The war in Ukraine and humanitarian crisis that is unfolding has prompted the world to look towards sanctions as a means of responding to the brutality of the invading Russian military. The rate at which such sanctions are being imposed together with the scale of what they are targeting is unprecedented. As condemnation of Russia’s action becomes even stronger the pressure to apply tougher sanctions increases, including imposing sanctions against those often termed as oligarchs who have links to President Putin.
The scale of the Russian sanctions and those yet to be enabled pose a significant logistical challenge for many financial services businesses.
Currently the sanction regime both in Jersey and in the UK are targeted towards.
EVERY board member of a regulated financial services business should familiarise themselves with the guidance issued by the Jersey Financial Services Commission (“JFSC”) explaining the sanction regime in operation in Jersey and offering practical advice on the following matters;
Boards should consider quickly undertaking a gap analysis against the above requirements in relation to Russian sanctions and documenting what action they intend to take to plug any gaps.
Further information on the subject of sanctions can be accessed via https://www.wolfsberg-principles.com/sites/default/files/wb/pdfs/Wolfsberg%20Guidance%20on%20Sanctions%20Screening.pdf
It is important to remember that although Government of Jersey does not compile its own list of designated persons, Jersey’s sanction legislation implements all UK sanctions regimes made under the Sanctions and Anti-Money Laundering Act 2018 (this includes UN sanctions). All UN and UK asset-freeze designations are effective in Jersey.
As Jersey assesses the impact of Russian sanctions the JFSC has requested businesses to assess their risk exposure to Russian sanctions and provide them with details. If faced with a large exposure contact with the JFSC in addition to fulfilling your reporting obligations to the Minister for External Affairs is key.
When conducting screening it is essential not to lose sight of the fact that financial sanctions also apply to legal entities that are owned or controlled, directly or indirectly, by a designated person. Those entities may not be designated in their own right, so their name may not appear on the relevant sanctions list. However, those entities are similarly the subject of the financial sanctions.
There are some important key steps that each board should consider undertaking.
In the immediate term, nominate an individual within the business to monitor the sanctions being imposed and ensure that such information is screened against your client base. Free up this individuals time from their other duties. The volume of sanctions being introduced is unprecedented and will require the individual to remain focused on the task for weeks possibly months ahead.
If faced with a client subject to sanctions, ensure that you fulfil your reporting obligations promptly and comprehensively and freeze assets pending engagement with the authorities.
Authors – Barry Faudemer and Simon Thomas