SRA to start spot checks on firms’ Russia sanctions compliance


Ukraine: Sanctions warning
Photo: Ehimetalor Akhere Unuabona

The Solicitors Regulation Authority (SRA) is to conduct spot checks on law firms to ensure they are complying with the sanctions imposed on Russian individuals, companies and ships.

It has also warned firms to ensure their duties to clients do not override their public interest obligations given concerns over so-called SLAPP suits – strategic litigation against public participation.

Updating its position on Russian sanctions, the regulator said firms must have policies in place to ensure compliance with sanctions legislation and carrying out regular checks of sanctions lists, given how quickly they were being updated at the moment.

“If your firm is using an electronic verification system for customer due diligence and sanctions checks, check they are refreshing sanctions lists with sufficient frequency,” it added.

The SRA said it was now “commencing a process of spot checks on firms to assess compliance with the financial sanctions regime”.

We understand that it will target firms on a risk basis drawn from a combination of its own data and other intelligence and require them to provide lists of their clients, which it will then check against sanctions lists.

SLAPP suits describe the misuse of the legal system, including pre-proceedings activity, to discourage public criticism and reporting or action to address issues such as such as corruption and money laundering.

The SRA said: “The rule of law and our legal system provides that there is a right to legal advice and representation for all. However, you must ensure that proceedings are pursued properly and that your duties to your client don’t override your public interest obligations and duties to the court.

“That means for example you must not bring cases that are not properly arguable; bring excessive or oppressive proceedings; or mislead or take advantage of others.”

The regulator last week published guidance on conduct in disputes, covering issues such as pursuing litigation for improper purposes and conducting “excessive or aggressive” litigation.

Some firms have asked the SRA whether they should stop representing clients because they were Russian or have links to the Russian regime, even though they were not named on the sanctions list.

“We recognise that many firms will wish to review their client lists and consider who they feel comfortable acting for,” it said.

“When it comes to terminating an existing retainer, you will need to consider your position in contract law: case law dictates that you should not do so ‘without good reason’.

“Each case will be different. For example, it could be a good reason for withdrawing services if the firm felt there were risks in continuing to do so, for example, around money laundering.”




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