Russia cannot use trust services due to financial sanctions

The Office of Financial Sanctions Implementation oversees the UK regime (OFSI). The government imposes the measures in order to accomplish particular foreign policy or national security goals.

The regime, which is supported by a number of pieces of legislation, has undergone a lot of changes recently. Firms can already read instructions from the Solicitors Regulation Authority (SRA) to make sure they are aware of their responsibilities.

The government has since amended the law to forbid offering trust services to anyone with ties to Russia, unless those services were already rendered before the restrictions went into effect, or to a specific individual. On December 16, 2022, the Russia (Sanctions) (EU Exit) (Amendment) (No. 17) Regulations 2022 went into effect.

The government's reaction to the conflict in Europe includes strengthening the financial sanctions framework, and law firms have a crucial role to play in this effort, according to Paul Philip, SRA Chief Executive. All businesses that offer legal services are subject to the sanctions regime; not just those covered by the anti-money laundering legislation. Because of how complicated and quickly things are changing, we released our preliminary advice last month. Companies would do well to sign up for OFSI notifications to stay informed and to do the necessary background checks on current and new clients.

According to the amendment, "trust services" are:

establishing a trust or other comparable arrangement

the giving of a trust or other similar structure a registered office, a company address, a correspondence address, or an administrative location

the operation or management of a trust or similar arrangement, acting as trustee of a trust or similar arrangement, or arranging for another person to function in that capacity, where "trustee" refers to a person who holds a position that is equivalent to or similar to that of a trust trustee.

Regulation 19(A)2 defines who is deemed to be "associated with Russia." A person is often seen as having ties to Russia if they regularly reside there or are physically present there. If a company is organized or domiciled in Russia and is subject to Russian legislation, it is considered to be tied to Russia.