Russian Sanctions – Why Your Law Firm Should Keep on Top of Sanction Checks
Brian Rogers, Regulatory Director at Access Legal
With the ongoing crisis in Ukraine and sanctions continuing to be placed on Russia, as well as people and companies associated with it, all business sectors are being affected. But it is how they respond to these changes that could have the biggest impact.
As these changes have been implemented under the Sanctions and Anti-Money Laundering Act 2018, law firms, in particular, have to keep a close eye on how their policies and guidance may alter.
It is common for law firms to have global clients so having to work around different rules in other countries could be difficult, and firms need to ensure they are complying by having the appropriate policies, controls and procedures in place relating to sanctions.
How can law firms comply with sanction checks?
Many of the sanctions currently in place involve asset freezing, travel bans and potentially pausing international client communication.
The checks firms can make to ensure they are complying can normally be completed by referring to the UK Sanctions List, however, some relating closer to the legal sector include updating Firm Wide Risk Assessments, conducting source of funds and wealth checks, providing staff support and keeping up-to-date with clients and countries that are considered to be allies of Russia.
A Firm-Wide Risk Assessment shows that a firm has reviewed matters and made appropriate changes to policies, controls and procedures, regardless of whether they deal with international clients or not. As the Sanctions List continues to develop, and more individuals and companies are likely to be added, it is important firms continue to check this to show regulators that they are staying on top of this.
Recently, it has been seen that a lot of law firms are not updating their risk assessments. Research from the Solicitors Regulation Authority (SRA) showed that in 2019, after requesting 400 firms’ risk assessments, 83 per cent were not compliant with the regulations and 38 per cent were dated after they were asked, showing they might only be completing them when requested.
With the ongoing changes to policies and sanctions within individual countries, legal firms need to keep an eye on how this could affect them and their clients. Not only in relation to Russian clients but also with allied countries under the EAEU such as Belarus, Armenia and China.
Finally, firms need to look inward and make sure their staff feel reassured and supported as many will have questions and will want to know how the new sanctions may affect them directly.
How can these checks benefit law firms?
As the invasion and its impact on the rest of the world has left many companies and business sectors facing uncertainty, the legal sector must keep an eye on sanction developments to ensure firms are not exposed to new risks.
Introducing regular training for staff on sanctions, compliance checks and money laundering matters will allow them to play their part in ensuring obligations are met. Undertaking training courses in governance, compliance, CQS requirements and SRA regulations can assist with firm-wide knowledge of how to tackle current and any future global situations.
Being prepared and already having new processes in place will allow a firm to be ready for any sudden changes, such as the Ukraine crisis. Not everything can be predicted but if law firms are meeting their obligations and have up-to-date date assessments, they can be ready to act when needed.