The firm-wide risk assessment serves the crucial purpose of identifying potential vulnerabilities to breaches of the regime and exploring ways to mitigate these risks. Although the sanctions regime is characterised by strict liability rather than risk-based, implementing this framework aids in the identification of emerging risks and facilitates the adoption of preventative measures.
The Office for Financial Sanctions Implementation (OFSI) has stated that despite the strict liability regime, it intends to adopt a risk-based enforcement approach. In the event of a breach, the implementation of preventive measures is expected to offer significant mitigation.
Having a firm-wide risk assessment is crucial for developing appropriate policies, controls, and procedures. While it may not be a legislative or regulatory requirement, I strongly recommend implementing it to safeguard both yourself and your firm. Additionally, fee earners may need to refer to the firm-wide risk assessment when evaluating risk at the client and matter level.
CQS accredit firms should consider including reference to a firm-wide risk assessment as part of their CQS AML Policy and or their CQS Risk Management Policy.