UK Says It's Searching for Unreported Sanctions Breaches by Legal Services Providers
The U.K. Office of Financial Sanctions Implementation released a threat assessment about possible sanctions violations by legal services providers, noting that since February 2022, the legal services sector has accounted for the second-highest number of suspected breach report submissions to OFSI. Legal services accounts for 16% of all submissions, behind first-place financial services with 65% of submissions.
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OFSI said that it's "highly likely that UK trust and company services providers (TCSPs) have not self-disclosed all suspected breaches to OFSI" and that it's "almost certain that most non-compliance by UK legal services providers has occurred due to breaches of OFSI licence conditions."
The agency added that it's "almost certain that complex corporate structures, including trusts," that are linked to sanctioned Russian parties and their family members "have obfuscated the ownership and control of assets which could be frozen under UK financial sanctions." Also, it's "likely" that sanctioned Russian parties have transferred ownership and control of their assets to non-sanctioned parties in potential breach of U.K. sanctions.
OFSI says it "values self-disclosure" and that it "proactively investigates suspected breaches" that aren't self-disclosed using a "wide range of available information." The agency said it has come across transactions that have exceeded the value limits outlined in OFSI sanctions licenses and is aware of transactions made after a license has expired. It also has tracked possible violations related to reporting rules and the wind-down of Russia-related transactions.
The agency outlined a host of red flags that legal services providers should monitor, including close name matches with sanctioned Russian parties or "non-designated individuals with discernible links to Russian" sanctioned parties; a non-sanctioned person or entity making payments to "meet an obligation previously met by" a sanctioned party; and low-profile legal services providers who could be acting on behalf of a sanctioned party.