Readers will be aware that, following the invasion of Ukraine by Russia, the UK Government, together with other countries, has imposed a number of financial sanctions on organisations and individuals that are deemed to have connections with the Russian Government.
While these are most likely to affect Banks, Investment Funds and other institutions that have a commercial relationship with sanctioned entities, all regulated firms will need to review their anti-money laundering processes to ensure compliance with the latest sanctions position. And that position appears to be in a state of flux so firms will need to monitor the situation regularly for the foreseeable future.
The FCA has published guidance and requirements online. Search the FCA website for full details of the current obligations. A high level summary of the position as at date of writing is undernoted for information.
“We expect firms to have established systems and controls to counter the risk that they might be used to further financial crime and this includes compliance with financial sanctions obligations. Where the FCA identifies failings in financial crime systems and controls we can impose restrictions and/or take enforcement action. Additionally, the Office of Financial Sanctions Implementation (OFSI) has the power to levy civil monetary penalties for breaches of financial sanctions and works with law enforcement for the most egregious cases where criminal prosecution may be considered.
Firms should screen against the UK Sanctions List to meet these new sanctions measures and screen against the OFSI list of asset freeze targets for financial sanctions obligations. You are legally obliged to report to OFSI if you know or suspect 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 opportunity, and you should also notify the FCA.
Our expectations of firms’ systems and controls in relation to compliance with financial sanctions are set out in FCG 7 of our Financial Crime Guide including examples of good and poor practice in relation to firms’ governance, risks assessment and approaches to screening in relation to financial sanctions. Where transactions give rise to concerns about sanctions evasion or money laundering you should also consider you obligations to report to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA) under the Proceeds of Crime Act 2002.”