PAS FAQ: Sanctions

I have received instructions to act in the sale of a property where the client comes up as a possible sanctions match. How should I proceed?

You should review all the client identity information you hold against the sanctions list, to make sure you do not have a false-positive identification. You may also ask your client for more identity information to help confirm or rule out whether there is an accurate match. The Office of Financial Sanctions Implementation (OFSI) issues a consolidated list of all persons and entities that are subject to sanctions which are effective in the UK.

You may find that the name of an individual or entity you are dealing with matches one or more entries on the consolidated list. However, it does not necessarily mean that the individual or entity you are dealing with is the same one on the list. If you are satisfied that this is the case, you do not need to take further action. If the individual or entity you are dealing with matches all the information on the consolidated list, this is likely to be a target match.

Where there is a positive match you must suspend the transaction and report the matter to your money laundering reporting officer (MLRO) or the money laundering compliance officer (MLCO). Solicitors have an obligation to report sanctions-related information to Office of Financial Sanctions Implementation (OFSI). Not doing so is a criminal offence, which may result in criminal prosecution or a monetary penalty. OFSI has the power to grant licences exempting certain transactions from the financial restrictions. Requests are considered on a case-by-case basis, to ensure that there is no risk of funds being diverted to terrorism.

If having consulted the consolidated list you are still unsure on whether you have a target match, you can contact OFSI for assistance email: ofsi@hmtreasury.gsi.gov.uk. General enquiries: 020 7270 5454.

You should consider also whether you have a suspicion of money laundering or terrorist financing which requires a report to the National Crime Agency.

As a firm do we need to conduct a sanctions risk assessment?

When you carry out your firm’s anti-money laundering risk assessment you should consider how likely it is that your clients may be on the sanctions lists.

However, it may be difficult to conclude that a client needs to be checked simply on the basis of their nationality or country of residence. UK nationals and UK residents can be on the sanctions lists. There is still a risk even if your firm acts for local clients.

You should also bear in mind that the current regimes list can help you assess risk but there may be some retainers where it’s not immediately apparent that a person or entity may have some connection to a relevant regime.

You cannot limit your risk assessment to the work regulated under the AML regulations. Examples of unregulated work that the sanctions regime may affect include:

• payment of personal injuries settlements
• property settlements following a divorce

Factors that may increase the risk of a person being on the sanctions list, and so increase the reason for checking the list, 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, and
• clients who seem unable to receive funds or send funds from a bank account in their name, for no good reason.

When conducting a risk assessment you should also refer to the Solicitors Regulation Authority’s (SRA) firm risk assessment guidance.

For further information, please see our Sanctions guide.