Clifford Chance

On 1 December 2023, the Financial Conduct Authority ("FCA") published an updated Memorandum of Understanding ("MoU") setting out arrangements for co-operation and the exchange of relevant information between it and the Office of Financial Sanctions Implementation ("OFSI").

The updated MoU (which replaces an existing MoU dated April 2019) is intended to enable effective co-operation between both regulators and to assist in the discharge of their respective functions, by allowing OFSI and the FCA to share relevant information obtained through performing their supervisory functions.

The updated MoU sets out the types of information that may be shared and the permissible use of such information; entitling both OFSI and the FCA to share relevant information proactively or on request.

The MoU sets out a non-exhaustive list of types of relevant information which may be shared including:

• information relating to suspected or actual sanctions breaches identified by OFSI, that fall within OFSI’s competencies, which suggest weaknesses in the FCA-supervised firm’s systems and controls;
• information relating to suspected or actual sanctions breaches identified by the FCA that fall within OFSI’s competencies, which the FCA has reasons to believe that OFSI may not be aware of;
• information relating to suspected or actual breaches of financial sanctions or relevant maritime services sanctions identified by either Party, where there is reason to believe that joint investigations would benefit enforcement of those sanctions;
• any information the FCA discloses to OFSI under the provisions of relevant legislation, including, but not limited to, FSMA and The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the “MLRs”);
• personal data, which may include information relating to individuals who have been involved in a suspected or actual breach of sanctions that fall within OFSI’s competencies;
• asset freeze notifications submitted to OFSI and designated persons reports submitted to OFSI in each case which relate to or were submitted by an FCA-supervised firm; and
• any information that could be used for intelligence purposes.
  
  

For each entity, the MoU clarifies the permissible use of the information obtained under the MoU which is not available in the public domain.

The FCA may use the information:

1. In discharge of functions concerning the authorisation, supervision, and market oversight of FCA-supervised firms (and individuals connected to such firms); or
2. For enforcement purposes, including conducting investigations or taking enforcement action.

OFSI may use information:

1. For any civil investigation undertaken by OFSI;
2. For any criminal investigations undertaken by other law enforcement agencies;
3. To facilitate compliance with financial sanctions legislation or relevant maritime services sanctions legislation; or
4. For any other purpose agreed between the FCA and OFSI, including conducting investigations or taking enforcement action.

Under the MoU, both the FCA and OFSI can disclose information obtained under the MoU to third parties when permitted by law.

The updated MoU underlines the close collaboration between the FCA and OFSI, and their shared intention to cooperate and share information to enhance their ability to discharge their respective duties. It acts as a reminder to regulated firms to ensure that both regulators are kept sufficiently informed in circumstances where their respective functions interact.