February 23, 2022

Russian Sanctions

Given the recent events concerning Ukraine/Russia, AFEP would encourage members to review their AML systems and controls.  This may also apply to Canada where emergency powers and freezing of bank accounts for funding the protests has occurred.  Both links are below.

Firms may want take action to filter out additional risks that these events pose, and identifying indirect payments to the territories of Donetsk and Luhansk.  Firms may also get enquires from their Banking Partners about their activities in this regard.



UK regulated firms are obliged to comply with the 2019 Russia (Sanctions) (EU Exit) Regulations and ensure that their financial sanctions systems and controls are robust to identify and prevent exposure to designated persons in compliance with the Russian sanctions regime. You are legally obliged to report to OFSI if you know or suspect that a breach of financial sanctions has occurred, that a person you are dealing with, directly or indirectly, is a designated person, if you hold any frozen assets and if knowledge or suspicion of these came to you while conducting your business. You must contact OFSI at the earliest opportunity, and you should also notify the FCA.

The broadening of the Russia sanctions regime in the UK, and the changes to the criteria under which individuals and entities may be designated as introduced with the amended definition of 'involved person', give the UK the ability to impose financial sanctions to new targets at short notice. As such, your financial sanctions systems and controls should be capable of being adapted in line with the recent changes made to the Russian sanctions regime and should be appropriate to readily respond in the event of changes and/or new potential designations.

Your firm’s financial sanctions exposure should be assessed to ensure you understand the risks posed by your business model. You should be able to identify which business areas are most likely to be exposed to the Russian financial sanctions and ensure that your sanctions control framework applied to these business areas is appropriate at all times. You must also ensure that your due diligence is adequate and the information you hold on customers, including on directors and ultimate beneficial owners (UBOs), is up to date.

You should screen new customers, payments and existing customers against the most recent UK Consolidated List to ensure you identify any sanctions exposure and that you comply with your legal obligations not to conduct any prohibited activities with designated persons. Your screening systems should be effective, up-to date and appropriate for the nature, size and risk of your business.