The post New Russian Sanctions Framework for the UK first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The Russia (Sanctions) (EU Exit) (Amendment) (No. 14) Regulations 2022 (the “Amending Regulations”) came into force on 21 July, and amended the UK’s principal Russia sanctions legislation, the Russia (Sanctions) (EU Exit) Regulations 2019 (the “UK Regulations”).
The new/Amending Regulations add a number of new prohibitions to the UK’s current sanctions regime, including in the following areas:
The new Schedule 3E to the Amending Regulations introduce restrictions in respect of a number of goods (Schedule 3 goods). The list of goods is quite wide in scope, and includes manufacturing plants, chemicals, machinery and components which may be used in multiple industries and sectors.
The Explanatory Memorandum to Schedule 3E states: “these goods have been identified as items of significant importance to the Russian economy and goods for which Russia particularly depends on the UK and G7 partners. By prohibiting Russian access to certain critical intermediate and vulnerable goods that power its economy, in particular the manufacturing sector, the UK will further isolate Russia’s economy and key industries that directly or indirectly support the war in Ukraine. The list of goods is wide-ranging and includes chemicals, materials, machinery goods and electrical appliances”.
The Amending Regulations state, that from 31 December 2022, it will be prohibited to:
The Amending Regulations also contain related restrictions on technical assistance, financial services and brokering services. The full list of prohibitions is contained in Schedule 3F of the Regulations.
The new sanctions measures prohibit the import of gold which originates from Russia (and if exported from Russia on or after 21 July 2022), the acquisition of gold which originated in, or is located in, Russia with the intention of the gold entering the UK, and the supply or delivery of gold from a place in Russia or from a third country to the UK. The items subject to gold restrictions are listed in Schedule 3G.
Restrictions in relation to technical assistance, financial services and brokering services are also introduced.
In a similar way to the oil and gold restriction, the Amending Regulations prohibit the import of coal and coal products consigned from or originating in Russia, along with the acquisition, supply, and delivery of these products to the UK. The Amending Regulations also contain related restrictions on technical assistance, financial services and brokering services.
The list of relevant coal products is set out in Schedule 3H.
The Amending Regulations also issue a prohibition on the provision of these services to a person connected with Russia:
(For these purposes a person connected with Russia is
(a) an individual who is, or an association or combination of individuals who are, ordinarily resident in Russia,
(b) an individual who is, or an association or combination of individuals who are, located in Russia,
(c) a person, other than an individual, which is incorporated or constituted under the law of Russia, or
(d) a person, other than an individual, which is domiciled in Russia).
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.
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]]>The post Is The OFSI Stepping up? first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>As of the 15th June 2022, the Act removed the “appropriateness” test (OFSI being satisfied on the balance of probabilities) that a person has breached a sanctions order or had reasonable cause to suspect that their activity breached the order, before issuing a fine.
Whilst OFSI will still bear the burden of proof to establish whether there was a breach of financial sanctions prohibitions or not, it can now impose a civil monetary penalty regardless of whether or not the offending party knew it had breached or if it was reasonable for them to suspect that they had breached.
In addition, under the new reform, OFSI is able to publicly name companies that have breached sanctions, even if they have not received a fine.
The ability to impose monetary penalties on a strict civil liability basis, does not look like it will be left idle by OFSI officials. Just recently, on the 29th June 2022, OFSI fined a company, Tracerco Limited, £15,000 for making funds available to a designated person under the Syria regime, thus breaching the sanctions regime. The company however did make a voluntary disclosure and was awarded a reduction of 50% on the total amount of the fine.
In short, Tracerco Limited booked 2 flights, for one of their employees, with the Syrian Arab Airlines. OFSI fined Tracerco because the airline is a public company controlled by the Syrian government, which was included in the sanctions regime.
In the world of sanctions breaches, a £15,000 fine could be classed as a drop in the ocean when compared to the $billion settlements and fines agreed with the likes of the US authorities and booking two flights is certainly not the worst example of a breach ever seen. However, the fine demonstrates the potential consequences of a breach measured against the nature of the activity that led to the breach, no matter how trivial that activity may be, or how trivial it may be perceived to be.
But what this fine really does, is display the decisiveness and commitment from OFSI in how they intend to take a hard line against those who would breach a sanctions order, irrespective of the nature and value of the breach. This sets a clear tone with regards to how OFSI views those who provide finances to sanctioned entities.
OFSI seem to appreciate the additions that have been made to their enforcement toolkit and do not seem afraid to put them to use.
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.
The post Is The OFSI Stepping up? first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The post Corruption Crackdown: Amending the Economic Crime Bill first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>Spurred on in part by these illicit activities, the Foreign Commonwealth & Development Office announced on 4th March 2022 that a series of amendments to the Economic Crime (Transparency and Enforcement) Bill (‘the Bill’) were being presented to parliament. The Bill proposes:
The Bill was expected to be expedited through the stages of the House of Commons and through to the House of Lords by Monday 7th March, and coincides with the Financial Action Taskforce (FATF)’s recently announced intention to issue guidance for the real estate sector, having identified it as a popular choice of investment for criminals.
A draft Economic Crime Bill has been discussed for several years, with the then-Prime Minister David Cameron proposing establishing a register of overseas entities owning UK property in 2016. However, the Bill has seen renewed enthusiasm following Russia’s invasion of Ukraine.
“We will ramp up the pressure on those criminal elites trying to launder money on UK soil and close the net on corruption. They will have nowhere to hide.” – Prime Minister Boris Johnson
Below we cover each of these areas in a little more detail.
Under the current rules, anyone can set up a company in the UK for just £12 without proof of identity or address. However, the Bill would create a new Companies House public register of foreign owners of UK property. This will require any overseas entity wishing to purchase UK property to identify and register their beneficial owners (in line with the threshold for becoming a registerable beneficial owner under the existing people with significant control (PSC) regime). This brings the requirements in line with the register for UK companies, which have been required to provide such information since 2016.
The register will need to be updated annually. Failure to register or submission of false information will lead to penalties, including preventing the entity from being able to buy and sell UK property in the future, daily fines, and prison sentences of up to five years. Fines were originally levied at £500 per day, but Steve Goodrich from Transparency International UK told the Guardian that this was “small change for those with deep pockets”. Subsequently, the government has increased criminal penalties to £2,500 per day.
The new register will apply retrospectively to property bought on or after 1 January 1999 in England and Wales and 8 December 2014 in Scotland. In the first draft of the Bill, overseas entities would have had an 18-month transactional period from the Act coming into force to dispose of their property or register. The government has since shortened this deadline to 6 months to help crack down on money laundering through UK property whilst giving those with legitimate reasons for holding property in overseas entities appropriate time to comply with the new requirements.
“The new register will shine a light on who owns what in the UK so we can flush out the oligarchs, criminals and kleptocrats who think they can use UK property to hide their illicitly obtained wealth.” – Busines Secretary Kwasi Kwarteng
Unexplained Wealth Orders (UWO) are a court order that requires the respondent to provide details of their interest in the specified asset and how they obtained it. They were introduced in 2018 to help law enforcement authorities tackle money laundering by giving them the authority to seize and dispose of unlawfully obtained property in certain circumstances. Failure to comply with a UWO could suggest the asset was obtained through unlawful conduct, thus making it easier for authorities to seize. However, UWOs have been criticised because they can be costly for authorities to implement, as in a recently defeated UWO case which cost the National Crime Agency £1.5 million. Moreover, a report by the Organised Crime and Corruption Reporting Project stated that UWOs have a “limited purpose”, illustrating a lack of confidence in them.
The Bill aims to revitalise UWOs by making three main changes:
The UK has been leading the way with its tough package of sanctions against Putin’s regime, and the new reforms will intensify sanctions enforcement. The Office for Financial Sanctions Implementation (OFSI) is the UK’s sanctions enforcer and can only impose monetary penalties on firms that it knew or had ‘reasonable cause to suspect’ had breached sanctions.
The Bill removes the current “appropriateness” test within the Sanctions and Money Laundering Act 2018 which dictates that ministers cannot designate an individual or entity as sanctioned unless they consider that the designation is appropriate in relation to the relevant sanction regime. Removal of this test would mean that individuals or entities may become designated as sanctioned based on a minister having reasonable grounds to suspect that they are or have been involved in a particular activity specified in the relevant sanction regime (or are owned, controlled, or associated with such a person). Moreover, under the new reform, OFSI will be able to publicly name companies that have breached sanctions, even if they have not received a fine.
These measures are intended to support the recent wave of sanctions against Russian nationals and banks as a result of the ongoing conflict in Ukraine.
The introduction of the Bill will undoubtedly improve corporate transparency and strengthen money laundering law enforcement powers by developing a register of overseas entities and reforming the UWO and Sanctions regime. Whilst the Bill has been fast-tracked due to Russia’s invasion of Ukraine, it is important to remember that it is not only specific to Russia, and these measures will reform the UK’s entire economic crime landscape.
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.
The post Corruption Crackdown: Amending the Economic Crime Bill first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The post Sanctions and Anti-Money Laundering Act 2018 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The Sanctions and Anti-Money Laundering Act 2018 received Royal Assent on 23 May 2018, creating a new sanctions regime for the UK after Brexit, needed to keep UK Anti-Money Laundering (“AML”) and Counter-Terrorist Financing (“CTF”) measures up to date.
The European Union (Withdrawal) Bill currently going through Parliament will freeze current sanctions regimes in effect on the date of the UK’s withdrawal from the EU. These regimes are largely dealt with through the European Communities Act 1972, which will be repealed.
The Sanctions and Anti-Money Laundering Act 2018 will:
It also introduces the requirement for annual reports to Parliament on progress towards a register of beneficial owners of overseas entities, with the intention of having such a register fully in place within by 2021.
Most of Part 1 of the Terrorist Asset-Freezing etc. Act 2010, which deals with terrorist asset-freezing, will be repealed by this Bill.
The post Sanctions and Anti-Money Laundering Act 2018 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
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