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Volume XIII, Number 39

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UK Law Enforcement Identify Common Sanctions Evasion Tactics and Use of UK-Based ‘Enablers’

On 12 July 2022, the UK’s Office of Financial Sanctions Implementation (OFSI) and various other UK government agencies issued a red alert, in conjunction with the Joint Money Laundering Intelligence Taskforce (JMLIT), setting out various common evasion tactics and techniques the agencies suspect certain persons designated under the UK’s financial sanctions regime use with the help of “UK enablers.”

The red alert defines “enablers” as “individuals or businesses facilitating sanctions evasion and associated money laundering” and identifies a number of enabling “key professions”, including lawyers, private family offices, accountants and wealth managers, estate agents, auction houses, and company directors.

The red alert includes the following suspected evasion tactics:

  • changes to beneficial ownership or corporate structures to non-Russian or dual national family members or associates, prior to or shortly after sanctions have been imposed

  • changes to ownership of a corporate holding to reduce ownership stakes to below the 50% threshold, shortly before or after sanctions designations

  • use of trust arrangements or complex corporate structures involving offshore companies

  • clients connected with a designated person seeking to move all assets to other financial institutions and closing their UK accounts

  • change of address and names for Russian entities in the lead-up to the invasion of Ukraine

  • trust and company service providers offering nominees and trustee services to a designated person, family members, or business associates

  • pooled accounts transferring funds to entities associated with a designated person

  • use of banks and financial organizations owned by close associates of a designated person

  • suspicious consulting invoices at exorbitant or clearly non-market rates

  • failures to undertake appropriate due diligence in relation to, for example source of funds or wealth checks

  • holding companies based in offshore jurisdictions or those linked to assets in the former Soviet Union

  • identification of transactions by holding companies linked with a designated person with Swiss bank accounts and BVI / Cypriot legal persons

  • payments via fintech owned in part by Russian nationals and/or others implicated in previous major trade-based money laundering schemes

There is significant pressure on professions and businesses to keep their houses in order. However, despite concerns as to resourcing within enforcement agencies, the cost of running afoul of sanctions regimes is evidenced by the reported arrests of at least 10 individuals from various sectors, including lawyers, estate agents, and auction house employees, by the UK’s National Crime Agency Kleptocracy Cell. Those involved in “key professions” should consider investing in due diligence processes and screening against the overlapping sanctions regimes and train staff to be vigilant to the tactics outlined above.

©2023 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 207
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About this Author

Shareholder

Annabel Thomas is an experienced commercial litigator with a strong background in corporate disputes and civil fraud. She represents clients on matters involving asset-tracing and injunctive relief; partnership disputes; competition law; and regulatory/disciplinary litigation. She also handles company and shareholder disputes (including unfair prejudice claims, breach of directors' duties, JV disputes, LLP disputes and breach of warranty and indemnity claims), as well as insurance disputes (including coverage, subrogated recovery and brokers' negligence). Annabel's...

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Of Counsel

Jo Rickards is the Chair of the London office’s White Collar Crime & Investigations Group where she represents a wide range of companies and individuals. Jo is recognised as a leading individual in her practice area advising clients in investigations involving allegations of corruption, cartels, tax and investment fraud and contentious financial services. She has advised directors and companies in the UK and internationally for over 20 years. She represents companies and individuals investigated by the SFO, FCA, CMA and HMRC and those who are subject to mutual legal...

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Senior Associate

Gavin Costelloe is a senior associate in Greenberg Traurig’s White Collar Defense & Special Investigations Practice in London. Gavin is a former lawyer and prosecutor for the UK’s Serious Fraud Office (SFO). Gavin advises companies and individuals on internal, government and regulatory investigations and compliance issues related to the UK Bribery Act, fraud, market manipulation, anti-money laundering, economic sanctions, and other serious and complex cross-jurisdictional matters. Gavin has considerable experience assisting with diligence for mergers, acquisitions,...

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Associate

Bethany Histed focuses her practice on commercial litigation, civil fraud, and complex multi-jurisdictional disputes. She has worked on complex contentious cases of significant value involving allegations of fraud, conspiracy, breach of fiduciary and directors’ duties, breach of contract, claims under the Insolvency Act 1986, and unfair prejudice petitions under section 994 of the Companies Act 2006. Bethany also has experience of dealing with asset disclosure and preservation issues.

Bethany acts for a wide range of clients including high-net-...

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Kara Bombach, Greenberg Traurig, Washington DC, International Trade and White Collar Defense Attorney
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Kara Bombach assists companies to lawfully export goods, technology and services around the globe. She places significant emphasis on helping clients achieve practical, workable solutions to complex regulatory situations arising under anti-corruption and anti-bribery measures (U.S. Foreign Corrupt Practices Act (FCPA) and OECD Convention), export control laws (EAR and ITAR), anti-boycott laws, and special sanctions (embargoes) maintained by the U.S. government (OFAC and other agencies) against various countries (including Iran, Cuba and Sudan), entities and individuals....

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