OFAC, EU, and UK financial sanctions - are you compliant? Top tips for financial institutions, private equity, debt funds and other asset managers

On 6 November we held a breakfast seminar focusing on the most important sanctions issues affecting the City and how to manage compliance with different financial sanctions regimes effectively.

Speaker Qudsi Rasheed, Head of Sanctions Unit and Deputy Director of Multilateral Policy at the Foreign & Commonwealth Office, joined the event on 6 November and discussed the UK Government’s foreign policy on sanctions and the UK’s sanctions legal framework.

The panel, led by Hogan Lovells finance partner Paul Mullen and including Hogan Lovells partners Aline Doussin, Aleksandar Dukic and Louise Lamb, spoke on why it is more important than ever for lenders, investors and managers to consider the likely exposure of their business (including their portfolio investments) to sanctions laws. The panel discussed key considerations clients should take into account when acquiring a target or planning investments to ensure compliance with sanctions:

  • The “3 Ws” – Understand what the relevant business does, where it does it, and who it does it with.
  • Due diligence – Analyse any sales during the last five years involving US, EU and UK sanctioned territories or parties to determine whether the business has breached sanctions. If there was no breach of sanctions, determine the steps needed to ensure ongoing compliance with sanctions.
  • Sanctions clauses – Include sanctions clauses in the deal documentation, which can be relied upon if the counterparty does in fact commit a sanctions violation. Consider whether such clauses should include an EU Blocking Regulation carve out when EU parties are involved.
  • Sanctions Compliance Uplift – Depending on your liability exposure, ask for undertakings that the relevant entity will implement a sanctions compliance uplift programme post-closing (i.e. mandatory sanctions training, enhanced record-keeping and auditing processes, improved sanctions policy).
  • Sanctions policy – Implement and audit a sanctions policy and processes that are tailored to your company’s risk profile and work alongside your KYC, AML and GDPR policies.
  • Sanctions Screening – Screen business partners against applicable sanctions lists during onboarding and throughout the relationship.
  • Monitor – Anticipate changes in applicable sanctions legislative developments.
  • Investigate and remediate potential problems – If a problem is uncovered, stem any further violations, investigate the scope and extent of historic violations, and determine whether to file a voluntary self-disclosure.

The Hogan Lovells sanctions team operates seamlessly across jurisdictions and industries to provide comprehensive and practical advice on the ever evolving sanctions landscape. We can help you comply with sanctions by carrying out due diligence, developing policies and training programs, and obtaining licenses. When disaster strikes, we assist you by investigating potential breaches, advising on self-disclosure, and dealing with regulators and other enforcement authorities.

Sanctions are just one of an ever increasing set of regulatory and compliance challenges faced by private equity, debt funds and other asset managers. Failing to comply can lead to considerable reputational damage, financial penalties and in some cases, criminal action.

To help private equity, debt funds and other asset managers deal with these challenges, our Regulatory, Compliance and Investigation Solutions (RC&I Solutions) provides a complete solution spanning sanctions and trade compliance, anti-bribery and corruption, anti-money laundering, cartels, environmental and health and safety, regulated activities, human rights, and data privacy and cybersecurity, delivered by our market-leading, multi-disciplinary team of lawyers.

Our team works with asset managers to understand their risk profile and business objectives, including those of their portfolio investments, to identify and deal with these risks, review or design compliance programmes and provide support if things go wrong.

To learn more about our RC&I Solutions offering, please click here or get in touch with one of our team if you would like any further information.


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