This website uses cookies

This website uses cookies to ensure you get the best experience. By using our website, you agree to our Privacy Policy

UK regulated firms urged to prioritise sanctions checks amidst escalating measures

Announcements
Share:
UK regulated firms urged to prioritise sanctions checks amidst escalating measures

By

Martin Cheek, Managing Director of SmartSearch, highlights the urgency for UK regulated firms to conduct sanctions checks following the imposition of 50 new sanctions on Russian individuals and businesses

With over 16,000 designations against Russia, Cheek emphasises the need for rigorous customer due diligence, citing a concerning drop in regulated firms regularly checking new customers against sanctions lists. As only 25% of firms currently adhere to this practice, Cheek urges the adoption of digital compliance tools to streamline the process and avoid unintentional breaches in an environment where geopolitical tensions impact financial landscapes.

The recent announcement by Foreign Secretary David Cameron imposing 50 new sanctions on Russian individuals and businesses serves as a stark reminder to regulated UK firms. Martin Cheek, the qualified lawyer and Managing Director of SmartSearch, stresses the critical importance of checking customers against sanctions in the current geopolitical climate.

On the two-year anniversary of the invasion of Ukraine, Cheek notes that there are now over 16,000 designations against Russia, surpassing the combined numbers for North Korea, Iran, and Syria. The UK witnessed an additional six individual sanctions against Russian prison officials following the death of opposition leader Alexei Navalny, contributing to the 2,000+ individuals and entities already subject to UK sanctions under the Russian regime.

Cheek expresses concern that despite the escalating sanctions—encompassing over 70% of Russia's financial systems and freezing central bank reserves—only 25% of regulated firms are regularly checking new customers against sanctions lists. This marks a significant decline from the previous year's figure of 73%, according to SmartSearch's annual survey of compliance decision-makers across various sectors.

Highlighting the potential risk of seemingly low-risk clients transforming into high-risk entities overnight due to new sanctions, Cheek advocates for the inclusion of Politically Exposed Persons (PEP) and sanctions checks as part of the customer due diligence process. Often referred to as Know Your Customer (KYC), this approach ensures that individuals and businesses are verified against sanctions and PEP lists, reducing the likelihood of unintentional breaches.

To streamline and enhance this process, Cheek recommends leveraging digital compliance tools, which eliminate the need for time-consuming manual intervention. These tools can promptly incorporate updates or changes to regulations, ensuring real-time compliance by monitoring alterations to sanctions and PEP lists. As geopolitical tensions continue to shape financial landscapes, regulated firms are urged to embrace digital solutions to maintain compliance and mitigate risks effectively.