Services for Professionals: Applicability of UK Sanctions Regime
Professionals in various fields, including auditors and accounting firms, face the ever-evolving landscape of sanctions regimes. Understanding the intricacies of the UK sanctions regime is essential to avoid inadvertent violations. In this article, we explore how our specialized services assist professionals in staying compliant with UK sanctions laws.
The UK sanctions regime is a multifaceted and complex area law. It encompasses a wide array of restrictions and regulations that any professional should be aware of in order to avoid the risk of breaching them. These restrictions and regulations are imposed through a variety of legislation, primarily the Sanctions and Anti-Money Laundering Act 2018, Immigration Act 1971, Export Control Order 2008 and Terrorist Asset-Freezing etc. Act 2010. The regimes can be either ‘thematic’, meaning it is relating to a particular issue, or ‘geographic’, meaning it is relating to a particular country or region.
Under the sanction’s regime, serious and extensive restrictions are imposed on dealing with an individual, or organisation identified as a subject to sanctions measures (‘designated persons’). The law restricts professionals from doing the following, directly or indirectly:
- Receiving payment from or making funds available to persons on the sanctions list,
- Dealing with their economic resources,
- Making legitimate payments to those persons,
- Intentionally participate in activities that would directly or indirectly circumvent or facilitate commission of any of the above.
In order to avoid a risk of breaching the sanctions regime, professionals must carry out anti-money laundering (AML) risk assessment, and consider the likelihood that a client may be on the sanctions list. It is important to consider that UK national and UK residents are not exempt from being on the sanction’s lists, so professionals may still be at risk even if they act exclusively for local clients.
AML risk assessment is a systematic evaluation of a person’s exposure to money laundering and other financial crimes. They are also essential for professionals to identify, understand, and mitigate risks associated with money laundering activities, including terrorism financing and other criminal financial activities.
Some factors that may increase the risk of a person being on the sanctions list, and so increase the reason for checking the client against sanctions lists, include:
- Clients or transactions with links to jurisdictions subject to sanctions, even if the clients are based locally;
- Clients or transactions involving politically exposed persons from jurisdictions subject to sanctions;
- Clients or transactions involving complex corporate structures in jurisdictions with high terrorist financing risks;
- Clients who seem unable to receive funds or send funds from a bank account in their name, for no valid reason.
If any of the following apply to a professional’s clients, they may need to consider checking that client against the sanctions list; and if they do return with a possible sanctions match, double-check to make sure that it was not a false identification.
There is also an imposed obligation on professionals to report to the Office of Financial Sanctions Implementation (OFSI) if they know or have reasonable suspect that a person may be a designated person, even if they choose not to act for that person.
Additionally, there is an obligation to report to the OFSI if there is knowledge of someone who committed an offence under the financial sanctions and asset freezing regimes.
Consequences of a Breach
It is important for professionals to remain compliant with the UK sanctions laws, as they are imposed with the intention to maintain global peace, security, and stability. With such high-value goals, the ramifications of a breach of UK financial sanctions are substantial.
Firstly, breaching a financial sanction is a criminal offence and the OFSI is authorised to enforce the sanctions in the UK:
- Warnings & referral to regulators: it can issue correspondence request details of how professionals propose to improve their compliance practices or refer them to their professional regulators;
- Publicity: it can publish a report on a sanctions breach, even where no monetary penalty has been imposed;
- Monetary penalty: it can impose a monetary penalty ranging from 50% of the value of the breach to £1,000,000, whichever is higher. Separate penalties can be imposed on a legal entity and the officers who run it;
- Criminal prosecution: it can convict by up to 7 years in prison. There are both civil and criminal enforcement options to remedy breaches of financial sanctions.
In deciding what action to take and the level of any penalty, OFSI considers the nature and severity of the breach and the conduct of the individuals involved. The more serious the breach, and the worse the conduct of individuals, the more likely it is that OFSI will impose a penalty, and the higher any penalty is likely to be.
How Can We Help
We delved into the nuances of the UK sanctions regime, outlining its impact on professionals and the ramifications they bring if they are breached. Our experts offer insights into risk assessments, due diligence, and compliance strategies tailored to your specific needs, to ensure that your risks are lowered and you remain compliant within the scope of the sanction’s regimes. Learn how Sterling Law can be your trusted partner in navigating the complex world of sanctions regulations, ensuring both your reputation and compliance remain intact.
- Tailored Compliance Strategies. Our team of experts specialises in developing tailored compliance strategies designed to meet the unique needs of professionals. We understand that one-size-fits-all solutions do not work in the complex world of sanctions regulations. Therefore, we conduct comprehensive risk assessments and due diligence to identify potential areas of concern. By understanding your specific situation, we can provide targeted guidance, ensuring that your practices align seamlessly with the UK sanctions laws.
- Navigating Risk Assessments. One of the critical aspects of sanctions compliance is conducting thorough risk assessments. Our experts at Sterling Law have extensive experience in evaluating the risk factors associated with different transactions, clients, and business activities. Through meticulous analysis, we identify potential risks and vulnerabilities within your operations. This proactive approach allows professionals to mitigate risks effectively, making informed decisions that safeguard their businesses.
- Comprehensive Due Diligence. Due diligence is paramount in the realm of sanctions compliance. Professionals must have access to accurate and up-to-date information about their clients, partners, and stakeholders to avoid unwittingly engaging with sanctioned entities. Sterling Law offers comprehensive due diligence services, leveraging advanced tools and databases to verify the backgrounds of individuals and organisations. Our meticulous approach ensures that you are well-informed, enabling you to make sound business decisions while remaining in full compliance with UK sanctions laws.
At Sterling Law, we are committed to assisting professionals in staying compliant with UK sanctions laws. Our specialised services, including risk assessments, due diligence, and tailored compliance strategies, ensure that your reputation remains intact, and your business operations remain above board.