Brexit Sanctions for Accountancy Firms

What you need to know about Post-Brexit Sanctions

As 2021 marks the UK’s official divorce from the EU, new sanctions have been announced that will require full compliance from all agents and accountants with the sanctions regime and licensing exemptions affecting many businesses across different jurisdictions. The UK uses sanctions to fulfil a range of purposes, including supporting foreign policy and national security objectives, as well as maintaining international peace and security, and preventing terrorism.

New year, new legal framework 

Now no longer subject to EU sanctions, the UK has its own sanction regime, the Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act). The Sanctions Act provides the legal basis for the UK to impose, update and lift sanctions. If you undertake activity relating to an individual, sanctioned country or entity, the importance of fully grasping what the change means and ensuring that you are fully prepared for the new reality cannot be underestimated.

Significant changes 

The good news is that the changes are broadly similar in principle to the EU regime, though not identical and there are some important differences. For example, persons designated under the Ukraine (Sovereignty and Territorial Integrity) and those businesses subject to restrictive measures under the current EU Regulations will both move to the new Russia sanctions regime.

Depending on the information you are looking for, from January 1, 2021 you will either need to refer to the UK Sanctions List, which covers all sanctions made under the Sanctions and Anti-Money Laundering Act 2018, or The Office of Financial Sanctions Implementation (OFSI) Consolidated List of Financial Sanctions Targets, which covers all financial sanctions designations.

Although many of the lists will remain the same, it will be critical to carry on sanctions checks as part of client onboarding and on an ongoing basis to ensure that your firm remains compliant with the various sanctions that are relevant to them. In the case of some clients, both lists will need to be checked.

The new sanctions: key points 

  • Sanctions exist – they can have a big impact on you and your business.
  • It is your responsibility to check whether individuals, organisations or countries that you are dealing with are impacted by the UK sanctions.
  • You may need a licence. In certain circumstances, the government may grant a license to permit an activity that would otherwise be prohibited. It is up to the licensing authority to determine whether a licensing application is in line with the purposes. Some licenses require UN notification approval.
  • You must report any suspected or actual breaches of financial sanctions to OFSI. Funds and assets of the individual or organisation in question must be freed immediately and report this to OFSI.