On 22 February 2022, the FCA published a new webpage concerning its expectations of firms in light of the UK’s sanctions on Russia.
The key message from the FCA is that it expects 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. Firms should screen against the UK Sanctions List to meet these new sanctions measures and screen against the Office of Financial Sanctions Implementation (OFSI) list of asset freeze targets for financial sanctions obligations. Firms are legally obliged to report to OFSI if they know or suspect that a breach of financial sanctions has occurred; if a person they are dealing with, directly or indirectly is a designated person; if they hold any frozen assets; or if knowledge or suspicion of these come to the firm while conducting business.
The FCA reminds firms that its expectations concerning systems and controls in relation to compliance with financial sanctions are set out in FCG 7 of the Financial Crime Guide which includes examples of good and poor practice regarding firms’ governance, risks assessment and approaches to screening in relation to financial sanctions. Furthermore, firms are reminded that where transactions give rise to concerns about sanctions evasion or money laundering they should also consider their obligations to report to the UK Financial Intelligence Unit at the National Crime Agency under the Proceeds of Crime Act 2002. Firms undertaking trade finance activities are also referred to the FCA’s Dear CEO letter from September 2021 which provides additional guidance on sanctions considerations.
We have also published a short video in which Jonathan Herbst provides some high level thoughts on some of the systems and controls issues firms should be thinking about.