In the notice of an enforcement action taken against a UK service provider, the UK OFSI took the position that (among others) the receipt of a payment from a blocked person even if such payment is blocked when entering the UK bank account is considered as providing funds to such a blocked person which initiated the payment.
The logic used to justify this conclusion is counterintuitive, because in the circumstances described above the payment (funds) is made available to the recipient/payee (not a designated person). Conversely, as a result of effecting a payment, the payor (a designated person) is deprived of the funds.
This is not the way, however, how the regulator analysed the matter – in its opinion, when the funds of a designated person arrived at the UK bank such funds were “for the benefit of” a designated person and not for its recipient.
Being what it is, this approach is very important to note for any creditor seeking to recover payments for supplied goods or services from a blocked person when the UK sanctions apply. It appears that the recipient cannot take any steps to recover such funds (e.g., to issue an invoice even if the invoices are issued automatically on a due date) unless it obtains a prior OFSI licence.
Less controversially, the notice is the authority that re-routing of payments to avoid UK nexus is interpreted by the regulator as the circumvention of sanctions.
The full summary of the enforcement notice is available at the following link.