Since Russia’s invasion of Ukraine in 2022, the UK introduced significant financial sanctions against Russian entities and individuals, alongside measures involving other regimes such as Myanmar, Libya, and South Sudan. Legal services providers have played a central role in ensuring compliance by supporting clients, reporting suspected breaches, and addressing risks within complex legal frameworks.

• High reporting by the legal sector - The legal sector submitted 16 per cent of suspected breach reports to OFSI, ranking second only to financial services, with the majority coming from solicitors’ firms and barristers' chambers.
• Breaches of licence conditions - Non-compliance is largely linked to breaches of OFSI licence conditions, including payments exceeding permitted limits, delays in reporting, and improper management of frozen funds.
• Complex structures enable evasion - Russian designated persons (DPs) have increasingly used intricate corporate structures like trusts to obscure ownership and control of frozen assets, complicating compliance assessments.
• Underreporting among TCSPs - Trust and company service providers (TCSPs) account for a small fraction of the reports, a trend flagged as a concern in the assessment.
• Asset transfers – Post-designation asset transfers to non-designated entities increase risks of sanctions violations.

To address these challenges, OFSI underscores the following practices for legal services providers:

• Timely reporting: Submit suspected breach reports and licence-related updates promptly.
• Enhanced due diligence: Scrutinise clients and transactions, particularly those involving complex corporate structures or ties to Russian DPs.
• Risk reviews: Conduct lookback exercises to identify unreported suspected breaches.
• Adherence to licence terms: Ensure all activities comply strictly with OFSI licence conditions, including value thresholds and timelines.

The report highlights the importance of robust compliance measures and proactive reporting as essential tools in safeguarding the integrity of the UK’s financial sanctions regime. Legal services providers are critical allies in this ongoing effort and their vigilance will remain vital as the sanctions landscape continues to evolve.

The report can be found here.