First published 25th February 2022.
Last updated 29th March 2022
Due to the invasion of Ukraine the UK Government has imposed new sanctions on Russia and Belarus-linked individuals and organisations. The CLC reminds the practices and individuals we regulate of the vital need to be aware of these new requirements and adhering to them.
The situation is fast moving, and further sanctions may well follow, so you will also need to ensure you monitor developments closely. Information about the UK sanctions regimes is regularly updated and published online by the Government. This includes both individuals and entities in a regularly updated UK Sanctions List.
There are two other key points to note. Firstly, while the current focus is on Russia and Belarus, the sanctions regime has a global reach and can apply to several nationalities and organisations.
Secondly, this is not an issue that will go away soon. If anything, it will be growing in importance due to recent events. Sanctions, along with economic crime, AML and cyber risks were already areas of increasing focus, and there will naturally be more of a spotlight on these issues from government, regulators, and the media, along with the public.
There is also a risk that further measures may be taken by the Russian regime or its proxies in response to this new sanctions’ regime (e.g. cyber-attacks on critical infrastructure or groups of firms).
The financial sanctions regime aims to reduce the risks (to businesses, consumers and the country) from carrying out business for, or in any way acting for individuals, entities or other defined bodies on the sanctions list. You are reminded that if a particular individual or organisation is named (and subject to an asset freeze), then you may not deal with their funds or make resources available to that person/organisation.
You have responsibilities under the sanctions regime to safeguard the UK, and to maintain and protect the reputation of the wider legal sector. Failing to follow the financial sanctions requirements could result in criminal prosecution or a large public fine. You should ensure that you have the right processes, systems and controls in place now – and in future – to comply with any sanctions developments to avoid the risks above. You are also strongly encouraged to review and update your process on AML and cyber protection.
These steps have to include:
A review of the financial sanctions list (see below) before continuing, or undertaking, any transactions for clients. Or offering any advice or services.
An update of how (and how often) you access the list. It is also a suitable time to remind yourself and staff on AML obligations and cyber protection. This should include updated training if necessary. (This point is always important, but especially so in the current situation).
You are reminded that you are also under a legal obligation to report suspicions to the Office of Financial Sanctions Implementation (OFSI) if you believe a client (or a proxy for them) may be a designated person under the financial sanctions’ regime. They have an updated list that can be searched here.
Need for an OFSI licence if you act for or collect fees from a sanctioned individual
If firms act for a client(s) who/which appears on the consolidated sanctions, they will need (before accepting or billing the client) to apply for separate and distinct licence from the OFSI before doing so.
You should contact OFSI as early as possible, and should ask their advice about whether you also need to notify the FCA and the UK Financial Intelligence Unit (UKFIU), based at the National Crime Agency (NCA).
Further advice on reporting issues to OFSI is also available here.
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