Following the Prime Minister’s statement to the House of Commons on 22 February 2022, the UK has announced a tranche of sanctions on Russia. The full details of the measures are available on the Foreign, Commonwealth & Development Office website. If you require a licence to permit any activity which would otherwise be prohibited by sanctions regulations, you must contact the relevant department.
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.
For firms undertaking trade finance activities our Dear CEO letter from September 2021 provides some additional guidance on sanctions considerations.
For further details on financial sanctions you should contact OFSI or, for trade and export sanctions, you should contact the Department for International Trade’s Economic Control Joint Unit. Applications must be made in advance of any business agreement or transaction taking place.