Jonathon Bray Limited
Sanctions Compliance
One year on ……
With Jonathon Bray, Rachael Eyre
and Carly Llewellyn

• The sanctions regimes and how they
apply to law firms
• Who you should conduct due
diligence on and how
• Exemptions and general licences
• Updated SRA/Law Society guidance,
and
• Professional duties
• Practical tips
• Q&A
Jonathon Bray Limited

The Basics
•Main legislation: Sanctions and Anti-Money Laundering
Act 2018
•Trade, immigration, transport sanctions
•Financial sanctions
•‘Designated person’ = individuals or entities targeted with
sanctions
•Criminal offences include:
• receiving/making payments
• dealing with economic resources
• knowingly/intentionally circumventing sanctions
• Includes legitimate payments
•Reporting to OFSI
• Obtaining licence
• Report a DP (even if you decide not to act) - subject to LPP
•Licences
• Individual licences (reasonable fees for legal advice is
specifically a ground for a licence)
• General licences (currently in place for legal fees and
expenses)
Jonathon Bray Limited

Implications for Lawyers
•How legal work can get caught
• Not just ‘transactional’ work: any payments to/from DPs
• Not necessarily overseas: UK nationals can be sanctioned
• No low value threshold
• Not just financial sanctions e.g. immigration sanctions
•Must do sanctions checks
•Should do a risk assessment
• On the basis of the RA, put in place policy/procedure and
do training
•International firms (US, Canada, Japan and other jurisdictions)
•Don’t forget trade sanctions
•Sanctions not to be confused with AML…
• …no risk based approach or scope for professional
judgement
• Not just criminal property
Jonathon Bray Limited

Sanctions
currently in
place
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Not just Russia and
Belarus
Usually specific
people,
organisations or
entities

Update on
Russia
Sanctions
Latest OFSI guidance (March 2023) -
https://bit.ly/3TINvcJ
December 2022 amendments include:
• Prohibition on providing trust services to DPs
or anyone connected to Russia
• Several professional service industries
restricted (including audit, IT consulting and
architects)
• Widening financial services and categories of
goods under trade sanctions
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Exceptions and general licences in place
• Exceptions relate mainly to niche areas of financial services and some trade sanctions
- not legal services
• Relevant general licences https://bit.ly/3JONDTg:
• March 2023 (INT/2023/2589788) - permission to wind down trust services
provided to sanctions targets (90 day window)
• October 2022 (INT/2022/2252300) - allows payments to be made for legal
professional fees and expenses associated with the provision of legal services.
• Must be reported to HM Treasury within 7 days
• Due to expire 27 April 2023
• May 2022 (INT/2022/1839676) - UK nationals can purchase travel tickets from
sanctioned Russian companies (inc. Aeroflot)
• Study terms of general licences before using them
Jonathon Bray Limited

AML Vs Sanctions
Jonathon Bray Limited
Sanctions AML
All firms / work types In scope
Including payment of fees Client assets not fees (adequate consideration)
Not legally prescriptive Legislation and LSAG prescriptive
Strict liability Risk based plus mandatory steps
Report to OFSI if know or suspect (a) breach; (b) designated person;
(c) frozen assets – all course of business
SAR if know or suspect proceeds of crime
Cannot outsource liability Regulation 39
‘Control’ (a) 50%; (b) right top appoint or remove majority of the
board; (c) person able to ensure affairs conducted within their
wishes.
Really wide.
Beneficial owner 25%, person with ‘significant control’

Due
Diligence
• Who to screen
• When to do screening
• How often should screening be repeated?
• AML checks will not be enough (checking the
wrong thing)
• E-verification tools probably do list checks (but
how often are they updated? Are they checking
the right lists?)
• Not all PEPs are designated persons
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SRA Guidance
November 2022 - Complying with the UK sanctions regime
https://bit.ly/3TLWauU
Main points to note:
• SRA committed to checking firms’ compliance
• All firms caught - not just those regulated for AML
• Knowledge of sanctions regime is important to avoid
unwittingly committing an offence
• Useful table showing the difference between AML
and sanctions
• Expectations of controls
• Risk factors and red flags
• SRA Warning Notice on SLAPPs https://bit.ly/40GqrxB
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SRA Guidance
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Risk factors – assess Due diligence Strict liability
Report to SRA if reporting
to OFSI
Red Flags for attempted
circumvention
Two common questions
with AML:
• 'Am I sure all parties are who
they say they are?'
• 'Does the client/matter make
sense?'

SRA Guidance – Risk Factors
Jonathon Bray Limited
Jurisdictions
Types of entity /
entity relations
In addition to other
risk (Ultra High Net
Worth)
Transactions for
expensive luxury
goods
Transactions for
funding education
Transport / freight
work
Immigration and
transactional work
Reputation
management
Charities with high
risk jurisdiction
Payment directly
from / to counter
or third party
Entity controlled /
majority owned by
a designated
person in the past
Jurisdictions with
no obvious
relevance to the
client / matter

The Law
Society
Guidance
Updated November 2022 - UK sanctions regime
https://bit.ly/3JNrJQz
Main points to note:
• Take a risk based approach and use the FWRA process
• Indicators of sanctions evasion risk inc.:
• Divestment of Russian owners
• Use of trust structures
• Transfer of ownership to family members
• Payments from venture capital
• Change in address from Russia shortly before invasion
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Professional Duties
SRA Principles:
• Uphold the rule of law and proper administration of justice
• Integrity
• Independence
• Trust in the profession and legal services
Code of Conduct for Individuals:
• 3.3 - maintain competence and professional knowledge
• 7.1 - keep up to date with the law and regulation
Code of Conduct for Firms:
• 2.1 - effective compliance systems and controls
• 2.2 - keep compliance records
• 2.5 - manage risks to the business
Accounts Rules:
• 3.3 - must not provide banking facilities through the client
account
Jonathon Bray Limited

Practical tips
• Check the sanctions list
https://sanctionssearchapp.ofsi.hmtreasury.gov.uk/
• Assess you risk factors
• Utilise your FWRA
• Use your AML regime
• Check your electronic verification system
Jonathon Bray Limited

Jonathon Bray Limited
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Jonathon Bray Limited

Jonathon Bray Limited
Sanctions Compliance
One year on ……
With Jonathon Bray, Rachael Eyre
and Carly Llewellyn