Sanctions risks are not limited to the client or beneficial owners. Risks may also arise through counterparties, lenders, investors, intermediaries, payment chains, correspondent banking relationships and other parties connected with a transaction.
Lawyers should therefore consider not only whether a client is subject to sanctions, but whether funds, assets or services may originate from, pass through, or ultimately benefit persons, entities or jurisdictions connected to sanctions restrictions.
The existence of a connection does not necessarily mean that a transaction is prohibited. However, where sanctions issues may arise through the wider structure of a transaction, lawyers should seek guidance from the MLRO before proceeding.
In addition to legal sanctions obligations, lawyers should be aware that banks, payment providers, insurers and other third parties may apply restrictions that are broader than those strictly required by law. For example, the Firm's banking providers may refuse or block certain payments, jurisdictions or payment routes as a matter of internal policy and risk management. Accordingly, a transaction that is technically lawful may nonetheless be incapable of completion through the Firm's banking arrangements.
Where funds or transactions involve jurisdictions, banks or payment routes associated with sanctions risk, lawyers should engage with the MLRO and the Accounts Team at an early stage.