Last Updated: 25 July 2022
Members will be aware of recent developments in Ukraine and the ongoing imposition of further financial and trade sanctions on Russian Government officials and other named individuals and entities, by countries around the world, including the UK, US and the EU.
These recent measures are directly relevant to both members in business and practice, as well as to those working in the charity and Not for Profit sector.
Whether in practice or in business, Members must comply fully with their legal and professional obligations relating to the Sanctions regimes in their respective jurisdictions; AIA expects that they will be willing to play their part in helping companies across the economy cope with any consequent disruptions.
Following the United Kingdom Prime Minister’s statement to the House of Commons on 22 February 2022, the UK has announced a tranche of sanctions on Russia. The full details of the measures are available on the Foreign, Commonwealth & Development Office website. If you require a licence to permit any activity which would otherwise be prohibited by sanctions regulations, you must contact the relevant department.
We expect firms to have established systems and controls to counter the risk that they might be used to further financial crime, including compliance with financial sanctions obligations.
Where the AIA identifies failings in financial crime systems and controls, we can impose restrictions and/or take enforcement action. Additionally, the Office of Financial Sanctions Implementation (OFSI) has the power to levy civil monetary penalties for breaches of financial sanctions and works with law enforcement for the most egregious cases where criminal prosecution may be considered.
Firms should screen current and new clients against the UK Sanctions List to meet these new sanctions measures and screen against the OFSI list of asset freeze targets for financial sanctions obligations. You are legally obliged to report to OFSI if you know or suspect that a breach of financial sanctions has occurred; if a person you are dealing with, directly or indirectly is a designated person; if you hold any frozen assets; if knowledge or suspicion of these come to you while conducting your business. You must contact OFSI at the earliest opportunity.
Our expectations of firms’ systems and controls in relation to compliance with financial sanctions are set out in AML Guidance for the Accountancy Sector (AMLGAS). Where clients give rise to concerns about sanctions evasion or money laundering you should also consider you obligations to report to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA) under the Proceeds of Crime Act 2002.
For further details on financial sanctions you should contact OFSI or, for trade and export sanctions, you should contact the Department for International Trade’s Economic Control Joint Unit. Applications must be made in advance of any business agreement or transaction taking place.
READ: OFSI Russia sanctions: guidance.DETAILED GUIDANCE FOR MEMBERS WITHIN THE UNITED KINGDOM
In conjunction with OFSI, the JMLIT+ Sanctions Facilitators Cell, law enforcement, private industry and regulators, the National Crime Agency (NCA) have issued a 'Red Alert' on financial sanctions evasion typologies by Russian elites and enablers.
The purpose of the alert is to provide information from law enforcement and the legal and financial services sectors on some of the common techniques designated persons and their UK enablers are suspected to be using to evade financial sanctions.
The Republic of Ireland and European Union have imposed financial sanctions and other economic measures on the Russian Federation in response to its unprovoked and unjustified military aggression against Ukraine, including:
Most recent measures imposed on Belarus in response to its unprovoked and unjustified military aggression against Ukraine:
On 9 March 2022, the EU published a further set of measures. These include:
The measures that came into force on 15 March include:
The measures that came into force on 16 March include:
The measures that come into force on 8 April 2022 include:
Measures introduced 7 June 2022
In light of Russia’s continuing war of aggression against Ukraine and Belarus' support to it, as well as the reported atrocities committed by Russian armed forces in Ukraine, the Council decided today to impose a sixth package of economic and individual sanctions targeting both Russia and Belarus.
The agreed package includes a series of measures intended to effectively thwart Russian abilities to continue the aggression.
The EU decided to prohibit the purchase, import or transfer of crude oil and certain petroleum products from Russia into the EU. The phasing out of Russian oil will take from 6 months for crude oil to 8 months for other refined petroleum products.
A temporary exception is foreseen for imports of crude oil by pipeline into those EU member states that, due to their geographic situation, suffer from a specific dependence on Russian supplies and have no viable alternative options.
Moreover, Bulgaria and Croatia will also benefit from temporary derogations concerning the import of Russian seaborne crude oil and vacuum gas oil respectively.
De-SWIFTing of additional Russian and Belarusian banks
The EU is extending the existing prohibition on the provision of specialised financial messaging services (SWIFT) to three additional Russian credit institutions - Russia's largest bank Sberbank, Credit Bank of Moscow, and Russian Agricultural Bank - and the Belarusian Bank For Development And Reconstruction.
The EU is suspending the broadcasting activities in the EU of three more Russian state-owned outlets: Rossiya RTR/RTR Planeta, Rossiya 24 / Russia 24 and TV Centre International. These structures have been used by the Russian Government as instruments to manipulate information and promote disinformation about the invasion of Ukraine, including propaganda, with the aim to destabilise Russia's neighbouring countries and the EU and its member states. In line with the Charter of Fundamental Rights, these measures will not prevent those media outlets and their staff from carrying out activities in the EU other than broadcasting, e.g. research and interviews.
The EU is expanding the list of persons and entities concerned by export restrictions regarding dual-use goods and technology. Such additions to the list include both Russian and Belarusian entities. Moreover, the EU will expand the list of goods and technology which may contribute to the technological enhancement of Russia’s defence and security sector. This will include 80 chemicals which can be used to produce chemical weapons.
The EU will prohibit the provision of accounting, public relations and consultancy services to Russia.
On 21 July, the European Union published a new set of restrictive measures in relation to Russian actions in Ukraine. Measures Include:
In addition to this package, new restrictive measures have also been introduced against military forces that have been aiding (directly and indirectly) the military actions of Russia in Ukraine. These measures add 6 Syrian individuals and 1 Syrian entity to an asset freeze and travel ban list.
Please find below details of the most recent measures imposed In light of the escalating war and illegal annexations in Ukraine. These measures include:
The Department of Finance ask that all entities familiarise themselves with the measures introduced and how they can comply with the sanctions. The relevant Statutory Instruments are available on the Irish Statute Book.
Further information on restrictive measures can be viewed also at:
The European Union sanctions whistleblower tool is accessible via the Commission’s website. It facilitates the anonymous reporting of possible violations of EU sanctions. It can be used to report past, ongoing or planned sanctions violations, as well as attempts to circumvent EU sanctions. More details about the tool are available here.
Please monitor the websites referenced above closely in the event that further information is available or further restrictive measures are adopted. It is important that all Members in Practice operating within the Republic of Ireland keeps up to date on developments.DETAILED GUIDANCE FOR MEMBERS WITHIN THE REPUBLIC OF IRELAND
The recent imposition of further sanctions on Russia and named individuals and entities has increased the potential risk of money laundering as individuals and business may seek to evade these respective sanctions regimes.
Recent developments in Russia and Ukraine may also potentially impact on the classification of new and existing clients and cause them to fall within the definition of Politically Exposed Persons (“PEP”).
Members in Practice are reminded of their obligation under the UK Money Laundering Regulations 2017 and the Republic of Ireland Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended) respectively, to conduct risk assessments and to perform Enhanced Due Diligence checks where required.
In particular, Members should ensure that they fully understand the source of funds and wealth in relation to their clients identified as high-risk.
Since many of those who are subject to sanctions may also be PEPs, Members are reminded of their obligation to ensure that they have adequate and up to date procedures in place to identify whether a client, or the beneficial owner of a client, is a PEP or a family member or known close associate of a PEP.
Firms should be aware that these sanctions are subject to change and should maintain up to date screening processes.FURTHER SANCTIONS AND AML GUIDANCE