Lawyers face prosecution threat over financial sanctions compliance

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10 August 2017


Passmore: Risks exist for every single solicitor and law firm

Lawyers are among those who could face prosecution if they fail to report information that could undermine UK financial sanctions, after a change to the law that came into force this week.

“Independent legal professionals”, along with trust or company service providers, accountants and others are now captured by the European Union Financial Sanctions Regulations 2017.

The existing regulations already placed an obligation on businesses to report to the Treasury if they were acting for anyone subject to financial sanctions, but until Tuesday enforcement action could only be taken against financial services firms.

Those caught by the new regulations will commit an offence if they fail to inform HM Treasury if they know or have reasonable cause to suspect that a person has committed an offence under the relevant regulations – such as dealing with funds that must be frozen or activities that circumvent an asset freeze – or is a person who is the subject of an asset freeze.

There are sanctions placed on people and entities from 25 countries around the world – from Afghanistan to Zimbabwe – plus ISIS and al-Qaeda.

Crispin Passmore, the SRA executive director for policy, said: “The new financial sanctions regulations mean legal firms are obliged to comply with the reporting regime. These regulations, and the approaching Financial Action Task Force inspection, are further reminders of the importance the UK and global community places on tackling terrorist financing.

“Risks exist for every single solicitor and law firm whether conveyancing on the high street or handling global transactions, and each should be thinking about their responsibilities for tackling these issues.”

Guidance from the Office of Financial Sanctions Implementation (OFSI) said lawyers are not required to provide information that is subject to legal professional privilege.

But it continued: “OFSI expects legal professionals to approach their disclosure obligations with rigour and carefully consider where legal professional privilege applies, and to what information.

“OFSI will challenge any blanket claims of privilege where we are not satisfied that such careful consideration has been made.”



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