Financial institutions act as a front-line defence against laundering the proceeds of crime and it is a regulatory requirement for them to combat money laundering and terrorist financing and to comply with the relevant sanctions regimes within the countries in which they operate. Firms will need to ensure that they are not doing business that is connected to individuals, entities or countries subject to sanctions, through a programme of detection and avoidance. Sanctions have historically not been an area of member focus but considering recent developments, this may be an area that members may wish AIMA to be more active in.

Russia/Ukraine Sanctions:

Although AIMA is not actively working in this area, third-party papers on this that we have re-posted with permission can be viewed below under the external resources tab. In addition, AIMA is in the process of identifying areas of clarification, or examples of sanction-related issues, which have arisen as a result of the multitude of sanctions imposed on the Russian Federation. AIMA will then seek to engage with the various regulatory agencies and jurisdictions to convey members' questions and challenges in managing sanction risk to ensure that they comply with the sanctions but to also flag any practical issues they should be aware of. Members are encouraged to contact Remmert Keijzer if they have any particular questions or observations.

Several regulators have come out with advisories to remind their constituents of their respective responsibilities, as well as to warn of cybersecurity risks.  As of 22 April, these advisories include:

  • The U.S. National Futures Association (NFA) issued a Notice to Members, encouraing them to monitor OFAC's webpage for further information. The notice also cautioned members to be vigilant against potential cyberthreats, in line with their broader cybersecurity responsibilities.
  • The U.S. Financial Crime Enforcement Network (FinCEN) issued an Alert advising increased vigilance for potential Russian sanctions evasion attempts. The Alert provides select red flags to assist in identifying potential sanctions evasion activity and reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations, including with respect to convertible virtual currency (CVC). FinCEN has also provided some useful information regarding the blocking/rejecting of transactions which members may want to consider. On 16 March, FinCEN issued an additional Alert regarding the importance of identifying and quickly reporting suspicious transactions involving Russian elites and their proxies.
  •       The UK FCA issued a statement reminding firms that it expects them to have established systems and controls to counter the risk that they might be used to further financial crime and this includes compliance with financial sanctions obligations as set out in FCG 7 of its Financial Crime Guide.

  • The Central Bank of Ireland (CBI) issued an industry communication in relation to Fund Service Providers effectively managing risks due to the Russian war in Ukraine. The CBI notes that the contents of the communication should be taken into account when responding to unfolding events, particularly with respect to the financial sanctions, valuation of funds, liquidity management and decisions regarding dealing arrangements.
  • The Dutch Autoriteit Financiele Markten (AFM) has published a Sanctions Alert where it outlines what it expects from financial institutions.
  • The Canadian Government has issued a Policy Statement on Foreign Investment Review and the Ukraine crisis. The Canadian Government notes the elevated risk environment will directly affect both net benefit reviews and national security reviews under the Investment Canada Act.
  •       The Luxembourg financial supervisory authority, CSSF, published a circular letter highlighting the sanctions (restrictive measures) of the EU in response to the current situation in Ukraine. The CSSF also calls on supervised entities to exercise the greatest possible vigilance with respect to the risks of cyberattacks, notably denial of service attacks.

Although a number of prominent financial regulators, such as the U.S. Securities and Exchange Commission (SEC), have not issued formal statements on the new sanctions or cyberthreats to date, we would not expect a differing view. 

(Last updated: 2 September 2022)

Other related workstreams

AML and Beneficial Ownership

AIMA provided views to FinCEN on their proposal for Beneficial Ownership Reporting. AIMA has published a position paper on the European Commission proposal for an AML Regulation.