Ukraine: sanctions, Russians and AML procedures
As the Russian madness continues in Ukraine, we have to ask China what it is going to do to clarify its position. Pending that, as our well-known names retreat from Russia, including KPMG and PC and well known law firms, we need to reflect on how the rest of us should go forward, and whether we can continue to act with any conscience for Russian clients.
Of course, as lawyers, we are ethically obliged to offer legal services to all those who request them, and we must avoid discrimination. Merely being Russian would not, of itself, justify our declining their request for legal advice and support. On the other hand, whether we can offer those services without fear or favour, or whether our consciences may be compromised could be a justification for declining their instructions, as would any suggestion that we embark on SLAPP tactics (strategic litigation against public participation) on behalf of those sanctioned or otherwise connected with Putin's regime. We must not bring, or support, litigation that has no foundation or is intended purely to intimidate.
That said, I believe we can and should continue to act for Russian clients PROVIDED we
check the sanctions lists daily to ensure that our clients are not named, or associated with anyone named, thereon
check with our e-search providers that they are checking the lists frequently enough to ensure their reports are bang up-to-date
re-check the lists frequently during the life of the retainer in case of last-minute changes
perform CDD as fully as possible, especially for corporate clients with opaque management and ownership structures and/or with foreign connections - we need to know the individuals who ultimately own the client or, as I put it, who is the ultimate beneficiary of our professional services
ascertain the client's source of wealth; how it has been accumulated and where from, is it legitimate
ascertain the exact nature and extent of our instructions.
However, if during the course of doing that we discover any Russian connections, then our default position should be that we will not act for the client. We would ONLY do so IF the client can reassure us - in every way possible - that their transaction is genuine, legitimate, UK-based and runs to the 'traditional' model, or that they are seeking advice only, and the only 'odd' factor is that they have Russian citizenship. There is nothing criminal in being Russian, after all, and one hopes that they share our common sense of horror at what is being done by their President.
The reputational damage of doing otherwise may turn out to be considerable.