Kremlin crackdown: Island firms go onto high-risk list

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A SPECIAL financial taskforce has placed a number of Jersey firms on a ‘high-risk list’ after they were found to be providing services to sanctioned Kremlin-linked oligarchs and businesses.

In a fast-paced investigation launched as the UK government hit individuals and companies with a range of sanctions and asset freezes, the newly-formed Island-based group made urgent inquiries about 613 people, firms and trusts.

Although the majority of firms were found to be clean, the taskforce – comprised of members of the Jersey Financial Services Commission, the States police and the government – has now drawn up a list of businesses who are deemed to be at high risk of facilitating money-laundering or financing terrorism after ‘sanctioned names’ were found in their customer base.

Those on the list will now be closely monitored and could face enforcement action, including bans on operating or criminal prosecutions.

Speaking to the JEP during the taskforce’s first interview since its launch, Diane Maxwell, the JFSC’s executive director of policy and risk, said that the entities contacted were given a week to respond to questions about their operations.

‘We were asking specifically about data relating to Ukraine, Belarus and Russia. We would usually give them a lot longer than a week to respond but 92% came back within a week. Returns were coming in at 9pm, 10pm, 11pm or at five to midnight,’ she said.

‘That tells us that industry responded. They’re taking it seriously and looking across their exposure.’

She added that after the first wave of responses had been collected, the regulator had assessed the results, which included data on 568 entities, and identified a list of ‘high-risk’ firms.

‘The risk team did a risk analysis and developed a list of entities and firms who we would go and visit within a week. The supervision team then went in and did visits with that group.

‘We put them on a high-risk list because we went through the list and said, as far as we are concerned, they’ve got sanctioned names on their customer base. We’re sharing that with the Financial Intelligence Unit. We’re revisiting that group and after that comes enforcement.

We’re seeing a lot of very good work and we’re also seeing a subset of entities that we’re not comfortable with and we’re going back to them.’

The taskforce declined to disclose the exact number of firms on the high-risk list or comment on individual cases.

The most prominent individual among the 1,000 sanctioned by the UK and Jersey is Chelsea FC owner Roman Abramovich, who the JEP recently reported was connected to a £1.5 billion loan from a Jersey company registered at Colomberie-based firm.

Ms Maxwell said that dealing with the ‘absolutely unprecedented’ level of sanctions that had been suddenly introduced was an opportunity to enhance the reputation of the Island’s financial services sector.

‘We’ve all felt that this is a moment in time for Jersey to step up and show that we’re going to protect and strengthen the reputation of Jersey, the international finance centre,’she said.

Dan Marcos, head of compliance at the Government of Jersey, said that the number of sanctions against Russian individuals had multiplied several times in a very short space of time.

‘Under the Russia regime until the invasion, there were more than 200 asset-freeze sanctions in relation to human rights, corruption, the invasion of Crimea in 2014 and everything that’s been happening in the past eight years,’ he said.

‘Following the invasion, we’ve seen an unprecedented package of sanctions against a G20 country.

We’ve gone to over 1,000 asset-freeze designations and we’re expecting hundreds more.’

At the end of this month, External Relations Minister is due to publish data on the value of assets frozen.

Guernsey’s government recently revealed that funds based there held up to £12 billion of Russian assets.

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