The financial sanctions regime—common misconceptions

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • The financial sanctions regime—common misconceptions
  • Value of transactions
  • Location of targets
  • Financial sanctions and money laundering
  • Targets v PEPs
  • Regulated activities
  • Low risk of money laundering
  • Tipping-off
  • Client due diligence

The financial sanctions regime—common misconceptions

The financial sanctions regime remains a myth to some organisations. You need to understand that it applies to you. This brief Practice Note outlines some of the most common misconceptions of the regime.

Value of transactions

Some organisations believe they are exempt from the financial sanctions regime because they process only low value transactions. This is not correct: there is no minimum financial limit.

Location of targets

Some organisations believe the individuals and entities on the lists (targets) are all based overseas. This is not correct: some targets are based in the UK.

Financial sanctions and money laundering

Another common misconception is that the financial sanctions and anti-money laundering (AML) regimes are largely the same.

The financial sanctions regime operates under TAFA 2010 and it is legally distinct from the AML regime established by the Proceeds of Crime Act 2002 (POCA 2002) and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692.

See further Practice Note: Understanding the financial sanctions regime—a guide for law firms—Financial sanctions regime v the AML regime.

Targets v PEPs

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