AMLSanctions

The US releases new sanctions on Russia

By April 11, 2018 May 28th, 2019 No Comments

The US releases new sanctions on Russia

On Friday, the US released wide-reaching sanctions on 24 Russian people and entities in response to 2016 election meddling and other “malign activity”. The actions targeted oligarchs, government officials, companies and a Russian bank, all of which have close ties to the President, Vladimir Putin. US Treasury Secretary, Steve Mnuchin also highlighted Russia’s ongoing material and weapon-based support for the Assad regime as another reason for the sanctions. The implications of which became considerably more pronounced over the weekend when the rebel-held area of Douma was attacked using chemical weapons.

As both tensions and sanctions between the US and Russia escalate, businesses need to be careful that they do not inadvertently breach these sanctions, which are more extensive than previously mandated and present a more complex set of risks. Companies and individuals affected control large stakes of the world’s commodity and energy markets, both of which are relatively dollar dependant. For the first time, it has been clearly stipulated that these sanctions will apply to anyone, from any nation who knowingly facilitates transactions on behalf of a sanctioned entity, which could complicate trade. In this increasingly heated situation companies need to make sure that they have robust controls in place to stay out of the crossfire.

The UK’s FCA sets out its new business plan

On Monday, the FCA released its business plan for 2018/19. Tackling financial crime remains one of the key priorities and this year will focus on combating money laundering and fraud. The FCA will aim to continue to design controls so that they are both effective and with minimal unintended consequences. 2018 has already been a busy year for the FCA with the introduction of their new supervisory body OPBAS and the announcement of the Global Regulatory Sandbox.

This shows the regulator is doing a lot to improve the UK’s financial crime framework, but recent news suggests there are still problems to address. Last week, City AM published an article which highlighted again how easy it is to fraudulently register company directors at Companies House which makes it easier to hide the true owner of a business. Another key weakness was highlighted by the Centre for Financial Crime and Security Studies, when they examined intelligence gaps in the UK’s AML regime, showing professional service providers such as lawyers and accountants are at risk. In October this year, the UK will receive the results of its FATF mutual evaluation, which will give an introduction of how well the UK is really doing.

Iceland receives its mutual evaluation from FATF

The last ten years have been difficult for Iceland’s financial sector. In 2008 it was nearly destroyed by the financial crisis and in 2016 the Prime Minister was forced to resign after the Panama Papers exposed that he was storing wealth connected to the crisis offshore. Last week, FATF released Iceland’s mutual evaluation which showed that the last decade has also taken its toll on the country’s AML/CFT framework. The evaluation shows that AML/CFT has long been under resourced and is poorly understood, especially by smaller financial institutions. FATF also harshly criticized the country’s recent risk assessment which it says is based more on theory than on fact.

So what can Iceland do to solve some of these problems? FATF wants Iceland to prioritize making its risk assessment more accurate. Iceland should start here, as a well-thought out and investigative risk assessment can form the bedrock of effective policy. It should also take time to evaluate how its AML/CFT risks are changing as it relaxes post-crisis financial controls, such as those placed on capital flows. Iceland may have been bruised by the last decade but to legitimately prosper the country  should do more to bolster money laundering controls.

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