Skip to main content

Indicators of Sanctions Evasion Risk for Solicitors

By

Red Flags (excuse the pun) are as follows:

Requests to transfer assets between Russian national/dual-national family members

Russian clients communicating changes to the beneficial ownership of their private investment companies (PICs) to non-Russian or dual national family members

Use of trust arrangements, with circumstances of transfers calling into question whether the original owner retains indirect control or otherwise could retain a benefit from the assets transferred

Assets transferred have usually been shares in companies, both UK and overseas, including both minority and controlling stakes in these businesses

Payments from venture capital and private equity vehicles, many located in offshore jurisdictions or the far east

Clients seeking to move all their assets to other financial institutions and closing their accounts in London

Clients domiciled in Russia asking whether they can make transfers to their London account

Attempts to purchase sanctioned Russian securities, which have drastically fallen in price

Increased volume of transaction monitoring alerts resulting from Russian and Ukrainian clients making and receiving larger transfers than is typical

Payments received by UK businesses, often in innovative areas, also with some elements of ownership by Russia nationals

Payments via a fintech with Russian investor nexus

Research on private equity/venture capital vehicles and some people with significant control/officers of UK businesses showing individuals connected to Russian industry previously subject to sectoral sanctions and on occasion politically exposed persons (PEPs)

Russian high net worth individuals who are already on international sanctions lists (but not UK list) and/or who anticipate that they may become a sanctions target, transferring assets to family members and/or close associates such as employees

Change in address and names for Russian entities one day prior to invasion

Change of ultimate beneficial owners from Russian to other nationalities

Circumvention attempts through open account trade-based money laundering (TBML) typology – for example, increase in third-party open account payments

CQS do not specifically require accredited firms are obliged to have a Sanctions Policy. I anticipate that a requirement for a Sanctions Policy will be included in the next CPMS update. 



Comments

Post a Comment

Popular posts from this blog

Argie Bargie over Home Information Packs

By
In response to a question from Conservative MP David Amess on what methodology would be used to use to evaluate the effectiveness of the Home Information Pack programme, Communities and Local Government Minister Ian Austin was involved in heated argument. The wording of the debate ( reported in Hansard ) makes interesting reading, so I thought I would share it with you : Mr. David Amess (Southend, West) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement. Mr. Andrew Mackay (Bracknell) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement. Mr. David Jones (Clwyd, West) (Con): What methodology his Department plans to use to evaluate the effectiveness of the home information pack programme; and if he will make a statement. The Parliamentary Under-Secretary of State for Communities and Local...
Post a Comment
Read more

Paperwork is not a shield: Why your SRA aml audit demands more than just a dusty manual

By
The Solicitors Regulation Authority continues its aggressive crackdown on financial crime with a recent fine issued against Whiteheads Solicitors (Staffordshire) Ltd . This decision serves as a stark reminder that the regulator is looking far beyond simple paperwork during an SRA aml audit . The firm was fined 2,584 GBP plus 600 GBP in costs following an investigation into its compliance with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. While the firm had a firm-wide risk assessment and general policies in place, the SRA identified critical failures at the matter level. Key compliance failures included: Failure to conduct adequate client and matter risk assessments . The SRA found a consistent pattern where the firm failed to sufficiently assess client matter risk levels as required by Regulation 28. Inadequate scrutiny of source of funds . In one specific property transaction, the firm failed to properly investigate the origin of funds provided by ...
Post a Comment
Read more

The High Street Practitioner’s Guide to Surviving the FCA

By
For a sole practitioner or the MLRO in a small high-street firm, "AML compliance" often feels like just another mountain of paperwork standing between you and your actual work. When you are juggling a heavy conveyancing caseload, a sensitive probate matter, and the day-to-day survival of your practice, the last thing you need is a new regulator with a reputation for being data-heavy and "zero-tolerance." But the ground is shifting. As the Financial Conduct Authority (FCA) takes over AML supervision from the SRA, the "high-street way" of doing things—relying on long-standing local reputations and gut instinct—is being replaced by a requirement for hard, documented proof. The end of "I’ve known them for years" In a small town, you often act for the same families for generations. You know their business, their parents, and their reputation. Under the old mindset, that felt like enough. Under the FCA, it isn’t. T...
Post a Comment
Read more