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Businesses Must Undertake Due Diligence and Screening Following Sanctions Against Russia

Businesses should take action to review their due diligence and sanctions screening procedures to avoid falling foul of extensive new sanctions against Russia, says SmartSearch, the anti-money laundering (AML) software provider.

It will be essential for UK companies to ensure that any individuals and organisations they are dealing with have not become subject to newly-imposed sanctions. Any regulated companies which are found to have contravened the sanctions brought in by the government against Russia could face action, including hefty fines, from regulatory organisations such as Office of Financial Sanctions Implementation (OFSI)

The sanctions include restrictions against individuals, entities, and their subsidiaries, and the introduction of legislation to limit deposits held by Russian nationals in UK bank accounts to £50,000.

Commenting on what this will mean for businesses in the UK, Collette Allen, client services director at SmartSearch said that it will be essential for companies to ensure that any individuals and organisations they are dealing with have not become subject to newly-imposed sanctions.

“These sanctions are extensive and have implications for a wide range of businesses in the UK. Not only are companies banned from making funds or other economic sources available to sanction targets, but they also cannot deal with intermediary financial institutions through which funds could pass.

“In order to avoid breaching sanctions, businesses should be undertaking fresh due diligence and screening to ensure that they are not transacting with individuals or organisations that are subject to the new sanctions.

“Any regulated companies which are found to have contravened the sanctions brought in by the government against Russia could face action, including hefty fines, from regulatory organisations such as OFSI.”

Ms Allen cautioned that the newly introduced sanctions mean that it is not enough for companies to have successfully screened a client at an earlier date.

“Businesses need to ensure they are using electronic verification so they can screen clients to see if they are on sanctions or politically exposed person’s (PEP) lists,” she said.

“In order to do this effectively, they need to ensure that the electronic verification platform they are using includes a monitoring system.

“It is clearly no longer enough for businesses to undertake client onboarding using old-fashioned methods, as it cannot ensure proper screening against sanctions and PEP lists. This approach is also unable to constantly monitor for status changes following the introduction of new sanctions, and without alerts, businesses are unable to immediately cease transactions linked to the flagged entity.”

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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