U.K.-based foreign exchange service Wise Payments was cited for breaching the country’s sanctions levied against Russia as part of the Office of Financial Sanctions Implementation’s (OFSI) first use of its disclosure enforcement powers acquired last year.
Wise avoided a penalty in the case, which related to a cash withdrawal of 250 pounds (U.S. $317) made from a business account held by a company owned or controlled by a person designated under Russian sanctions. Wise self-reported the incident and has improved the aspects of its sanctions compliance process that led to the breach occurring, said OFSI in its disclosure notice published Thursday.
The details: In response to Russia’s February 2022 invasion of Ukraine, OFSI was granted authority to publish details from cases where financial sanctions breaches are not serious enough to merit civil penalties.
“Our intention is to use this power in response to moderately severe breaches, when an administrative warning letter would be too lenient on the facts of the case but a civil monetary penalty would be disproportionately punitive,” said Giles Thomson, director of the agency, in a blog. “… Through publishing details of breaches, this new enforcement tool will act as a form of censure and deterrent while also enabling compliance lessons to be available to other companies and individuals.”
In the Wise case, the customer was designated June 29, 2022, and made their withdrawal the following day. Wise had suspended the account but did not immediately restrict activity on the debit card associated with the account, according to OFSI. The customer was exited July 4, 2022.
Later that month, Wise disclosed the incident to OFSI and fully cooperated with the agency’s investigation, according to the notice.
Compliance considerations: “Despite the low breach value, OFSI considered that Wise’s systems and controls, specifically its policy surrounding debit card payments, were inappropriate,” the agency said in its notice. “This factor made the case moderately severe overall and enabled funds to be made available to a company owned or controlled by the designated person.”
Company response: “At Wise, we take the responsibility of complying with all sanctions laws very seriously,” said a company spokesperson in an emailed statement. “We took immediate steps to suspend our services to Russia as soon as sanctions were enacted in response to its invasion of Ukraine.
“We remain committed to ensuring that our day-to-day operations are in compliance with all relevant regulatory requirements and to working openly and collaboratively with our regulators.”