Following the recent invasion of Ukraine by Russia, the international community has responded by imposing a large number of sanctions on Russian politicians, individuals and entities along with Belarusian officials and military enterprises.
In this rapidly changing environment, it is important to establish the potential impact of the sanctions relating to Russia on your business and interests by carrying out swift and effective due diligence on any individual, entity, funds, or transaction with a connection to Russia.
Many businesses, particularly small and medium sized organisations, may assume that they don’t deal with oligarchs or the Kremlin, and ask themselves why are the sanctions relevant to them? But this is the time for all legal and financial organisations to be extra vigilant and ensure that due diligence is carried out in line with the government’s guidelines on all new clients to eliminate any risk of money laundering.
In this article, we provide an overview of what are sanctions, the sanctions imposed by the UK government on Russia and how Amiqus can help to ensure compliance.
What are sanctions?
Sanctions are an important tool of governance in the global financial industry and have become crucial in navigating foreign relations, peacekeeping and conflict resolution.
Given their prevalence, there is an obligations on companies in the legal and financial sectors, to understand what sanctions are, how they are used and how they impact their own business.
Types of sanctions
- Economic sanctions: Withdrawal of customary trade and financial relations. E.g. blocking access to financial services and capital markets for individuals, companies or whole sectors of a certain country’s economy.
- Diplomatic sanctions: Reduction or removal of diplomatic ties, such as embassies or cancelling high-level government meetings.
- Sanctions on individuals: Restrictive and punitive measures taken against particular individuals and groups who pose a threat to peace and security, including political elites, rebel groups, or terrorist organisations. E.g. asset freezes and travel bans.
- United Nations Security Council Sanctions (UNSC) and Office of Foreign Assets Control (OFAC)Measures taken by the UNSC range from economic and trade sanctions to more targeted actions, including arms embargoes, travel bans, and financial or commodity restrictions. Additionally, the UN applies sanctions to:
- support, maintain or restore international peace and security
- deter non-constitutional changes
- hinder terrorism
- protect human rights
- promote nonproliferation
OFAC oversees and enforces economic and trade sanctions based on US foreign policy and national security objectives against targeted:
- foreign countries and regimes
- terrorists
- international narcotics traffickers
- persons or groups engaged in activities related to the proliferation of weapons of mass destruction (WMDs) and other threats to the national security, foreign policy or economy of the US
Sanctions on Russia by the UK – Current situation
On 26 February, the UK, along with the US and EU announced sanctions on Russia’s central bank, which will involve freezing its assets held in sterling, dollars or euros.
They have also excluded Russia’s biggest banks from SWIFT, the payment messaging network that enables cross-border transactions.
All Russian companies are restricted from accessing UK capital markets and trading in debt through the UK financial system.
The UK, US and EU have also blocked Russia’s largest banks, including Sberbank and VTB, from accessing western capital markets, correspondent banking, and sterling, dollar and euro clearing.
Other measures introduced by the UK include:
- Asset freezes on 100 new Russian entities and individuals
- Ban on the export of dual-use goods and technology to Russia
- Limits on the amount Russian nationals can place in UK bank accounts.
- Additional sanctions on Belarus, for its role in the invasion of Ukraine.
At the time of writing this article, the UK has designated 66 entities and 197 individuals under its Russia-related sanctions regime.
As a result, many notable UK based international law firms have already severed ties with Kremlin-linked groups and oligarchs. In a statement, the global law firm Linklaters said it was closing its Moscow office and would not “act for individuals or entities that are controlled by, or under the influence of, the Russian state, or connected with the current Russian regime, wherever they are in the world”.
One of Scotland’s largest law firms Burness Paul confirmed it won’t be taking on new work from businesses associated with the Putin regime. Peter Lawson, the Burness Paull chairman, said, “As a firm we are of a very clear view that we will not accept any instructions from Russian state-linked businesses, and will exit any client relationships that are found to be so, regardless of whether they are subject to sanctions or not.”
What steps and actions you can take
- Ensure that Senior management understands your organisation’s sanctions obligations.
- Follow it up by putting policies and procedures in place.
- Make sure that your organisation’s Politically exposed persons (PEPs) and Sanctions screening provides comprehensive coverage to match the nature, size and risk of the business.
- Provide regular training to make sure everyone within the organisation fully understands the requirements and procedures.
- Ensure that everyone knows who to escalate red flags and high risk results to, within the organisation as and when required.
You can also have a look at our partner – Law Society of Scotland’s sanctions FAQs database which provides guidance to members of the legal profession on what is required of them.
How can Amiqus help?
The global sanctions landscape is fast-paced and more complex than ever before, as such you need a compliance platform that provides you with access to the most up-to-date databases.
With the click of a button you can include our Watchlist check and instantly screen and continuously monitor global data on politically exposed persons (PEPs) and sanctions lists, as well as adverse media data from 500 million web pages, as part of your compliance and due diligence processes.
Amiqus PEPs/Sanctions data is supplied and verified by ComplyAdvantage, who are a global leader of real time global sanctions screening. In order to respond to the rapid changes to sanctions regimes, their sanctions screening team is operating 24×7.
As a result, all sanction updates going live on the ComplyAdvantage database are included in Amiqus PEPs/Sanctions results, ensuring that our clients are not violating UK law by not including these in their searches.
The latest UK sanctions were added to our databases within 17 minutes of their announcement.
The following image is an example of the results you would see after completing a watchlist check, which includes:
- Politically exposed persons (PEPs)
- Sanctions
- Adverse media
Sanctions
The Amiqus Watchlist check reviews profiles of people and organisations on global and national sanction lists and thousands of government, regulatory, law enforcement, fitness and probity watchlists.
Possible results are:
- Arms embargoes
- Import bans
- Export bans
- Financial sanctions – A financial sanction can consist of various penalties, including the prohibition of transferring funds to certain countries and the freezing of accounts and assets, as we are seeing now due to the Russia – Ukraine conflict. There are also specific financial sanctions that may prohibit individuals from providing financial support or services to citizens of a sanctioned country.
To know more about how our powerful watchlist functionality works, watch the short video below.
As we continue to monitor the situation, please don’t hesitate to get in touch with us on [email protected] if you want to know more about the Amiqus watchlist check and how it can help your business in the current climate.
Additionally, you can also contact Craig Wilson, Client Relationship Manager at Amiqus, on [email protected] to discuss PEPs/Sanctions checks for your business or any other concerns and needs you may have.
