In the last article on high risk jurisdictions I briefly mentioned the financial sanctions in place against Iran and North Korea, but did you know that law firms are obliged to check clients against the UK government’s consolidated list of targets, and that this includes individuals in jurisdictions such as Afghanistan, Belarus, Egypt and the Ivory Coast? It doesn’t matter if the client has solely come to you for a litigation matter either – whilst you may have a policy of not conducting AML (anti-money laundering) checks on litigation clients because strictly speaking they’re outside of the regulated sector, they are certainly not outside of the sanctions regime.
You may be using identity verification software which automatically checks at least the latest version of the UK sanctions list. Some go further and also check the US Treasury’s Specially Designated Nationals (SDN) list, but if you’re not using an automated system, or yours doesn’t check these lists, do not despair. You can run the checks manually, especially if you’re fortunate enough to have a compliance person with a photographic memory.
The UK Treasury’s Consolidated List of targets can be found here, and the US Office of Foreign Assets Control (OFAC) list here.
In both cases you can set up daily emails alerts for updates, and then check these against your client database – not nearly as onerous as it sounds if you keep on top of it as a daily practice once you’ve conducted the initial checks, especially if your IT department is able to set up an automatic ‘sweep’ of the records.
Whilst you’re prohibited from receiving payments from or dealing financially with such regimes as Al Qaida and the Taliban for instance, you may be able to act for someone on the sanctions list if you have a licence from the HM Treasury Asset Freezing Unit. This can only be obtained by emailing or writing to the Financial Sanctions Department of the HM Treasury, details here.
If you’d like to read more about sanctions, The Law Society Practice Note on what they mean for law firms can be found here.
About the author
Hayley Crawshaw is an independent Risk and Compliance Consultant for Law Firms. Her contact details can be found at www.celticcompliance.com