British banks and sanctions

16.10.2023 The Office for the Implementation of Financial Sanctions of the United Kingdom (hereinafter referred to as "OFSI", the "Office") has published updated guidance on sanctions against Russia, including answers to frequently asked questions regarding the circumstances when a UK financial institution receives funds indirectly from or through sub-sanctioned persons.
The new guidelines state that "in the case where the only connection with a sub-sanctioned person is the receipt of funds indirectly from a sub-sanctioned bank by a British financial institution and there is no bank of a sub-sanctioned person in the chain after the British financial institution, OFSI believes that the UK financial institution does not need to freeze the funds received."

The guide includes images of two payment chains that serve as examples of circumstances in which freezing of funds cannot currently be initiated.

However, OFSI draws attention to the fact that the guide concerns exclusively the legislation currently in force. The Department will work to ensure that the legislation completely prohibits the implementation of transfers, in one way or another related to sub-sanctioned persons.

OFSI's previous position is also reflected in the current version of the European Commission's guidelines on sanctions against Russia, which states that "transfers from a bank included in the sanctions list should not be rejected, and funds should not be returned to the sender; instead, funds should remain blocked in an EU bank."

Link to source: https://assets.publishing.service.gov.uk/media/6516eed66dfda6000d8e3906/Correspondent_Banking_Genera...
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1188...