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Sanctions compliance – New SRA Guidance and Firm Wide Risk Assessment
30 January 2024

The SRA have issued guidance last week on their expectations in respect of a sanctions firm wide risk assessment (see: https://www.sra.org.uk/solicitors/guidance/sanctions-regime-firm-wide-risk-assessments/).

This, of course, is in addition to their guidance on sanctions compliance more generally, issued in November 2022 (see: https://www.sra.org.uk/solicitors/guidance/financial-sanctions-regime/).

The new guidance contains a template for undertaking a firm wide risk assessment (see: https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fwww.sra.org.uk%2Fglobalassets%2Fdocuments%2Fsolicitors%2Fsanctions-regime-firm-wide-risk-assessment-template.docx%3Fversion%3D48f884&wdOrigin=BROWSELINK).

If you haven’t carried out a detailed sanctions firm wide risk assessment, we recommend that you do so, using the SRA’s template. If you already have a risk assessment in place, it is advisable to review it against the SRA’s guidance and template. We also recommend that when considering the more general guidance, you put in place a sanctions policy for staff to follow.

One point of significance in the new guidance – there is a clear expectation that firms do a basic check via the OFSI Consolidated List (see: https://sanctionssearchapp.ofsi.hmtreasury.gov.uk/) on all counterparties. The SRA say:

“Relying on the other side in a transaction, or third parties, to have effective systems in place to screen for designated persons is unlikely to provide you with a complete defence if you breach the sanctions regime”. Further, “As a basic measure, we recommend that your firm carries out basic checks on the counterparties in your matters, perhaps alongside your existing conflict checks. These are likely to be more limited than the checks you would carry out on your own clients, due to the more limited information available. To be effective they should include checking the counterparty against the consolidated list, including any ultimate beneficial owners. The level of checks should, however, increase with increased risk”.

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