Help…I Have Been Approached by a Sanctioned Russian Client…What Do I Do Now

The ongoing invasion by the Russian Federation may seem hundreds of miles away. However, lawyers need to be getting prepared for approaches from sanctioned Russian persons requiring advice.

What Should Lawyers Be Doing To Prepare?

Faced with a mammoth story dominating the news headlines twenty-four hours a day and the tough sanctions imposed by the UK Government it would understandably overawe lawyers. However, the Law Society has advised lawyers not to panic, keep calm and follow a straightforward approach. This would reduce the drama and allow for carefully considered, level-headed and rational decision-making.

A primary check lawyers should be vigilantly conducting is their standard identity checks of all clients and especially those reasonably believed to be under sanctions. All documents pertaining to identify the client need to be collected and collated. These then must be carefully analysed and compared against the UK Government’s Sanctions List.

What is the Sanctions List?

Every entity and person with sanctions imposed upon them are recorded on the Office of Financial Sanctions Implementation (OFSI) List setting out all those under relevant sanctions and asset freeze targets in a consolidated format.

If a Lawyer Finds Themselves in this Precarious Situation, What Should They Do Next?

This is a major stage in the process for lawyers because some information may correlate with entries on the Sanctions List. Whilst a name matching the list is a dramatic development and potentially stressful, it is however important for lawyers to stop, breathe and think because it may be premature if the lawyer jumped the gun and assumed that a mere match is correct without any question. The Law Society have alerted the profession to the growing trend of ‘false positives’ that are becoming prevalent.

Lawyers are inquisitive people by nature. Requesting, gathering and analysing further information are all part of the game. Such an exercise will be extremely valuable as it would be seemingly putting meat on the bones for lawyers facing the crucial decision as to eliminating a potential sanctioned client from their enquiries or to corroborate their initial suspicions. If on the evidence before the lawyer is enough to decide that the client’s documents do not correlate with the UK Government’s Sanction List then the lawyer is not required to take any further measures.

What If The Client’s Identification Documents Correlate With The UK Government’s Sanctions List?

If all the information in the identification documents matches the Sanctions List after careful analysis then the lawyer is under a duty to put the file on hold and report such a client to their respective money laundering reporting or compliance officer.

Could There Be Any Further Implications For Lawyers Who Fail To Comply With The Sanction Rules?

It cannot be underestimated how serious a failure to comply with the UK Government sanctions is. Lawyers should be communicating with the UK Government’s Office of Financial Sanctions to notify it of target matches. If lawyers fail to meet their reporting obligations under the sanction rules then this behaviour may amount to the commission of a criminal offence resulting in potential criminal investigations, charges, convictions and penalties.

Are There Any Exemptions From The Sanction Rules?

The UK Government has introduced some exemptions for some transactions. Clients can approach the Office of Financial Sanctions and apply for a licence which would exempt a transaction from the sanction system. According to the Law Society the discretionary licensing system is in place to mitigate against the risk of monies being channelled into criminal activities such as terrorism.

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This Article was Written Using the Following Sources

[1] Law Society - My client is a possible sanctions match. What should I do? My client is a possible sanctions match. What should I do? | The Law Society

[2] Who is subject to financial sanctions in the UK? - Who is subject to financial sanctions in the UK? - GOV.UK (www.gov.uk)

[3] Financial sanctions targets: list of all asst freeze targets

[4] Russia: list of persons named in relation to financial and investment restrictions.

[5] Search the consolidated list of financial sanctions targets

[6] Consolidated List Format Change Notice 28.02.2022

[7] Consolidated List and the list of persons named in relation to financial and investment restrictions: format guide

[8] Law Society – CPS updates guidance on prosecuting ‘failure to disclose’ offences – 03 July 2021 - CPS updates guidance on prosecuting ‘failure to disclose’ offences | The Law Society