SANCTIONS
Managing sanctions risk
David Potts Director of Operations, AIA
R
ussia’s invasion of Ukraine in February 2022 and the subsequent response of countries and international organisations around the world has brought a new focus on financial sanctions and due diligence for accountants operating in the United Kingdom and Republic of Ireland. Sanctions are restrictive measures imposed on individuals or entities to curtail their activities and exert pressure and influence on them. Measures include, but are not limited to, financial sanctions, trade sanctions, restrictions on travel and civil aviation restrictions. Sanctions can be put in place to fulfil a range of purposes, including complying with UN and other international obligations, supporting foreign policy and national security objectives, maintaining international peace and security, and preventing terrorism. However, sanctions are not an innovation and there are no new additional requirements for accountants to take consideration of when onboarding potential clients or servicing an ongoing relationship. The size, scale and interest in sanctions regimes may have grown, but the obligations for regulated accountancy firms remain the same.
Sanctions frameworks
The UK implements a range of sanctions regimes through regulations made under the
22
©Getty images/iStockphoto
David Potts considers the limitations that sanctions place on accountants operating in the UK and Republic of Ireland, how to apply appropriate due diligence and how to mitigate your sanctions risk.
Sanctions and Anti-Money Laundering Act 2018 (also known as the Sanctions Act). The Sanctions Act provides the main legal basis for the UK to impose, update and lift sanctions. Some sanctions measures (such as asset freezes and travel bans) apply only to persons or ships which have been designated or specified by the UK government. This is publicised through the UK sanctions list, which contains designations or specifications made using legislation under the Sanctions Act. The Office of Financial Sanctions Implementation in HM Treasury also maintains a Consolidated List of Asset Freeze Targets, which contains details of designations specifically for financial sanctions, where asset freeze measures apply. The Republic of Ireland does not impose any unilateral sanctions regimes, but implements UN and EU sanctions, published within consolidated sanctions lists. Within the EU, each member state is required to designate competent authorities that are engaged with sanctions issues. In Ireland, the three competent authorities are: the Department of Foreign Affairs; the Department of Enterprise, Trade and ISSUE 123 | AIAWORLDWIDE.COM
