FCA finds broad divergence in firms' sanctions controls

The ramping-up of conflict in Ukraine last year has prompted countries around the world to introduce or expand sanctions regimes against Russia. But a review by the UK financial regulator has found wide-ranging weaknesses in the compliance of many institutions, with serious consequences for some firms, reports Denis O'Connor.

Denis O'Connoris a fellow of both the Institute of Chartered Accountants in England & Wales and the Chartered Institute of Securities and Investment. He was a member of the British Bankers' Association Money Laundering Committee from 2003-10 and a member of the Joint Money Laundering Steering Group's board and editorial panel between 2010 and 2016. He has been a frequent speaker at industry conferences on financial crime issues, both in the United Kingdom and abroad.

Ever since the Russian invasion of Ukraine in February 2022 and the subsequent imposition of comprehensive and complex sanctions by the UK Government and its international counterparts, the Financial Conduct Authority has increased its focus on firms' sanctions systems and controls. To assess the degree to which firms were meeting their obligations, the regulator reviewed the systems and controls of 90 firms, covering retail banking, wholesale banking, wealth management, insurance, electronic money and payment firms. Notably, the regulator used their own sanctions screening tool to assess whether firms were identifying sanctioned individuals and entities using test data.