Most accountancy firms have well-established client acceptance procedures that include identity verification, customer due diligence (CDD) and anti-money laundering (AML) checks. However, sanctions screening has become an equally important element of the client onboarding process and should not be overlooked.

Financial sanctions are a legal requirement rather than simply a matter of good practice. They prohibit or restrict dealings with certain individuals, businesses, organisations and, in some cases, countries or sectors of the economy. Unlike AML checks, which are designed to identify the risk of money laundering or terrorist financing, sanctions compliance is concerned with ensuring that firms do not provide funds, economic resources or certain services to designated persons or entities.

For accountants, sanctions screening should form part of the initial client acceptance process and continue throughout the professional relationship. Sanctions lists are updated frequently, meaning that a client who presented no sanctions risk when first accepted could subsequently become subject to sanctions.

Why sanctions matter to accountants

Many practitioners assume that sanctions are only relevant to banks or multinational organisations. In reality, UK sanctions legislation applies to accountancy firms and tax advisers, making sanctions compliance an important part of professional practice.

Relevant firms, including accountants, auditors, tax advisers and trust or company service providers, have legal obligations under UK sanctions legislation. Failure to comply may result in civil penalties, criminal prosecution or significant reputational damage.

Importantly, sanctions compliance is separate from AML compliance. A client may pass all AML checks and still be subject to financial sanctions.

A UK company is not automatically low risk

One common misconception is that UK incorporated businesses present little or no sanctions risk. However, the existence of a UK company, a UK registered office or a UK bank account does not remove the need for sanctions screening.

The key consideration is whether the client, its beneficial owners or those exercising control over the business are designated persons or are owned or controlled by designated persons. For example, a UK limited company may appear entirely legitimate but be majority-owned by an individual subject to UK financial sanctions. In these circumstances, sanctions restrictions may apply even if the company itself does not appear on the UK Sanctions List.

Sanctions are not limited to traditionally high-risk countries

Another misconception is that sanctions only affect clients connected with countries traditionally viewed as presenting high money laundering risks.

In reality, sanctions are imposed to support foreign policy and national security objectives. Governments may introduce sanctions in response to armed conflict, terrorism, cybercrime, human rights abuses or other international developments. As a result, sanctions regimes can change quickly and may affect jurisdictions that have not previously been considered high risk.

Firms should therefore avoid making assumptions based solely on a client's nationality or country of residence. Instead, each client should be screened against the current sanctions lists and assessed on its own facts.

Understanding UK financial sanctions

The UK has the power to impose various forms of sanctions under the Sanctions and Anti-Money Laundering Act 2018 and other legislation. The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, is responsible for implementing and enforcing UK financial sanctions.

Types of financial sanctions 

Financial sanctions come in many forms as they are developed in response to a given situation. The most common types of financial sanctions used in recent years are:

• Targeted asset freezes: these apply to named individuals and entities restricting access to funds and economic resources. Someone subject to an asset freeze in the UK will be listed on the UK Sanctions List.  
• Restrictions on a wide variety of financial markets and services: these can apply to named individuals and entities, specified groups, or entire sectors. To date these have taken the form of 1) investment bans 2) restrictions on access to capital markets and 3) directions to cease banking relationships and activities.
• Directions to cease all business: these will specify the type of business and can apply to a specific person, group, sector or country.

The UK also operates trade sanctions, transport sanctions, immigration sanctions and director disqualification sanctions, although financial sanctions are the measures accountants are most likely to encounter during client onboarding.

Ownership and control

One of the most challenging aspects of sanctions compliance is the concept of ownership and control.

An entity is owned or controlled directly or indirectly by another person in any of the following circumstances:

• the person holds (directly or indirectly) more than 50% of the shares or voting rights in an entity
• the person has the right (directly or indirectly) to appoint or remove a majority of the board of directors of the entity
• it is reasonable to expect that the person would be able to ensure the affairs of the entity are conducted in accordance with the person’s wishes.

This could, for example, include:

• appointing, solely by exercising one’s voting rights, a majority of the members of the administrative, management or supervisory bodies of an entity, who have held office during the present and previous financial year
• controlling alone, pursuant to an agreement with other shareholders in, or members of an entity, a majority of shareholders’ or members’ voting rights in that entity
• having the right to exercise a dominant influence over an entity, pursuant to an agreement entered into with that entity, or to a provision in its Memorandum or Articles of Association, where the law governing that entity permits its being subject to such agreement or provision
• having the right to exercise a dominant influence referred to in the point above, without being the holder of that right (including by means of a front company)
• having the ability to direct another entity in accordance with one’s wishes. This can be through any means, directly or indirectly. For example, it is possible that a designated person may have control or use of another person’s bank accounts or economic resources and may be using them to circumvent financial sanctions.

If any of the above criteria are met, and the person who owns or controls the entity is also a designated person, then financial sanctions will also apply to that entity in its entirety (meaning these assets should also be frozen). The prohibitions on making funds or economic resources available directly or indirectly to a designated person, also prohibit making them available to an entity who is owned or controlled, directly or indirectly, by the designated person. The UK government will look to designate owned or controlled entities or individuals in their own right where possible.

This means firms should not restrict sanctions checks solely to the client entity. They should also consider directors, beneficial owners, shareholders and other individuals exercising significant control.

Conducting sanctions screening

The UK Sanctions List is now the only source for all UK sanctions designations. The OFSI Consolidated List of Asset Freeze Targets closed on Wednesday 28 January 2026 and is no longer being updated.

For timely updates on all additions and changes to the sanctions list, sign up to get UK sanctions email alerts.

As part of client acceptance procedures, firms should consider screening:

• the prospective client
• directors
• beneficial owners
• persons with significant control (PSCs)
• trustees and beneficiaries where trusts are involved
• any connected parties where appropriate.

Screening should be performed before engagement and repeated periodically, particularly for higher-risk clients or where ownership structures change.

Many firms use electronic verification providers that combine identity verification with sanctions and politically exposed person (PEP) screening. Even where technology is used, firms remain responsible for considering any matches and determining whether they represent a genuine sanctions risk.

Using the UK Sanctions List

The UK Sanctions List contains a range of information to aid the identification of persons subject to sanctions. For an individual this can include their:

• primary name, name variations or aliases
• date of birth
• place of birth
• nationality
• passport details
• national ID details
• addresses
• position (such as employment or an official role).

You may find that the name of an individual, entity or ship you are dealing with matches one or more entries on the list. This is known as a name match. However, it does not necessarily mean that the individual, entity or ship you are dealing with is the same one as is on the list.

If the individual or entity you are dealing with matches all the information on the list, this is likely to be a target match.

If you are satisfied that the person or entity is not the same as the one on the list, you do not need to take further action.

If, having consulted the list, you are still unsure on whether you have a target match, you can contact OFSI for assistance.

Ongoing monitoring

Sanctions compliance is not a one-off exercise completed when the engagement letter is signed.

Clients may change their ownership structures, appoint new directors or become connected with designated persons after they have been accepted. Likewise, governments regularly introduce new sanctions or amend existing sanctions regimes.

For this reason, sanctions screening should form part of the firm's ongoing monitoring procedures and should be repeated when significant changes occur or at appropriate intervals based on the firm's risk assessment.

Reporting obligations

Accountancy firms are classified as ‘relevant firms’ under UK sanctions regulations and have specific reporting obligations.

Where a firm knows or has reasonable cause to suspect that a person is subject to financial sanctions or that a breach has occurred, it must report the matter to OFSI as soon as reasonably practicable. This obligation exists independently of any reporting required under the Proceeds of Crime Act 2002.

Submitting a Suspicious Activity Report (SAR) to the National Crime Agency does not remove the obligation to report sanctions matters to OFSI. Separate reports may therefore be required.

Practical steps for firms

Firms should ensure that sanctions compliance is fully integrated into their client acceptance and ongoing monitoring procedures. This includes incorporating sanctions risks into the firm's policies and procedures, reflecting those risks within the firm-wide risk assessment, embedding sanctions screening into client due diligence, client risk assessment, providing regular training to staff.

Practitioners should also monitor updates on the UK sanctions list, as new designations and changes to sanctions regimes can occur at short notice. Members should note the UK government recently issued new sanctions against networks enabling settler violence in the West Bank. Regular review of firm procedures will help ensure continued compliance with an evolving area of law.

By carrying out appropriate sanctions screening, understanding ownership and control rules, and maintaining effective ongoing monitoring procedures, accountancy firms can meet their legal obligations, reduce regulatory risk and protect both their practice and the wider financial system.

Further resources

Visti the ACCA AML hub for all AML guidance and factsheets.