The Legal Sector Affinity Group (LSAG) has updated its guidance on the anti-money laundering (AML) regulations. As of 28 March, Guidance on the new requirement to carry out proliferation financing risk assessments, either as part of the firm’s existing practice-wide risk assessment or as a standalone document.
What is proliferation financing?
Proliferation financing is defined by the FATF as the provision of funds or financial services used for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials, including both technologies and dual-use goods used for non-legitimate purposes.
A key focus on preventing the threats posed by Proliferation Financing is the strict implementation of the sanctions regime on North Korea and Iran, as well as preventing chemical weapons activity.
Sanctions laws apply to all businesses. Any business who breaches a UK sanctions regime could be fined or subject to criminal prosecution. Breaching sanctions was recently made a strict liability offence, meaning a business only has to have breached the law to be liable for a penalty, there is no requirement for intent.
What to do now
- Review your business for PF risks with a dedicated risk assessment process
- Review your AML policies and sanctions policies in light of PF risks
- Amend your risk assessments to incorporate PF risks
- Implement specific controls and measures highlighted by the PF risk assessment
- Record these controls and analyse their effectiveness
VinciWorks have published a new guide covering the basics of proliferation financing, how PF occurs, key PF risks in the UK, red flags and more.
