The amount of money, resources and time a company chooses to invest in sanctions screening is a risk-based decision based on their perception of their sanctions risk. For most firms, the likelihood of finding a sanctioned name in their customer base is probably slim – some have millions of customers and have rigorous on-boarding processes. Many UK-based financial services firms consider their customer base as low risk from a sanctions perspective. If, for example, you have only UK-based customers and you only take on corporate customers with businesses that match your risk appetite, then that is not an unreasonable argument.
The likelihood of finding a sanctioned name on your books might be low, but the impact – if it did happen – can be enormous. Regulator restrictions, huge fines, reputational damage, loss of banking licence…
For this article, we took a look at the individuals and companies on OFAC’s Specially Designated Nationals and Blocked Persons List[i] that had the United Kingdom noted as a possible address. We found 107 unique individuals and companies. By comparison, there were 826 linked to Iran, 814 to Colombia, 81 to Germany and 37 to Spain. Click here for a recent SQA article showing how these numbers have moved over time.
The map below shows how those 107 SDNs are spread across the UK. (There were 22 for which the only reference was ‘UK’.)
The UK SDNs have been listed under a variety of programmes:
The 107 names were made up of 75 companies and 32 individuals. Just to pick out a few examples:
- Kala Limited[ii] was added to the SDN list in 2018 as it has been identified as a subsidiary of the National Iranian Oil Company (NIOC). It is an active UK registered company based in Westminster and is fully up to date in terms of its filings. It has 2 active directors, one based in Middlesex and the other in Kensington in London.
- Reynolds and Wilson Limited was included in Executive Order 13350[iii] – Termination of Emergency Declared in Executive Order 12722 with Respect to Iraq – signed in 2004 by George W Bush. Interestingly, a UK company called Reynolds and Wilson Limited changed its name in 2007 to Roundstone Properties Limited and subsequently to Roundstone Properties UK Limited[iv]. It should be noted that it’s difficult to be certain that this is the same company as the listed company, as the address details differ. There are also no aliases listed for this entry on the OFAC list. This company has 3 directors based in Kent.
- Leonardo Gonzalez Dellan is a Venezuelan Businessman who was listed in 2019 due to being identified as part of a large scale corruption to take advantage of the Government of Venezuela’s currency exchange practices. His location is listed by OFAC has ‘London, United Kingdom.’
- Ashraf Seed Ahmed Al-Cardinal is a Sudanese businessman sanctioned in 2019 under the Global Magnitsky programme for bribery and fraud with senior government officials. Addresses in Brondesbury Park, North London and Isleworth, West London are noted in the listing.
This shows that the sanctions risk of a UK customer base should probably not be considered as negligible. UK firms that don’t prioritise sanctions screening could be opening up themselves to more risk than they realise.
SQA Consulting can help companies ensure that their sanctions screening is effective and consistent with their risk appetite. For more information, please contact us.
[i] The extract was taken on 31 October 2020