The rules and principles which apply 

To help individuals and firms meet their responsibilities, the Asset Freezing Unit of HM Treasury maintains a consolidated list of people, organisations and regimes targeted by financial sanctions through UK, EU and UN legislation.  The Treasury does not currently provide a web-based search facility for checking the consolidated list; however it does provide the list in various formats for firms to use when making checks; to read more about this click on the following link: Consolidated list format guide and to access the list itself click on the following link: Consolidated list.

HM Treasury regularly updates the consolidated list and therefore provides a facility for people to be notified when the list is updated; to register for these updates click on the following link: Financial Sanctions update subscription facility.

Alternatively firms can use third party screening providers to help meet their responsibilities. To assist with choosing a screening provider, we have produced a factsheet setting out important considerations for firms before making an appointment, as well as contact details for a selection of potential providers (see FS04).

Important – Firms transacting business with people or businesses based outside the UK should also consider what action may be required for them to comply with financial sanctions regimes applied in other parts of the World e.g. the United States, EU etc.

How this may affect firms  

The UK Sanctions List contains the names of all designated persons and specified ships, and the sanctions that have been applied to them.

The UK Sanctions List is searchable and downloadable in various file types. The entry for an individual can include their:

• aliases
• date of birth
• place of birth
• nationality
• passport details
• national ID details
• addresses
• position (such as employment or an official role)

Firms are permitted to take a risk based approach to sanctions checking, however this is less about which clients a firm should check and more about how often firms should check every client.

As sanctions check form an important part of a firms anti money-laundering and anti-terrorism controls our view is that sanctions checks should be completed for all clients (including directors and beneficial owners >25%) at onboarding stage – before the commencement of cover. Thereafter it is for firms to decide how often checks are carried out, bearing in mind that the sanction list is updated frequently. Many firms use automated systems which can carry out real-time checks on a ongoing basis, however it is also suitable to carry out checks at key stages throughout the customer lifecycle, for example when providing refunds, renewing a policy or before processing any claim settlement.

 Dealing with positive matches against the consolidated list

Where a name matches that on the consolidated list it will be classed as either a target match or a name match. A target match occurs when the firm is confident that they have identified a relationship with a target of financial sanctions named on the list, whereas a name match happens when a name matches that of a target on the list, but there is uncertainty about whether or not the firms relationship is with the intended sanctions target.

A firm is guilty of an offence if at any time since relevant financial sanctions became effective, it knew or suspected that a customer, person or organisation with whom the firm has had business dealings:

• was a target of financial sanctions, or
• was a person acting on behalf of a financial sanctions target, or
• had committed an offence under financial sanctions legislation

and it does not disclose to the Treasury the information on which the knowledge or suspicion is based as soon as is reasonably practicable after that information comes to its attention.

Dealing with name matches

Firms are much more likely to encounter a name match than to find a target match, due to some common names being shared with other people and due to name variations and misspellings within a firms records. On discovering a name match, firms should initially review all information they hold about the customer against that contained in the consolidated list, to see whether or not this helps to confirm or reject the identified match.

If, after assessing all available information, it is still unclear whether or not a customer is the same person or entity as that included on the sanctions list, firms should seek guidance from the Office of Financial Sanctions Implementation either by post or by e-mail (contact details provided below). Firms will be asked to provide any relevant information held about the customer, such as their full name, address, date and place of birth, occupation, family details, etc.

Dealing with target matches

If a relationship with a target of financial sanctions is identified, any account must be frozen and all relevant information provided immediately to Office of Financial Sanctions Implementation either by post or by e-mail (see contact details further below). A critical aspect of financial sanctions regimes is that a targets assets are frozen immediately (i.e. preventing them from being removed from the UKs jurisdiction).

The Treasury, or anyone authorised by them, may request additional information or documents to help them enforce financial sanctions; anyone failing to comply, supplying false information, destroying or altering documents is guilty of an offence.

On discovering a target match, firms can contact the helpline for guidance on any further action they may need to take, such as applying to the Treasury for a licence to deal with the named target.

Penalties for not complying

In general terms, any firm providing insurance services to persons listed under the relevant financial sanctions legislation is guilty of an offence, unless it has received a licence from the Treasury permitting it to do so. Generally, any person guilty of an offence under the relevant legislation may be fined and/or imprisoned for up to seven years (depending on the particular legislation involved).

Where any firm is guilty of an offence, and that offence is proved to have been committed with the knowledge of anyone within the firm, its ARs/IARs or outsourced service providers, then that individual (and the firm itself) is considered to be guilty and will be treated as such.

Further information

Any queries, notifications or licence requests regarding financial sanctions should be directed to the Office of Financial Sanctions Implementation. The e-mail address for providing suspicious reports to the OFSI is ofsi@hmtreasury.gov.uk, details of what to include in a report can be accessed here.

The OFSI have released a series of video guidance ‘Financial Sanctions: The Basics’ which can be accessed here.