UK Fines Property Management Firm for Breach of Russia Sanctions
The U.K. fined property management company Integral Concierge Services Limited 15,000 British pounds, or about $20,000, for helping a client designated under the U.K.’s Russia sanctions regime manage a residential property. The company was accused of being “unaware” of its sanctions compliance obligations and making “no attempt to educate itself on its legal obligations” after its client was sanctioned.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The penalty comes as the U.K. looks to dedicate more resources to its enforcement efforts, including through a new sanctions agency that will begin work in October (see 2409250015 and 2409130015).
“We promised this government would act -- and we are putting those involved in breaches on notice,” Stephen Doughty, sanctions minister for the U.K.’s Foreign, Commonwealth and Development Office, said Sept. 27. “Let this be a strong warning to those who fail to comply.”
The U.K. said Integral Concierge Services is registered in Britain but mostly provides “concierge” services to Russians and Ukrainians, including by helping them manage residential properties. The company’s violations stemmed from making or receiving 26 payments in 2022 and 2023 involving a property owned by a person sanctioned by the U.K., the Office of Financial Sanctions Implementation said. Those payments were worth about 15,000 pounds.
Those payments were worth about 15,000 British pounds. For at least 10 of the payments, OFSI said the company “either knew or had reasonable cause to suspect that it was in breach of those prohibitions.”
OFSI said Integral Concierge Services had been providing property services to the client since 2015, which included collecting rent from tenants, and organizing and paying for routine maintenance, repairs and insurance. After the U.K. designated the person in 2022, the company continued to provide its services and collected management fees from the designated person’s account with the firm. It also used that account, its own business account and a personal savings account to make “several transfers between accounts which dealt with the Designated Person’s funds,” OFSI said.
Integral Concierge Services never obtained a specific license from OFSI that would have authorized those payments and transfers, the agency said.
During OFSI’s investigation, the agency said Integral Concierge Services “admitted that it did not believe it was necessary to seek guidance about the sanctions regime, despite the fact that its knowledge of sanctions was, by its own admission, extremely limited.” The company was also “unaware of its sanctions obligations beyond not making direct payments to” a sanctioned person and “facilitating further rental payments to the Designated Person’s client account,” the agency said.
Integral Concierge Services didn’t try to learn about its legal risks and continued to run its business “otherwise as normal” after its client was sanctioned, OFSI said. The company also didn’t voluntarily disclose the violations and “chose to make no representations and did not seek an administrative review of OFSI’s decision.”
The company also violated the reporting requirements of OFSI general licenses covering payments to water companies and transactions involving gas and electricity when it failed to report to the U.K. government about six payments to water and utilities companies, the agency said. Although those payments “were not themselves breaches of the Russia Regulations,” OFSI said it “considers ICSL’s failure to comply with the reporting conditions a breach of regulation 67(2) of the Russia Regulations.”
The agency said it didn’t impose a penalty for those violations, but it “considers them to be an aggravating factor in ICSL’s conduct in this case.”
OFSI noted that even though most of the company’s payments were “of lower value, the cumulative total and their repeated nature was serious.” Other aggravating factors included the fact that the company “blunted the intended effect” of U.K. sanctions against the designated person and had a “lack of awareness of sanctions risks.” It also failed to disclose the sanctioned person was one of its clients during a “client due diligence review” by its banking provider.
The agency also pointed to several mitigating factors, including that OFSI may have granted a license to Integral Concierge Services if it had applied for one. OFSI said it has previously issued general licenses to allow some payments involving properties owned by sanctioned people.
OFSI also said the company cooperated with the agency’s investigation, including by “providing information on breaches it had committed of which OFSI was not yet aware.” It said this made “enforcing the law simpler, easier, quicker.”
The agency classified the case as “serious” instead of “most serious,” but said Integral Concierge Services didn’t qualify for a penalty reduction because the company didn’t self-report the violations. If it had, OFSI may have reduced the penalty by up to half.
The case highlights the importance of companies understanding their sanctions risk exposure, OFSI said, noting that Integral Concierge Services should have been aware of its risks because its clients are mostly Russians and Ukranians. That “should have led it to seek out a better understanding of its sanctions responsibilities.”
OFSI also said sanctions rules are “especially important” to follow for companies in the the property management sector. Property-related payments can make “funds available to a third party for the benefit of the Designated Person,” which is a violation of U.K. sanctions.
Integral Concierge Services didn’t immediately respond to a request for comment.