Over the weekend the regulator issued an update urging firms to “ensure” they meet FCA requirements on complying with government sanctions on Russian companies and sanctioned individuals.

The government and FCA have taken steps to crack down on Russian investments by UK firms and individuals following the Russian invasion of Ukraine.

The FCA says regulated firms are already making changes to, “avoid new investment in the Russian economy.”

The watchdog said: “Many asset managers and pension providers have written down any Russian assets already held by the fund or scheme to zero, and some have announced that they are intending to divest themselves of such assets when it is practical to do so. 

“Major index providers have taken steps to remove Russian securities from their equity and bond indices.”

The regulator has accepted, however, that disposing of Russian assets is challenging.

It said: “There are currently significant practical challenges in terms of disposing of Russian assets. When it is possible to sell such investments, firms should ensure that they meet requirements on entities that are subject to sanctions or connected to sanctioned entities. We have set out our guidance on this issue.”

The guidance marks a stronger line from the regulator on doing business with Russian or sanctioned individuals but an acceptance that it will take time in some cases.

Firms which require a licence to permit them to carry on any activity, which would otherwise be prohibited by sanctions, must contact the relevant government department.

The FCA says it expects firms to have established “systems and controls” to counter the risk that they might be used to further financial crime and this includes compliance with financial sanctions obligations. 

The FCA says where it identifies breaches it may apply restrictions on companies or financial penalties and enforcement action. Additionally, the Office of Financial Sanctions Implementation (OFSI) has the power to levy civil monetary penalties for breaches of financial sanctions.

Firms should screen against the UK Sanctions List.