‘Red alert’: agencies warn ‘enablers’ on sanctions evasion

Lawyers and other potential ‘enablers’ may be targeted with sanctions if they help designated individuals hide their assets from law enforcement, according to a ‘red alert’ issued this week.

Sanctioned individuals are ‘using a range of techniques in order to evade sanctions’, the National Economic Crime Centre (NECC) and the Office of Financial Sanctions Implementation (OSFI) warned, generally before sanctions are imposed – but ‘it is also happening shortly afterwards’.

Designated persons (DPs) are ‘using associates, including family members and close contacts, via enablers’ to transfer assets to trusted individuals, sell assets at a loss or reduce their ownership stakes below 50%, according to the alert.

The NECC and the OSFI added that ‘key professions’ for facilitating the evasion of sanctions include solicitors and barristers, accountants, investment advisors and wealth managers, as well as estate agents, auction houses and company directors.

The alert states:

“In relation to international bribery and corruption, London-based enablers are almost certain to be in senior positions (director, owner, CEO, senior partner) within their company or business.”

It also sets out key indicators that individuals may be trying to avoid sanctions, including ‘changes to the beneficial ownership of their corporate structures’ shortly before or after sanctions take effect and the ‘use of trust arrangements or complex corporate structures involving offshore companies’.

The alert warns:

“The UK government is targeting corrupt elites and enablers involved with assisting DPs in evading sanctions.

“Enablers may become a target of sanction designations themselves where they can be demonstrated to be acting on behalf of, or at the direction of, a DP, such as in the obfuscation of assets.”

Law firms should not take arms-length transactions ‘at face value’ and should ‘seek guidance from OFSI if they have any doubt’, the NECC and OSFI recommend. Firms should also carry out their own legal assessment even where companies may have provided their own and conduct ‘enhanced due diligence’ if they receive documentation which ‘purports to present a change in ownership by a company linked to a DP’.

OSFI director Giles Thompson said the alert ‘outlines the significant exposure that many sections of industry have to sanctions evasion and, given the nature of the risks identified, is something we will all need to be increasingly vigilant to’.

The warning comes after the House of Commons’ foreign affairs committee last month called on the government to ‘strengthen legislation against enablers’ to stem the tide of ‘dirty money’ flowing into the UK.

Kindly shared by The Law Society Gazette

Main photo courtesy of Pixabay