A few of our clients have expressed a bit of confusion about the ‘UK Sanctions List’ issued by the Foreign, Commonwealth and Development Office and how this differs from the ‘Consolidated List of Financial Sanctions Targets in the UK’ issued by HMT/the Office of Financial Sanctions Implementation.
Whilst the HMT Consolidated List has been in place for some time, the UK Sanctions List is a relatively recent addition. The UK Sanctions List is the comprehensive list of individuals, entities, or ships designated under sanctions regimes set up using the powers of the Sanctions and Anti Money Laundering Act (2018) (“the Sanctions Act”). The Sanctions Act was brought in to ensure that the UK would meet its UN-driven sanctions resolutions following its departure from the EU.
So what does this mean for UK-regulated firms?
- Should firms abandon the HMT/OFSI list and just screen against the new FCDO list?
- Does your firm know what is on each list (and what isn’t?) and what this means for your sanctions risk?
Publicly available information on this is a bit thin on the ground, so we went to the horse’s mouth and asked the FCDO directly. Here is their response:
The UK Sanctions List is the comprehensive list of individuals, entities, or ships designated under sanctions regimes set up using the powers of the Sanctions and Anti Money Laundering Act (2018) (“the Sanctions Act”). The restrictions applied to such persons, entities or ships can include financial, immigration, trade, or transport sanctions. The UK Sanctions List only covers those designated under the Sanctions Act. It does not include those designated under other sources, e.g. the Anti-Terrorism Crime and Security Act 2001 (ATCSA).
The OFSI Consolidated Lists reflect all financial sanctions designations made under UK legislation (both the Sanctions Act and ACTSA). But they do not include those subject to other forms of sanctions, such as immigration, trade, or transport. The lists consist of a consolidated list of financial sanctions for those subject to asset freezes and asset freezing orders, and a separate list for those subject to restrictions on financial markets and services.
The diagram below summarises the FCDO response:
Whilst the designated individuals, entities, and ships might be the same between the two lists, we see some differences in the level of detail included. For example, Oleksandr Viktorovych Yanukovych is listed with 300 aliases on the HMT/OFSI list but with only 100 aliases on the FCDO list. The component given name, middle name, and family name are all listed with similar variations on both lists, but the HMT list goes to the trouble of listing out every possible combination, whereas the FCDO list includes fewer combinations. This might seem trivial but whether or not a screening system will match on every combination would depend on which list is being screened against as well as the configuration of the screening system.
In this article, we are just talking about financial sanctions. The FCDO was clear in their response that decisions on the list(s) that are used for screening purposes are determined by an organisation’s business and customer demographic. Each organisation needs to make its own determination and no generic advice can be provided.
Selecting the right sanctions lists to screen against can be a complicated business and regulators will expect to see that the appropriate thought and effort has gone into the process. Critically, a firm should ensure that its risk appetite is central to the decision. And of course, selecting the right lists is only one part of getting screening right overall.
Please contact us if you would like to discuss how to make sure your sanctions screening would meet regulatory expectations.
