This article was written by Kate Burt, Head of Risk and Compliance at Legl and experienced solicitor/ consultant.
It’s been nine weeks since the Russian invasion of Ukraine and, according to international news reports, the military advancement shows no sign of retreat.
The latest sanctions measures were designed to weaken the Kremlin’s ability to finance the war and to impose clear economic and political costs on Russia’s political elite. This issue was covered in my previous article on the subject. Since then, there have been two further statutory instruments enacted since that article, which relate to sanctions on trade and bring the number of amendments to Russia (Sanctions) (EU Exit) Regulations 2019 to eight.
Sanctions against Russia have been under the international spotlight in recent weeks; however, the existence of legislative powers in varying forms have been in place since 2014 following Russia’s illegal annexation of Crimea and Sevastopol from Ukraine.
Since then, Russia has sustained a campaign of destabilisation of Ukrainian sovereignty in violation of a number of Russia’s international commitments, including under the UN Charter, the OSCE Helsinki Final Act, the Budapest Memorandum and the 1997 Russia/Ukraine Treaty of Friendship, Co-operation and Partnership.
The Russia (Sanctions) (EU Exit) Regulations 2019 were enacted to allow the UK to operate a functioning sanctions regime following exit from the EU, and transposed the legislation existing at the time into domestic law.
The latest changes
There have been eight amendments to the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2022 so far this year, with the latest amendments relating to trade restrictions.
In addition to an extension of the existing finance, shipping and trade sanctions, Amendment No. 7 of the Regulations confer a power on the Secretary of State to designate persons ‘by description’ instead of identifying them by name. Amendment No. 8 provides for an extension of trade restrictions including in relation to oil refining goods, software and technology and luxury goods.
The changes to this area are fast moving and any commentary will date quickly, law firms need a robust process to ensure that they do not inadvertently fall foul of the sanctions regime with out of date information.
How to stay ahead
The lists and information about the UK sanctions regimes in force, are constantly updated and published online and law firms can sign up for e-alerts from Office of Financial Sanctions Implementation (OFSI) for all UK financial sanctions listings, visit OFSI’s consolidated list.
Technology solutions can also help firms apply consistent processes across the practice reducing the occurrence of fee earners following their own perhaps less robust practices. Good technology solutions will allow oversight and visibility of risk centrally, allowing MLROs and other managers to monitor and take action where required.
How Legl is assisting their law firm clients
Legl partners with leading AI-driven financial crime and regulatory reporting tools and sources to provide real-time ongoing risk monitoring. These tools provide ongoing watchlist screening, capturing updates automatically to provide accurate and up to date coverage.
Data sources are refreshed on an ongoing basis which enables law firms to stay up to date and continue to make informed decisions around sanctions and AML risk.
Legl’s Ongoing Monitoring customers receive daily alerts within the app about any changes on their monitored contacts, including if they are added to, or removed from, a sanctions list. They also receive a weekly summary report of any activity.
What law firms should continue to do in relation to sanctions
- Ensure policies, procedures and controls to prevent your firm breaching sanctions including how technology could help reduce risk
- Identify, verify and screen your clients and beneficial owners against sanctions lists with ongoing monitoring
- Train your staff in relation to sanctions checking including screening, restrictions and reporting obligations
- Be ready to demonstrate your approach to regulators should your firm be selected for a visit