UK Clarifies Scope of Russia-Related Sanctions License for Brokers
The U.K.’s Office of Financial Sanctions Implementation issued three new FAQs to provide guidance on its Russia-related general license that authorizes certain transactions involving brokerage firms.
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New FAQ 162 clarified that the license doesn’t cover assets held “in, by, or via” Russia’s sanctioned National Settlement Depository. The license covers only “assets where the chain of custody involves one Designated Person, the broker itself. It does not give any permissions to the NSD to transfer funds that it holds some direct or indirect custody over,” the U.K. said.
FAQ 163 stresses that the license doesn’t represent a “policy shift” toward the National Settlement Depository, which was sanctioned for providing “key” financial services to the Russian government. “OFSI assesses applications on a case-by-case basis,” the U.K. said.
FAQ 164 says that the license may not be necessary for non-sanctioned clients to “terminate their banking relationship” with sanctioned brokers. “Every situation will depend upon its facts, and the terms of the relationship,” the U.K. said. “OFSI’s general view is that, once the” non-sanctioned client funds are removed, the closure of their accounts and the “termination of their contractual relationship” with the sanctioned broker “will not ordinarily engage sanctions.”
“Therefore, OFSI does not consider a licence necessary to terminate the brokerage relationship once the funds are removed,” it said.