Financial firms have made progress in preventing sanctions
breaches – with £37 billion worth of assets frozen in the UK as
of last year - but gaps remain, warns the Financial Conduct
Authority (FCA).
The Office of Financial Sanctions Implementation (OFSI) and the
Office of Trade Sanctions Implementation (OTSI) implement
financial and trade sanctions. The FCA supports them through its
role supervising firms within the financial services sector. This
includes checking they have adequate sanctions systems and
controls.
Since February 2022, the FCA has proactively assessed the
sanctions systems and controls of over 150 firms across a range
of financial services sectors. In its latest review, the FCA
found:
- Repeated examples of firms exhibiting strong controls and
identifying potential sanctions breaches before they occurred.
- The most common root causes of reported sanctions breaches
were weaknesses in due diligence, alert management, transaction
and name screening, as well as the management of frozen assets
and compliance with licences.
- Firms face challenges in detecting and preventing specific
breaches of trade sanctions.
- The range of controls used for trade sanctions compliance -
related to bans on the export and import of goods, technologies
and services - was greater than those used for financial
sanctions.
The regulator is sharing good and poor practice it identified to
help all firms further strengthen their sanctions controls.
Reports from firms continue to relate primarily to the Russian
sanctions regime, but the FCA also saw reports relating to Libya
and, increasingly, Iran and North Korea.
Today (28 May) the FCA has signed a Memorandum of
Understanding (MoU) with OTSI. It sets out the
arrangements for cooperation and the sharing of intelligence
between the two organisations.
There is already an MoU between the FCA and
OFSI.
Notes to editors
-
Sanctions systems and controls
in our firms: our findings.
- The FCA previously looked at firms' sanctions systems and
controls in 2023.
- The FCA enables a fair and thriving financial services market
for the good of consumers and the economy. Find out
more about the FCA.
