OFSI issues general licence for “Personal Remittances”

On 28 May 2024, the Office for Financial Sanctions Implementation (OFSI) issued General Licence INT/2024/4761108 (the General Licence), impacting what it calls “Personal Remittances”. The General Licence issues clear and specific conditions for payments made to, from, or via a credit or financial institution designated under the Russia (Sanctions) (EU Exit) Regulations 2019 (“the Russia Regulations”), providing a significant relief for firms dealing with the impact of UK-imposed sanctions on Russia.

What does the General Licence introduce?

We have broken down the practical effect of the general licence by creating a hypothetical client of a UK Financial institution which we will refer to as “Client A”.

Client A can use the retail banking services of a designated credit or financial institution (i.e. the sanctioned entity) provided that the payments made or received are intended for the personal use of Client A. The General Licence labels this activity as “personal remittances;” however, some financial institutions have been using different terminologies, such as “first-party payments”.

The General Licence specifies that Client A is an individual other than an individual under the sanctions of the Russia Regulations.

The General Licence is, however, subject to specific conditions:

1. The totality of the payments for or in respect of Client A must not exceed £50,000 during the general licence's validity (from 28 May 2024, to 27 May 2026).

2. Within 14 days of processing such payments for Client A, the relevant institution must report to HM Treasury with details and supporting evidence of:

• the amount processed
• the payment route used
• the date on which the funds were processed

3. The General Licence requires firms to keep complete and readable records on paper or electronically of any activity purporting to have been permitted under this licence, for a minimum of six years.

4. The General Licence only applies to credit or financial institutions designated under the Russia Regulations, so firms will need to ensure that the correct sanctions regime is applied when considering relying on the General Licence.

5. The General Licence doesn't allow transactions if Client A or the UK financial institution suspects that it will result in funds or economic resources being dealt with or made available in breach of the Russia Regulations. That is to say, entities relying on the General Licence must ensure that Client A is not a designated client and must ensure that extra diligence is carried out to ensure that Client A is not an associate or acting as a proxy for a designated person. As per the third condition, evidence for all of this must be retained for a minimum of six years.

We advise anybody intending to use the General Licence to consult the copy of the licence for full details of the definitions, permissions, and usage requirements or consult their compliance advisors.

At Cosegic, we are experienced in assisting firms with their ongoing sanctions obligations. If your firm needs support, please do get in contact; we would be happy to help.