Sanctions Policy and Procedure
Last reviewed: June 2023
Last updated: June 2023
Person responsible: Management Committee (Head of Risk and Compliance)
Sanctions are used as an enforcement tool to maintain and restore international peace and security: these sanctions are made by the United Nations Security Council (UNSC) and must be implemented by all UN members.
Sanctions are also used as a foreign policy tool by individual states, or groups of countries working together, when all other diplomatic methods have failed. Such sanctions are sometimes referred to as autonomous sanctions and are made outside the UNSC framework.
The UK, EU and US all implement their own autonomous sanctions to pursue the foreign policy objectives of the UK, EU and US, respectively.
Sanctions are only used in the most serious of circumstances: in international relation terms the only action considered more serious than sanctions is military action. Countries usually try to achieve their aims diplomatically, but if that is not possible, and the issue is important enough, they may introduce sanctions.
A wide range of measures can be enforced under sanctions regimes, from asset-freeze designations to restrictions on the import or export of specified goods, and prohibitions on the provision of financial and other services.
Both UNSC sanctions and autonomous UK sanctions are implemented by the UK under the relevant sanctions Regulations made under the Sanctions and Money Laundering Act 2018 ("SAMLA").
Jersey implements both UNSC sanctions and autonomous UK sanctions by implementing the relevant SAMLA Regulations through the Sanctions and Asset-Freezing (Jersey) Law 2019 ("SAFL"), and the Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021.
The nature of the firm’s clients and its services mean that the likelihood of our activities creating an exposure to sanctions is low, however, the firm must be mindful of sanctions and will meet all its legal and regulatory obligations in this respect.
The Partners are accountable for ensuring the correct framework is in place to ensure the firm’s compliance with Sanctions related legislation and regulations. It is the firm’s policy that we will not act for any person/s subject to financial sanctions implemented by the United Nations, the United Kingdom, the European Union or the United States of America.
The Management Committee, through the Head of Risk and Compliance has responsibility for ensuring that appropriate procedures and processes are put in place to ensure the firm meets or exceeds the obligations where appropriate and to ensure the awareness and understanding of employees meet the expected standards and does not expose the firm to sanctions related risks.
The Head of Risk & Compliance is responsible for monitoring the effectiveness of the sanctions controls and their compliance with the Jersey sanctions regime.
By policy, sanctions will be considered at the point of take-on of all business and whenever there are amendments to sanctions.
At take-on all staff handling the matter: fee earners and administrators, are responsible for assessing the risk of sanctions related to that client. The questions in the risk assessment forms are designed to consider all risks which include sanctions. There is a question in the CDD Form ID1C – Enhanced Due Diligence which specifically requires consideration of sanctions.
The anti-money laundering, countering of financing of terrorism and the countering of proliferation financing regulations to which we are subject requires that we screen all clients, including their beneficial owners, controllers, associated parties and any third parties acting for them. To ensure our obligations are met, an Accuris KYC6 (“C6”) search for both sanctions and PEPs must be undertaken to clear this risk. Staff should be particularly aware of countries on the JFSC D2 schedule and also screen for adverse media for any nationals or residents of countries on this list. The same criteria apply for companies, legal arrangements or other non-personal clients and all beneficial owners and controllers. C6 screens against a wide variety of international sanctions lists including the UN, UK, EU and US, PEP related databases and other adverse media sources.
There are UK resident British nationals who are subject to sanctions so for any client living outside Jersey a C6 search for both sanctions and PEPs must be undertaken to clear this risk. Staff should be particularly aware of countries on the JFSC D2 schedule and also screen for adverse media for any nationals or residents of countries on this list. The same criteria apply for companies, legal arrangements or other non-personal clients and all beneficial owners and controllers. C6 screens against a wide variety of international sanctions lists including the UK, UN and US, PEP related databases and other adverse media sources.
Administrators within all teams are authorised to undertake C6 searches with at least one administrator per team being registered as a C6 user. When undertaking searches, administrators should include variations of the client names and any aliases if known, using a 70% matching threshold. Generally the ID document should be the source to confirm the correct client name. Where dates of birth are used for elimination of a wide range of potential hits, the five years variance option should be used. Where there is no identifiable match, this should be noted on the C6 search results and a copy retained in the CDD folder for future reference. If there is any concern as to whether a client is subject to a Sanction, the matter must be referred to the MLRO (or the MLCO/Practice Director) for clearance to proceed.
It should be remembered that Sanctions are a public matter and hence there is no risk of tipping off in discussing concerns with a client regarding their being the subject of a Sanction order or advising them we are unable to act for them because of their being subject to a Sanction order.
Due to their nature it may be considered that it would be appropriate to represent a Sanctioned client, however, discretion in this area is subject to the approval of the Risk Committee.
If we are approached by a sanctioned person, the MLRO must be informed in order that any appropriate external reporting may be considered – either SAR and/or to the Minister for External Relations.
If there are extraordinary circumstances by which it is considered appropriate that we act for a client subject to Sanctions, Risk Committee approval must be obtained in advance and be signed off by the Managing Partner, the MLRO and the Head of Risk and Compliance. The latter two persons will be responsible for ensuring that all legal and regulatory requirements are met to enable the firm to act without breaching relevant laws and regulations.
If it is agreed appropriate to proceed, the MLRO will approach the Ministry of External Relations to obtain the necessary approvals. No action may be taken until clearance has been obtained and the MLRO confirms we may proceed.
New Sanctions Designations
The Firm subscribes to alerts via the Jersey Gazette and the JFSC and receives notification of changes to Jersey sanctions. The designated Administrator is responsible for screening any designated names in the notices using the Conflicts check function within ALB. The screening must include all aliases detailed within the Notices. Such screening must be undertaken within 24 hours of the sanction being implemented or the following working day when the notification occurs after the close of business at the end of the working week.
To ensure that all relevant parties are screened, all beneficial owners, controllers, associated parties and third parties acting for clients must be recorded in ALB under the appropriate Association Role.
The outcome of the screening must be advised to the MLRO and copied to the Practice Director and Head of Risk & Compliance.
If a possible match is identified, the MLRO will consider the client and matter involved and determine if any action is required on the part of the firm. Due to the low likelihood of a sanctions “hit”, the firm does not maintain a specific procedure for this, but the MLRO (or Practice Director/Head of Risk & Compliance in the absence of the MLRO) should refer to government guidance and JFSC guidance.
In most cases, payments will be either to or from our clients, who we will already have assessed for Sanctions risk. Some payments will be to or from other Jersey law firms, once again presenting no sanction risk.
Payments to or from third parties will be rare, but if they do occur, then fee-earners should consider the risk of sanctions and request a C6 search. Accounts staff should also be aware of payments which may represent Sanction risk and challenge the fee-earners accordingly.
Fee earners must remain vigilant as matters proceed and if any flags or concerns arise, a C6 search, irrespective of nationality or residency, should be undertaken.
Fee earners should also be vigilant and alert to any attempts to circumvent sanctions, such as using proxies or situations where the background of the matter seem unlikely in the normal course of events and complete and submit a Suspicious Activity Report to the MLRO for assessment.
Training & Maintaining Awareness
Due to the low level of risk associated with Sanctions, the firm does not consider it necessary to provide specific training to all staff, however, the MLCO will ensure that awareness of Sanctions is included within other training provided to staff.
The MLRO and MLCO will ensure their knowledge and understanding is kept current through their CPD training programmes.
The MLCO will also monitor the JFSC and Government websites for developments and determine if any changes to policy and procedures are required.
Monitoring and Testing
The MLCO will include checks that the firm is adhering to this policy and procedure through:
- Reconciliation of alerts received from the JFSC to screening notifications provided by the designated Administrator.
- Assessing effective risk assessments through the File Review monitoring programme.
- Periodically testing the effectiveness of C6 screening.
The designated Administrator will keep a record of the notices received and checks performed.
The Head of Risk and Compliance will maintain separate records of reviews and checks performed.