On 17 May 2022 the UK Financial Conduct Authority (FCA) made an appeal for people to report to it regarding firms on the Financial Services Register or other FCA registers, or companies with UK listed securities that have been evading sanctions or have poor sanction controls.
What to report
The FCA has called for information about:
- Any suggestion that a firm has poor sanctions controls,
- Actual or suspected breaches of the UK sanctions regime, and
- The methods believed to be used by firms or individuals to breach the UK sanctions regime.
The FCA’s request is expected to be most relevant to current and former employees of regulated firms, and other firms and professionals.
How to report
The FCA has stated that, dependent on anonymity requirements and the source of the information, it is able to receive information in the following ways:
- The FCA’s whistleblowing team will be available to receive the report where there is a need for confidentiality. For example, where an individual is reporting about the conduct of their employer;
- An authorised firm reporting issues with its own sanctions compliance should do so in accordance with the provisions of SUP 15 in the FCA Handbook; and
- The FCA created a new ‘wrongdoing and misconduct’ report form (available here) to be used where a firm or industry practitioner is looking to report information relating to another firm or individual. When using this form, there is no obligation to provide the FCA with contact details, but any person submitting a report who does include their email address will receive a reference number to allow them to update their report should they receive any further information.
Interaction with other reporting obligations
Firms and individuals are subject to existing obligations to report sanction breaches, and these obligations are not impacted by the FCA’s request. Suspected breaches of sanctions must be reported to the Office of Financial Sanctions Implementation (OFSI).
Certain firms and individuals may also be required to report to other regulators in the sector in which the breaching entity is active (for example, the Solicitors Regulation Authority, the Association of Chartered Certified Accountants, or HM Revenue and Customs). In addition, firms or individuals submitting reports should inform their relevant supervisory professional bodies and any known professional bodies responsible for supervising the breaching entities/individuals as required.
Unfortunately, the FCA will not provide the person submitting the report with any updates on further action taken in response.
However, the FCA has stated that even where it does not take visible enforcement action, any information shared will allow it to build a more complex picture of conduct risk and inform policy and enforcement action moving forward.
Firms and companies must ensure that their sanctions systems and procedures remain up-to-date to ensure compliance with applicable requirements, and must seek to maintain open and productive dialogue with their regulators.
K&L Gates is continuing to track the changes and additions to the UK sanctions regime and the impacts these can have on entities and individuals. K&L Gates is equipped to advise on the full suite of regulatory and criminal issues, and can offer clear practical advice on how best to meet regulatory requirements (including when a report to the FCA and/or OFSI is required).
Please contact Michael Ruck or Rosie Naylor should you have any queries relating to FCA sanctions reporting, or to UK sanctions more generally.