Financial sanctions are imposed by the Government and may apply to individuals, entities and governments, who may be resident in the UK or abroad.
If you know – or suspect – a breach of financial sanctions, you must report it to the Office of Financial Sanctions Implementation (OFSI). You must also contact OFSI at the earliest opportunity and notify us (the FCA) if:
- a person you are dealing with, directly or indirectly, is a designated person
- you hold any frozen assets
- you discover – or suspect – any breach while conducting your business
Financial sanctions orders prohibit a firm from carrying out transactions with a person or organisation (known as the target). In some cases, the order will prohibit a firm from providing any financial services to the target.
These measures can vary from the comprehensive – prohibiting the transfer of any funds to a sanctioned country and freezing the assets of a government, the corporate entities and residents of the target country – to targeted asset freezes on individuals/entities.
It is a criminal offence not to comply with a financial sanction unless you have an appropriate licence or authorisation from the Office of Financial Sanctions Implementation (OFSI). Their website contains information about current financial sanctions, including the consolidated list of all those subject to asset freezes or sanctions under UK law.
We are not responsible for enforcing these asset freezes or sanctions, but we do expect your systems and controls to mitigate the risk of financial crime to include those that enable you to meet financial sanctions obligations. These may need to be different from those you might have in place for anti-money laundering purposes, because compliance with sanctions means that you also need to consider to whom payments are being made and whether funds are from an entirely legitimate source.
Under Principle 11, we expect authorised firms and firms operating under the temporary permissions regime (TPR) to notify us if they (or their appointed representatives (ARs) and agents) are subject to sanctions.
For firms such as electronic money institutions, payment services firms, cryptoasset businesses and annex I financial institutions, this is regarded as a material change of circumstance and we expect to be informed if you or any connected entities are subject to sanctions.
Dual-regulated firms should also notify the Prudential Regulation Authority (PRA).
The sanctions this covers
Firms should notify us if they, or their ARs and agents, are subject to any sanctions, directly or indirectly. This includes sanctions listed by OFSI and sanctions listed by any other country or jurisdiction.
A firm could be subject to sanctions in several ways including if:
- the firm is directly named on a sanctions list
- the firm is indirectly sanctioned via beneficial ownership/controller/shareholder
- the firm has directors or employees that are named on a sanctions list
How to notify the FCA
Authorised firms should notify us in line with SUP 15 requirements through the usual reporting mechanisms. All firms can notify us via the Contact Centre, submitting a SUP 15 notification or by contacting the relevant Supervisor.
You should provide us with sufficient information, including but not limited to:
- the country that has imposed the sanction(s) including the relevant sanctions regime
- when the measures came into force
- who is affected by the sanction(s)
- your analysis of how the sanction(s) impact your firm’s activities
Please also provide any general or specific licences that have been issued by any authority that are relevant.
We expect firms to notify us without undue delay if they are subject to sanctions.
What to do if you suspect a sanctions breach
For all enquiries about asset freezing or other financial sanctions, or to make a report if you suspect you or a customer of your firm have breached restrictions, contact OFSI by:
email: [email protected]
post: Office of Financial Sanctions Implementation, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ
OFSI also have an email subscription service which you can sign up to and get notified as and when amendments to the financial sanctions regime are made.
If you have information about sanctions evasion or weaknesses in sanction controls, we want you to report it to us. Find out how to report sanctions evasion.
More information about financial sanctions
See our Financial Crime Guide. We have provided some examples of good practice for sanctions systems and controls in Chapter 7 of Part 1 of the guide.
Our thematic review on financial services firms’ approach to UK financial sanctions has found that many small firms were unaware of the financial sanctions regime and those who were aware had misconceptions about it.
It is useful to consider the following facts about financial sanctions:
- Standard anti-money laundering checks do not screen clients against the OFSI’s Consolidated List. Firms should not confuse the Government’s financial sanctions regime with anti-money laundering procedures.
- Financial sanctions apply to all transactions, there is no minimum financial limit.
- Politically Exposed Persons (PEPs) are not necessarily financial sanction targets.
- Most listed individuals and entities are aware that they are on the OFSI’s Consolidated List, which is publicly available. The issue of ‘tipping off’ (as set out in the Proceeds of Crime Act 2002) should therefore not generally arise.
- The Government’s financial sanction regime is not the same as our enforcement action. OFSI is responsible for implementing, administering and enforcing compliance with the financial sanctions regime.
It is good practice to check:
- your existing clients against OFSI’s Consolidated List
- all new customers prior to providing any services or transactions
- any updates to the OFSI’s Consolidated List
- any changes to your client’s details
Remember, even providing financial advice can be a breach. It is good practice to include directors, beneficial owners of corporate customers and any third party payees in your checks.