Financial Sanctions Checks

In response to Russia’s invasion of Ukraine, the FCA published information about the tranche of sanctions announced in relation to Russia and Belarus and the HM Treasury’s Office of Financial Sanctions Implementation (OFSI) has been regularly updating its publications to provide new information as it becomes available.

Financial sanctions – a firm’s obligations

The FCA Handbook (FCG7) states that the FCA’s role is to ensure that the firms it supervises have adequate systems and controls in place to comply with the UK’s financial sanctions regime. See here for our previous article including the FCA’s expectations.

What are financial sanctions?

Financial sanctions are restrictions put in place by the UN and the UK to achieve a specific foreign policy on national security objective, they can:

  • limit the provision of certain financial services;
  • restrict access to financial markets, funds and economic resources.

Who imposes financial sanctions?

The United Nations (UN) imposes financial sanctions and requires member states to implement them through Resolutions passed by the UN Security Council. Where listings are made under a new UN Security Council resolution or sanctions committee, they will have effect in the UK law via regulations. OFSI will add all UN listings to the OFSI Consolidated List.

The United Kingdom (UK) imposes financial sanctions through a combination of statutory instruments and primary legislation.

Who is subject to financial sanctions?

The OFSI maintains two lists of those subject to financial sanctions:

  • The Consolidated List

This is a list of all asset freeze targets listed under UK financial sanctions legislation and UN sanctions. The individuals and entities listed are known as ‘designated persons’.

list of asset freeze targets for financial sanctions obligations

  • List of entities subject to capital market restrictions

OFSI now maintains a separate list of entities subject to specific capital market restrictions, these entities are not on the Consolidated List.

UK Sanctions List

How do firms comply with the requirements?

Firms should screen clients against both of the above lists to meet the financial sanctions obligations.

Firms are legally obliged to report to OFSI if someone in the firm knows or suspects that a breach of financial sanctions has occurred …

  • if a person you are dealing with, directly or indirectly is a designated person
  • if you hold any frozen assets
  • if knowledge or suspicion of these come to you while conducting your business …

… you must contact OFSI at the earliest opportunityand you should also notify the FCA.

Firms using electronic identity verification should check that the system being used screens both above-mentioned lists and firms manually checking are now required to check both lists.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

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Shirley has a wealth of industry experience and proven track record of working closely with firms to deliver high quality compliance and T&C solutions across a wide range of regulatory disciplines.

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