The Solicitors Regulation Authority (SRA) has issued a reminder to the legal sector of its compliance duties in the wake of the Government’s imposition of sanctions on Russia.
The new financial sanctions prevent law firms from doing business or acting for listed individuals, entities or ships without a licence.
The SRA warns that the onus is on firms to check the most up to date financial sanctions lists before offering services or undertaking any client transactions.
The Authority also advises that firms should not deal with any funds or make resources available to any individual who is subject to an asset freeze as a result of the sanctions.
The SRA has warned that firms may be spot checked to ensure compliance and breach of the financial sanctions could result in disciplinary action, a criminal prosecution or a fine by the Government’s Office of Financial Sanctions Implementation (OFSI).
Law firms are also reminded of their obligation to report any client to OFSI if they suspect they are a ‘designated’ person under the financial sanctions’ regime.
Exemptions apply for reasonable fees for legal advice and, in such circumstances, firms will be required to seek a licence from OFSI.
The SRA also offers advice to law firms when reviewing client lists and considering who they feel comfortable acting for, stating that: “the general position is that firms can choose who they act for, and can choose not to act for any reason (unless unlawful, for example under equalities legislation).
“The question of terminating a current retainer is one for the common law and turns on whether there is a ‘good reason’ for the termination.
“The current situation with the conflict in Ukraine is clearly novel, and whether there is a ‘good reason’ for terminating a client retainer in response will be a matter for the courts to decide, on the individual facts. Either way, from a regulatory point of view, our concern is to ensure that the firm has carefully considered the legal position and also understood and mitigated any risks to the client.”