The UK government has issued new wide-ranging sanctions to increase pressure on the Russian economy.
New laws severely limit access to legal services provided to businesses and individuals connected to Russia by British lawyers. This is in addition to previous restrictions on trust services.
Scope of the new sanctions
It appears that the ‘relevant activities’ subject to the new sanctions are intended to cover legal advice, rather than representation.
The government announcement states:
“Wealthy individuals and big businesses linked to the Russian regime will be further restricted from accessing UK legal expertise to carry out deals that could bolster the nation’s war chest – further ratcheting up pressure on President Putin’s government.
A new law introduced today (29 June) by the government will prevent UK lawyers from advising Russian companies in certain business deals – thwarting the nation from benefiting economically from the UK’s world-leading legal expertise. This could include trade deals between global corporations, or international money lending…
The new rules will extend existing regulations on Russia using UK legal professionals to facilitate certain commercial activity which benefits the country – and may block legal professionals from advising international companies on lending decisions to Russian businesses, for example…”
Law firms need to take sanctions seriously
Sanctions compliance is an increasingly central issue for law firms. Getting it wrong can be both a criminal matter and a regulatory issue, since it is policed by the SRA. The regulator’s guidance on the UK sanctions regime can be found here.
Where sanctions breaches are uncovered, the SRA has its full armoury of punishments available to use against firms, individual regulated people, and compliance officers.
Law firms need to take care that they have appropriate systems and controls in place to identify sanctions risks. That includes a full understanding of which legal services are caught by an outright ban, and whether any exemptions apply.
This is in addition to identifying clients who may be on one of the sanctions lists.
Firm-wide risk assessments should be updated in light of the new legislation.
Compliance officers should bear in mind that Russian money is known to be funnelled through higher risk third countries, particularly those favouring privacy and anonymity. Therefore, sanctions may bite even where there is not an immediately obvious Russia connection.
Make yourself familiar with the full official guidance and ensure your team is aware of the updates sanctions requirements.
