FCA Publishes Review of Sanctions Systems and Controls

The Financial Conduct Authority (FCA) has published a report entitled Sanctions Systems and Controls: Our Firms, Our Findings, setting out observations from its review of sanctions controls across a range of regulated financial services firms.

The report is directed at FCA-regulated firms rather than notarial practices. However, it provides a useful indication of the areas that regulators continue to focus on in relation to sanctions compliance and enforcement.

The FCA identified a number of common weaknesses, including insufficient understanding of ownership and control structures, weaknesses in sanctions screening processes, inadequate escalation procedures and poor documentation of sanctions-related decisions. The report also highlights examples of good practice, including maintaining up-to-date risk assessments, understanding beneficial ownership and control arrangements, and ensuring that sanctions concerns are appropriately investigated and documented.

Whilst notaries are not FCA-regulated firms, the findings provide some useful reminders. In particular, notaries may wish to ensure that they:

• understand who they are acting for, and where relevant who ultimately owns or controls a corporate client;
• remain alert to sanctions risks arising from overseas connections, complex ownership structures or high-risk jurisdictions;
• make appropriate enquiries where a matter raises sanctions concerns; and
• keep a clear record of the checks undertaken and the reasons for decisions reached.

Sanctions issues may arise in a variety of matters, whether or not they fall within the regulated sector for the purposes of the Money Laundering Regulations, and notaries should continue to adopt a risk-based approach to sanctions compliance.

The FCA report is available on the FCA website.