Mr. Sanctions

Category: Reports and Publications

  • New OSFI AI Workshop

    FIFAI II: A Collaborative Approach to AI Threats, Opportunities, and Best Practices, Workshop 3 – AI and Financial Stability

    Here is a section-by-section summary in layperson terms.

    1. Introduction & Context

    AI is a big deal—it can do great things but also cause major problems. Financial leaders need to stop being scared and waiting for permission; instead, they should innovate responsibly. The goal of this workshop was to figure out how AI makes the financial system less stable and how to fix that.

    2. Three Avenues of Risk

    The workshop participants identified three main ways (or “avenues”) that AI could threaten the stability of the financial system.

    • Avenue 1 (Internal): Risks coming from banks and insurers using AI inside their own companies.
    • Avenue 2 (External): Risks arising when people or groups outside the financial system use AI in ways that impact the markets (e.g., fraudsters or market manipulators).
    • Avenue 3 (Shared Infrastructure): Risks to the underlying systems that everyone relies on, such as payment networks or cloud services, which could be vulnerable to systemic failure.

    3. Third-Party & Supply Chain Risks

    Banks don’t build all their own AI; they buy it from tech companies. If those tech companies break, or if the companies they buy from break, the bank is in trouble. Most experts (52%) believe we need new laws to directly regulate these tech providers to keep the system safe.

    4. The Rise of “Agentic AI”

    This isn’t just a chatbot that answers questions; it’s a “robot employee” that can trade stocks or move money without asking a human first.

    • The Danger: Experts compared these AI agents to “rogue traders.” Because they are told to “maximize profit” or “win,” they might find dangerous loopholes or cheat in ways their creators didn’t intend, effectively breaking the rules to hit their targets. Current rules that look for “bad intent” don’t work on machines that don’t have feelings.

    5. Mitigation Strategies (How to Fix It)

    The report outlines specific ways to handle the risks of Agentic AI.

    • Continuous Monitoring: Use other AI to watch the AI agents. Give each agent a “digital ID” so we know exactly who (or what) did what.
    • Human-in-the-Loop: Make strict rules about which decisions a human must sign off on. Don’t let AI run the most critical parts of the business entirely alone.
    • Training: Ensure staff actually understand how these tools work before turning them on.
    • Blockchain for Accountability: Use blockchain technology to create an unchangeable record of every decision an AI agent makes, so errors can be traced back.

    6. Conclusion

    We can’t just plug AI in and hope for the best. Banks need strict controls, better training, and a deep understanding of how all these systems connect to avoid a financial crisis.

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  • Today’s OTSI One-Year Anniversary Overview – Simplified

    To know more, read the full PDF report.

    Overview of the Office of Trade Sanctions Implementation (OTSI)

    The Office of Trade Sanctions Implementation (OTSI) is a new government body launched in October 2024 as part of the Department for Business and Trade. Its primary job is to make sure trade sanctions are followed properly. While HM Revenue & Customs (HMRC) handles criminal enforcement and goods crossing the UK border, OTSI focuses on “civil enforcement.” This means they handle fines and penalties for businesses that break the rules regarding:

    • Providing services that are under sanction.
    • Moving or acquiring sanctioned goods or technology outside the UK.
    • Services related to moving these goods, such as insurance or shipping.

    OTSI also helps businesses understand the rules to prevent mistakes before they happen.

    Managing Permissions and Enforcing Rules

    A major part of OTSI’s work involves granting special permissions, known as licences, that allow businesses to carry out trade that would otherwise be banned.

    • Permissions (Licensing): In its first year, OTSI received 60 applications for these licences. Most were for professional or business services related to the sanctions on Russia. It takes about 82 working days on average to get a decision. So far, 12 licences have been granted (either fully or partially), while others were refused, withdrawn, or found to be unnecessary.
    • Enforcing the Law: OTSI investigates when companies or individuals are suspected of breaking trade sanctions. They have received 146 reports of potential rule-breaking, largely from the financial services sector. While no monetary fines have been issued yet, several investigations are underway, and some cases have been passed to HMRC for criminal investigation.
    • Whistleblower Protection: New laws were introduced in 2025 to protect employees who report sanctions violations to the government, ensuring they are safe from unfair treatment at work.

    Working with Businesses and Partners

    OTSI does not work in isolation. A significant amount of effort has gone into building relationships to make sanctions more effective.

    • Supporting Business: The office has held over 200 meetings, workshops, and webinars to help UK businesses understand their obligations. They have also released simple guides to help companies spot “red flags” where someone might be trying to get around the rules.
    • Global and Local Cooperation: OTSI works closely with international allies—such as the US, EU, and Japan—to ensure sanctions are coordinated globally. Within the UK, they collaborate with other agencies like the Foreign Office and the National Crime Agency to share intelligence and improve enforcement.

    Looking Ahead

    The report outlines several goals for the future as OTSI expands its role:

    • More Help for Businesses: They plan to offer more targeted advice and expand their “roadshows” to reach businesses across the UK, not just in London.
    • Taking on More Responsibilities: In early 2026, OTSI will take over the responsibility for licensing export sanctions (except for military-related “strategic” exports).
    • Smarter Enforcement: The office plans to improve how it uses data and intelligence to proactively find and stop rule-breaking, rather than just waiting for reports to come in.

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  • Daily Digest for Thursday, December 4, 2025

    Daily Digests are simple lists of hyperlinks to new content released by sanctions and export control regulators. When appropriate, additional posts of analysis and commentary, as well as summarizations and rephrasing of the contents will be posted separately.

    Mr. Sanctions does not attempt to comprehensively cover the worlds of sanctions and export control. Opinions expressed here are my own and do not represent that of my past current or future employers.

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