UK: Businesses and Sanctions Against Russia
March 2, 2021
This week has been marked by the escalation in conflict between Russia and Ukraine. As a result, many sanctions have been put in place against Russia. The anti-money laundering (AML) software provider, SmartSearch, advises businesses in the UK to take extra precautions to avoid defying these new sanctions.
Businesses should take action to review their due diligence and sanctions screening procedures to avoid falling foul of extensive new sanctions against Russia
It is imperative for any and all UK businesses to ensure that the organizations, businesses, or individuals they are making business with don’t fall amongst those who have been recently subject to these newly-imposed sanctions. Regulatory organizations such as Office of Financial Sanctions Implementation (OFSI) will be handing out hefty fines to companies found to be defying these new sanctions brought by the government against Russia.
The sanctions include restrictions against individuals, entities, and their subsidiaries, and the introduction of legislation to limit deposits held by Russian nationals in UK bank accounts to £50,000
Collette Allen, client services director at SmartSearch said that companies have the responsibility of ensuring they are not making business with sanctioned entities.
These sanctions are extensive and have implications for a wide range of businesses in the UK. Not only are companies banned from making funds or other economic sources available to sanction targets, but they also cannot deal with intermediary financial institutions through which funds could pass.
Businesses will have to take extra precautions at screening in order to make sure they aren’t unknowingly defying these newly-imposed sanctions.
Having screened a client at an earlier date is not enough, said Ms. Allen, and urges businesses to ensure they are using an electronic verification system in order to see if the company or individual they are dealing with are sanctioned or marked as politically exposed person (PEP)
In order to do this effectively, they need to ensure that the electronic verification platform they are using includes a monitoring system. It is clearly no longer enough for businesses to undertake client onboarding using old-fashioned methods, as it cannot ensure proper screening against sanctions and PEP lists. This approach is also unable to constantly monitor for status changes following the introduction of new sanctions, and without alerts, businesses are unable to immediately cease transactions linked to the flagged entity.
This week has seen an inevitable turn in world events, and in how businesses should act as a result. In order to avoid hefty fines, it is important for companies to take due diligence to ensure they are screening their clients thoroughly.
Want to learn more? Check out The Fintech Times’ full write-up here.
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