Financial Sanctions | FCA Handbook

What should firms do?

A firm should have effective, up-to-date screening systems appropriate to the nature, size and risk of its business. According to the Financial Crime Guide, screening itself is not a legal requirement, however, screening new customers and payments against the Consolidated List, and screening existing customers when new names are added to the list, helps to ensure that firms will not breach the sanctions regime. Where HMT has granted a licence, some firms may knowingly continue to retain customers who are listed under UK sanctions.

• Management should have sufficient awareness of the firm’s obligations with respect to financial sanctions checking and responsibility for oversight given to an individual of with suitable authority.
• The firm should establish appropriate escalation procedures for both potential and actual target matches. The potential risks posed by clients, products, transactions etc. should form part of the wider risk assessment.
• Consider what mix of automated and manual checks will be appropriate for the firm to perform.

Firms should check:

• Existing clients against the HMT’s list, this can be found at www.hmtreasury.gov.uk/financialsanctions
• All new customers prior to providing any services or transactions;
• Updates to the list on a regular basis; and
• Any changes to your client’s details.

It is also good practice to include directors, beneficial owners of corporate customers and any third party payees in your checks.

What should firms do if one of their clients is on the HMT list?

Often, when a firm finds a customer name matches a name on the Consolidated List, it proves to be a ‘false positive’ (whereby the customer has a similar name but it is not the same person). Firms should therefore have procedures in place to identify whether a match is real.