Sanctions Compliance in Respond to the Crisis in the Ukraine

Intro

Our clients rely on us to provide continued up-to-date global coverage in terms of Sanctions and PEP Data. Therefore, we publish the recent update for global sanctions lists on the 22nd of February.

In order to respond to the changes to sanctions regimes given the political circumstances, our team is constantly monitoring the situation and implementing all daily updates.

All sanctions updates have been made and as Sanctions can change quickly many government officials announce new sanctions before they are officially designated (due to required legislation as for example in the EU).

We’ve got you covered: Our updates so far

We have got you covered and ensured that the sanctions are up to date and have been pushed into our live production environments. We have updated the Data in terms of the US Office of Foreign Assets Control (OFAC) and the UK.

Recommendations

1. Continuous monitoring of the situation is important
2. A holistic approach is now more important than ever.
3. Sweeping customer databases to identify all clients physically based in Russia or connected to sanctioned individuals and entities.
4. Identifying clients that have significant business dealings with Russia to determine whether to apply enhanced monitoring to transactions of those clients.
5. Reviewing deals in the energy, transport, and construction sectors where clients may have a deal in place with a Russian counterpart.
6. Putting into place enhanced scenarios that take into account IP addresses, geolocation or similar
7. Monitoring the behaviour of clients with scenarios that help you to uncover the potential relocation of large volumes of money in multiple layers

Who should be following the sanctions updates

We advise all our clients to follow recent updates and will publish on a daily basis the news here on our Blog.

The 3 main sanctions regimes so far

1 Europe

The EU has restrictive measures in the response to the crisis in Ukraine. Therefore it imposed a new package of sanctions against Russia.

The Council agreed on a package of measures to respond to the decision by the Russian Federation to proceed with the recognition of the non-government-controlled areas of Donetsk and Luhansk oblasts in Ukraine as independent entities, and the ensuing decision to send Russian troops into these areas. The Council adopted restrictive measures, within the framework of the existing sanctions, on five more individuals for actively supporting actions and implementing policies that undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine.

The persons designated today are members of the State Duma of the Russian Federation, who was elected to represent the illegally-annexed Crimean peninsula and the City of Sevastopol on 19 September 2021, as well as the head and deputy head of the Sevastopol electoral commission

The agreed package includes:

Targeted sanctions against the 351 members of the Russian State Duma and an additional 27 individuals
Restrictions on economic relations with the non-government-controlled areas of Donetsk and Luhansk oblasts
Restrictions on Russia’s access to the EU’s capital and financial markets and services.

On 24 February, EU leaders met at a special summit convened following Russia’s aggression against Ukraine. They agreed on further sanctions against Russia that target:

The financial sector
The energy and transport sectors
Dual-use goods
Export control and export financing
Visa policy
Additional sanctions against Russian individuals
New listing criteria

2 UK – Largest Ever Sanctions

Foreign Secretary imposed UK’s most punishing sanctions to inflict maximum and lasting pain.

Those announced so far include:

Comprehensive sanctions covering Russian elites, companies, and financial institutions were announced following Russia’s full-scale invasion of Ukraine.

Russian bank assets in the UK to be frozen totally shutting off its banking system from UK finance markets.

The UK is banning Russian state-owned and key strategic private companies from raising finance on the UK financial markets.

More than 100 companies and oligarchs at the heart of Putin’s regime hit with sanctions today worth 100s of billions of pounds, asset freezes, and travel bans.

Punitive new restrictions on trade and export control against Russia’s hi-tech and strategic industries

Russia’s national airline Aeroflot banned from UK airspace
new restrictions to cut off wealthy Russians’ access to UK banks.

The UK is working with allies to exclude Russia from the SWIFT financial system.

The UK also will introduce new financial measures to:

Freeze the assets of all Russian banks including, today, a full asset freeze on VTB, Russia’s largest bank. Co-ordinated with the US this is by far the single biggest financial sanction in history. Individuals and companies whose assets are frozen will be unable to undertake any business in the UK or with UK nationals.

Prevent Russian companies from borrowing on the UK markets, effectively ending the ability of those companies closest to Putin to raise finance in the UK. This is in addition to banning the Russian state itself from raising funds in the UK, as previously announced.

Take the power to prevent designated banks from accessing Sterling and clearing payments through the UK. This will match the power the US already has. Banks subject to this measure will be unable to process any payments through the UK or have access to UK financial markets.

Five Russian banks, including:

• Rossiya, a bank with stakes in a television company
• The Black Sea Bank, created after Russia annexed Crimea
• The General Bank, a financial institution that operates in Crimea
• Promsvyazbank, a state-owned Russian bank
• IS Bank

What you must do:

• Check whether you maintain any accounts or hold any funds or economic resources for the persons set out in the Annex.
• Freeze such accounts, and other funds or economic resources and any funds which are owned or controlled by persons set out in the Annex.
• Refrain from dealing with the funds or assets or making them available (directly or indirectly) to such persons unless licensed by the Office of Financial Sanctions Implementation (OFSI);
• Report any findings to OFSI, together with any additional information that would facilitate compliance with the Regulations;
• Provide any information concerning the frozen assets of designated persons that OFSI may request. Information reported to OFSI may be passed on to other regulatory authorities or law enforcement.

Where a relevant institution has already reported details of accounts, other funds, or economic resources held frozen for designated persons, they are not required to report these details again.

Failure to comply with financial sanctions legislation or to seek to circumvent its provisions is a criminal offense.

Where you can find more information in the UK:

The full UK Consolidated List

The UK Sanctions List

Further details on changes to the new format of the Consolidated List

3 US:

The US Treasury Announced Unprecedented and expansive Sanctions against Russia and also made new actions targeting Russian elites.

For more information please read this article.

Summary

Enhanced sanctions against Russian entities, individuals, vessels, and Banks have increased the risk for organisations with this exposure exponentially, but also significantly increases the unknown risks for institutions who may not have the correct measures in place to detect behaviour that suggests an attempt to circumvent sanctions.