Financial Crime World

Sanctions Supervision in the UK: A Key Component of Anti-Money Laundering and Combating the Financing of Terrorism

Sanctions play a crucial role in preventing funds and economic resources from being provided to designated persons or for prohibited activities in the UK. To ensure robust compliance with UK sanctions, supervised firms are required to screen their activity against the UK sanctions list under the Sanctions and Anti-Money Laundering Act (SAMLA).

Supervisors’ Role in Sanctions Supervision

Sanctions supervision is a key component of anti-money laundering (AML) and combating the financing of terrorism (CFT) efforts. Supervisors, including professional body supervisors (PBSs), public sector supervisors, and law enforcement agencies, play a vital role in ensuring that firms under their remit are complying with sanctions requirements.

Supervisory Activities

To monitor compliance with sanctions requirements, supervisors engage in various supervisory activities, including:

  • Onsite Visits: Supervisors conduct onsite visits to firms to assess their compliance with sanctions requirements.
  • Desk-Based Reviews (DBRs): Supervisors review firms’ documentation and information to ensure compliance with sanctions requirements.
  • Questionnaires and Information Requests: Supervisors request information from firms to help them assess their compliance with sanctions requirements.

Data on Supervisory Activity

According to data provided by AML/CFT supervisors, the 2022-23 period saw:

  • 5,253 DBRs and onsite visits conducted across all supervisors
  • Approximately 5.5% of AML/CFT-regulated businesses being subject to supervisory activity

There was significant variation in supervisory approaches among supervisors, with some focusing on onsite visits and others using DBRs and virtual interactions.

Conclusion

Sanctions supervision is a critical component of AML/CFT efforts in the UK. Supervisors play a vital role in ensuring that firms under their remit are complying with sanctions requirements. The data provided by supervisors highlights the importance of ongoing supervisory activity to monitor compliance with sanctions requirements and address any risks or weaknesses identified.

In our next article, we will delve deeper into the sanctions supervision process and its significance in preventing money laundering and terrorist financing.