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OFSI considers revising sanctions licence requirements for lawyers

Author: Syedur Rahman  5 October 2022

In a Rahman Ravelli Sanctions Monitor Update, Syed Rahman details why the Office of Financial Sanctions Implementation is considering a change of stance.

The UK’s civil sanctions enforcement agency, the Office of Financial Sanctions Implementation (OFSI), may introduce a change that would allow lawyers to be paid by sanctioned companies and individuals without them requiring a specific licence.

OFSI Director Giles Thomson told lawyers during a webinar that the agency may issue what would be known as a general licence, which would make it possible for law firms to receive funds from sanctioned clients.

At present, OFSI rules require firms to obtain a licence from it before they can receive fees from clients who are on UK sanctions lists.

The Director said that OFSI had received huge amounts of messages from lawyers since the start of the war in Ukraine in February, resulting in delays in processing licence applications.

He added: “We had a system based on receiving a certain number of licence applications, a certain number of breach reports and a certain number of contacts to OFSI. That more than quadrupled overnight, and increased tenfold or twentyfold in some cases.’’

The Director stated that OFSI has no problem with firms providing legal services to sanctioned people or companies, but added that it does require such legal expenses to be what he called “reasonable”. OFSI’s 2021 guidance states that it takes factors such as the scope of the work and the lawyers’ experience and professional standing into account when considering whether such costs are reasonable.

Before the invasion of Ukraine, OFSI employed approximately 45 staff. It plans to more than double this by April next year, in response to the extra work it is facing as a result of events in Ukraine.

The possibility of OFSI introducing a general licence makes sense given the circumstances. At present, lawyers can be waiting at least six months to have legal fees authorised and there can be unnecessary complications regarding issues such as the issuing of copies of practising certificates.

A lot of the time, lawyers are dealing with complex matters involving sanctions compliance, and to do so while justifying costs at the same time is not always efficient. Furthermore, the concept of a general licence would give OFSI staff more time to focus on other issues.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

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