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When should I carry out a sanctions risk assessment?
As a firm, do we need to carry out a sanctions risk assessment?
When you carry out your firm’s anti-money laundering (AML) risk assessment, you should consider how likely it is that your clients may be on the sanctions lists.
However, it may be difficult to conclude that a client needs to be checked simply on the basis of their nationality or country of residence.
UK nationals and UK residents can be on the sanctions lists. There is still a risk even if your firm acts for local clients.
You should also bear in mind that the current regimes list can help you assess risk, but there may be some retainers where it’s not immediately apparent that a person or entity may have some connection to a relevant regime.
You cannot limit your risk assessment to the work regulated under the AML regulations.
Examples of unregulated work that the sanctions regime may affect include:
- payment of personal injuries settlements
- property settlements following a divorce
Factors that may increase the risk of a person being on the sanctions list, and so increase the reason for checking the list, include:
- clients or transactions with links to jurisdictions subject to sanctions, even if the clients are based locally
- clients or transactions involving politically exposed persons from jurisdictions subject to sanctions
- clients or transactions involving complex corporate structures in jurisdictions with high terrorist financing risks
- clients who seem unable to receive funds or send funds from a bank account in their name, for no good reason
When conducting a risk assessment, you should also refer to the Solicitors Regulation Authority’s firm risk assessment guidance.
For further information, see our guidance on the UK sanctions regime.
While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.
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