What Are Sanctions?
Sanctions are restrictive measures with various purposes, including fulfilling UN and other international obligations, supporting foreign policy and national security objectives, maintaining international peace and security, and preventing terrorism.
SRA Introduces New Questionnaire for Law Firms on Financial Sanctions Compliance
The Solicitors Regulation Authority (SRA) has issued a new questionnaire requiring law firms to report on their approach to financial sanctions compliance. Firms must outline how they are ensuring adherence to the current financial sanctions regime. The response window is open from 2nd to 31st May 2023.
Who Must Complete the Questionnaire?
All SRA-regulated firms that were not part of the 2022 anti-money laundering information exercise must participate. The SRA will email Compliance Officers for Legal Practice (COLPs) or Authorized Signatories in early May with further instructions. Role holders at multiple firms must complete a separate return for each firm.
Is Providing This Information Mandatory?
Yes, under paragraph 3.3 of the SRA Code of Conduct for Firms, all firms must submit the required information. The SRA may take action against non-compliant firms. A dedicated link will be provided for submitting the information, with email or postal submissions not accepted.
What Questions Will Be Asked?
The questionnaire will focus on how firms are meeting sanctions requirements. Firms should provide the most accurate answers possible if they are unsure about any questions.
Here are some of the questions which will be asked:
- Have you assessed in writing the sanctions risks your firm may be exposed to? For example, which work areas or client groups are most likely to result in a sanctions breach.
- Do you have clients with a connection to any of the high risk countries listed in the questionnaire?
- Do you provide advice to clients in any of the following areas of work?
- Do you identify clients, including ultimate beneficial owners (if the client is not a natural person)?
- Do you verify clients’ identities using independent materials (e.g. passports or other equivalent documentation)?
- Do you carry out source of funds checks on matters?
- How do you check whether a new client is on the UK sanctions list?
- Do you check if an existing client has been added to the UK sanctions list during the life of a matter?
- In the past 24 months, have you carried out any work for a sanctioned individual, organization, or ship (also known as a designated person)?
- Are you currently holding any frozen assets or funds that belong to a designated person?
- In the last 24 months, have you made a report to the Office of Financial Sanctions Implementation?
Why Does the SRA Need This Information?
The UK financial sanctions regime, operated by the Office of Financial Sanctions Implementation (OFSI), is designed to achieve specific foreign policy and national security objectives. Strengthening this regime is a vital part of the government’s response to war in Europe.
All SRA-regulated firms must comply with sanctions legislation and ensure they do not receive fees for work involving a designated person outside of an OFSI license. Non-compliance can result in criminal prosecution or fines.
The SRA requires information on firms’ approaches and potential exposure to financial sanctions risk to assess risk within the sector.
How Will the SRA Use the Information?
The SRA will use the submitted information to evaluate potential financial sanctions risk faced by individual firms and the sector as a whole.
