The UK set out how it plans to deter oil traders from cheating on a global plan to cap the price of Russian petroleum.
From 5 December, the country – along with allies in the US and European Union – is to bar anyone from accessing insurance, shipping and other services related to Russian oil and fuels transport.
However, companies will still be able to access such services provided they agree to pay a capped price for cargoes. That has led to worries that some traders could be tempted to lie about what they paid – enabling them to obtain G-7 nations’ shipping and insurance despite not adhering to the cap.
The UK on Monday set out guidance on what the punishments might be if they do, as well as other clarifications.
Those found to have lied will face fixed fines up to a million pounds ($1.18 million) for breaching the measure. Alternatively, if it’s more, they could end up having to pay half the value of the breach, the UK Office of Financial Sanctions Implementation said in guidance published Monday.
Other possible actions include making information public about those who cheat, or passing their information on to criminal prosecutors.
With less than a month to go until its implementation, the European Union and Group of Seven nations are still yet to agree on a final value for the cap on crude oil.
On Monday European Commission President Ursula von der Leyen said the bloc is “ready to go” with an effort to impose a cap on Russian oil, while the US has warned that Russia is likely to have to halt some oil production if the cap is not imposed.
When it comes into effect, the measure will apply from when a cargo is loaded on a ship up to the point where it is delivered in a country, or is significantly transformed.
Costs such as transportation and legal fees won’t fall within the scope of the cap, the guidance said.
The UK said it was aware that the cost of shipping and other services could be used as a means of avoiding the rules, but that companies who suspect a breach would be obliged to report it.
Entities involved in a transaction as part of the cap will have to take part in an attestation process to ensure that cargoes are sold below the cap. Insurers and shipowners, for example, will be expected to receive written confirmation that oil was purchased below the capped price from traders with access to that information.