Top Tips from Our Recent Talk about Sanctions Against Russia

Sanctions Against Russia

The EU has imposed a fifth round of sanctions against Russia in response to its military aggression in Ukraine. Following Russia’s invasion of Ukraine, the US and UK governments have announced further sanctions, which are penalties imposed by one country on another to prevent it from acting aggressively or breaking international law. In this Blog Bisi Giwa from Kharis and Knoble shares her top tips for companies in the light of the emposed Sanctions Against Russia, as she mentioned about it in our recent webinar, DX Digital Series: Financial Sanctions Compliance.

Firms should be mindful of the following:

1  Whereas they previously targeted only specific named entities (states, ships, aircraft, organisations and individuals), now narrative and sectoral sanctions have been introduced targeting specific sectors and prohibiting specific activities, which are more open to interpretation.

2  As governments increasingly rely on sanctions as a tool for political foreign policy, new entities are added to, and removed from sanctions lists, all of the time so firms should keep an eye on that.

3  Sanctions are not limited to entities themselves so firms owned or controlled by sanctioned entities also need to be in scope of sanctions lists and compliance programmes. Additionally, customers who aren’t on a sanctions list but have a relationship with a sanctioned entity could also present a risk.

4  The multitude of sanctioning bodies, including sovereign states and international organisations such as the UN, each publish their own sanctions – which don’t always align so firms should bear this in mind.

Key actions firms should take:

1  Update business-wide and customer risk assessments to account for changes in the nature and type of sanctions measures

2  Ensure that customer onboarding and due diligence processes identify customers who make use of corporate vehicles to obscure ownership or source of funds

3  Ensure that customers and their transactions are screened against relevant updated sanctions lists and that effective re-screening is in place to identify activity that may indicate sanctions breaches. Robust data source is critical identify activity that is not in line with the customer profile or is otherwise suspicious and ensuring that these are reported quickly to the nominated officer for timely consideration

4  Engage with relevant platforms to gather insights on the latest typologies and additional controls that might be relevant and share best practice examples

Red flags firms should note:

1  Customers resident in or conducting transactions to or from a jurisdiction which is subject to sanctions, or neighbouring jurisdictions or which is on the UK’s High Risk Third Countries list for anti-money laundering and counter-terrorist financing purposes, or any jurisdiction identified as posing an increased risk of illicit financial activity.

2  Where licences are applicable ensuring that terms of the licence is thoroughly understood and expiration dates have been fully considered for the duration of the transaction.

3  Red flag indicators should be considered in context. What may appear innocent in isolation may be indicative of sanctions evasion when considered alongside other red flag indicators or contextual information. For example moving vessels to offshore jurisdictions or less restrictive jurisdictions, divestment of investments or registration of companies in friendly jurisdictions, asset flight and sham sale (e.g. football club sale by Abramovich).

Don’t miss the chance to watch our recent webinar, DX Digital Series: Financial Sanctions Compliance, moderated by DX Compliance Partnerships Specialist Karl Mcmurry and hosted by Simon Dix, DX Compliance CEO & Founder, with Bisi Giwa, Kharis & Knoble Director, which focuses on the practical implications of financial sanctions and how compliance teams may cope with them, and more about sanctions against Russia.

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