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Indicators of Sanctions Evasion Risk for Solicitors

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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. 



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