Sanctions against a country, jurisdiction, regime, organisation or individual are used to encourage a change in behaviour or to prevent the financing of terrorism.
The Treasury has established within it the Office of Financial Sanctions Implementation (OFSI) which helps to ensure that financial sanctions are understood, implemented and enforced in the United Kingdom.
In general terms, the law requires firms not to make funds or economic resources available to those on the consolidated list of financial sanctions targets in the UK. OFSI’s consolidated list of individuals and entities that are subject to UK financial sanctions includes those designated by the UN and the EU, in addition to those designated under UK legislation – hence its name.
The financial sanctions regimes in force in the UK include country-based regimes, as well as those directed at terrorist organisations. All funds belonging to, owned, or controlled by designated persons on the sanctions list must be frozen. No payments or transfer may be made from a frozen account, including to another frozen account expect under authority of a licence granted by OFSI.
You can subscribe to receive updates when sanctions are updated.
Further guidance on financial sanctions and monetary penalties for breaches in financial sanctions is available in OFSI’s website, along with a form for reporting suspected breaches of financial sanctions.
The IFA strongly recommends sanctions checking as an important part of your client due diligence.
All accountants in practice, as well as others working within the regulated sector in the UK, will be aware of their obligations under the Money Laundering Regulations 2007 including the legal obligation to report their suspicions to the National Crime Agency (NCA).
All businesses, organisations and individuals now have an obligation to report information about sanctions breaches.
You must report to OFSI as soon as practicable if you know or have reasonable cause to suspect that a person:
- is subject to financial sanctions
- has committed an offence under the regulations
OFSI have updated their Guide to Financial Sanctions to help individuals and businesses understand what they should report and when.
There is a standard template that must be used which can be found here.
Members should be aware that making a SAR to the NCA does not remove the requirement to make a report to OFSI.