Britain has sanctioned five Russian banks as part of their diplomatic solution to dismantle further Russian aggression. The five banks are: Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank. These sanctions freeze the assets of the parties involved, restricting access to British Pounds held by these institutions1.
The first individual sanctions have been implemented, with action taken against Putin’s allies Gennady Timchenko, Boris Rotenberg and Igor Rotenberg as part of Britain’s economic effort. All three high net-worth individuals have had their UK-held assets frozen and are restricted from travelling to the UK. This follows the US banning Americans from doing business in the rebel-occupied areas of Donetsk and Lugansk in Ukraine. The White House has threatened further sanctions should Russia invade further2.
The EU has published targeted sanctions – including against all Russian diplomats involved in the decision to invade Ukraine, and banks that are financing Russia’s military. Perhaps the strictest of sanctions, they have also revoked Russian state access to EU capital markets and services and issued targeted sanctions toward trade from Donetsk and Lugansk with the EU3. The EU has also threatened Russia with more severe financial sanctions if the path towards war continues.
A regulatory emergency
Financial Institutions (FIs) must act upon this first tranche of UK sanctions by first checking their customer accounts to see if the sanctioned individuals or entities hold assets with the bank. These accounts must be frozen with immediate effect, FIs must refrain from dealing with the funds or assets, and report any findings to the Office of Financial Sanctions Implementation4. Payment filters must also be updated to reflect the updates to the sanctions lists and sufficient resources available to handle any spike in alerts.
Where appropriate, FIs should also ensure that updates to EU and US sanctions lists are reflected in their filters and relevant action taken for any accounts identified. This includes a full remediation of existing customers as well as an update to onboarding procedures. Whilst handling the updates to sanctions filters and the alerts generated may not be such a big challenge with the first new updates to global sanctions lists, it could become more challenging as further sanctions are implemented.
FIs must use the time that follows wisely; with the whole world anticipating further Russian military advancement, despite promises of further sanctions, it is imperative to be prepared for further action. Upcoming sanctions may be revealed at a moment’s notice, so FIs must be positioned to implement immediate action on clients with Russian economic connections.
EFI can help
The possibility of severe sanctions against Russian entities and individuals creates challenges for FIs and the number of variable factors means thorough planning and anticipation of issues is key to successful compliance. Changes to sanctions lists will generate many false positive hits and EFI can quickly mobilise highly trained teams to process alerts and alleviate spikes in compliance activity.
You will need to update all current sanctions filters to reflect the new lists, as well as manage all alerts generated. Are you sufficiently equipped to handle these changes? Act quickly – do not risk falling behind in times of operational urgency.
We can merge our teams with your processes efficiently and effectively to optimise your handling of this changing landscape, making sure you can handle the volumes of new alerts. We recognise the importance of knowing how regulators work from the inside, and as such we can best prepare you for what is to come. Don’t get caught on the back foot: we are here to assist with your financial crime prevention response.
This blog was also featured on Retail Banker International