The UK Financial Conduct Authority (FCA) has recently conducted an evaluation of sanctions systems and controls compliance across more than 90 firms in a variety of sectors, providing a valuable insight into best and poor practices observed. With the increasing size, scale, and complexity of sanctions imposed in the aftermath of Russia’s invasion of Ukraine, the FCA has been devoting more attention to the firms’ sanctions systems and controls.
Given this spotlight on firms’ sanctions systems, it’s clear that the FCA’s findings offer important lessons for legal professionals working on compliance issues in global corporations and law firms. While the emphasis on individual firms varies based on numerous factors, some essential learnings can be extrapolated from the FCA’s study for a broad understanding.
The key outcomes of the FCA’s review shed light on some crucial aspects. First, a deeper understanding of the regulations is essential. Firms that have demonstrated superior compliance possess a robust understanding of the sanctions relevant to their business and the countries they operate in.
Secondly, vigilance plays a crucial part. The FCA noted that firms that have shown strong compliance also maintain ongoing surveillance of changes in sanctions and an understanding of their implications. This requires regular review of practices and amendments where necessary.
Last but not least, effective communication within the firm is of utmost importance. In firms where good compliance was observed, the findings highlighted the value of clear, consistent communication within the organization, especially between management and operational teams.
The FCA’s interest in sanctions systems and controls is expected to increase with the complexity and magnitude of international sanctions. Legal professionals in firms of all sizes should heed these lessons, continually improving their compliance systems in response to evolving global events.
For a comprehensive understanding of the FCA’s findings and more details, visit the full summary provided by Allen & Overy LLP here.