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Russia sanctions: how to check your client base

Author: ICAEW Insights

Published: 07 Mar 2022

In light of international sanctions against Russia, members should turn to open sources of information as part of their client due diligence. ICAEW’s video offers useful pointers.

ICAEW members are being urged to identify any potential connections to Russia among their clients and perform the necessary due diligence following the introduction of sanctions designed to make Russia feel the cost of its aggression in Ukraine.

Used alongside existing client due diligence procedures, savvy use of open source information already in the public domain can allow members to gain a more complete picture of who they will potentially be dealing with. Members should consider the reputational risk associated with acting for certain clients.

A simple internet search of the client’s name may seem obvious but time and again firms have been shown to be so focused on verifying the identity of a prospective client that they neglect to do wider background checks that could potentially raise concerns about the client’s activities.

Practitioners should also be prepared to undertake more complex searches using strings of words, especially search terms that indicate relations to ‘Russia’ or ‘Russian companies’. Perhaps words that indicate undesirable relationships can also be used as part of the search exercise.

Newspapers, online news and subscription news services should also be part of the due diligence mix. News aggregation services are also useful and reduce time spent scouring multiple outlets. ICAEW members can use our own client screening service for three name checks per week.

You should review and document the information obtained and check for consistency with anything provided to you by the client while applying professional scepticism.

If alarm bells ring when you are conducting research on clients, raise any concerns directly with them. Information that is in the public domain can be discussed openly – after all, your reputation could be at stake.

“This type of research does not have to be onerous,” says Omid Tissier, ICAEW’s Economic Crime and Ethics Manager. “It is a useful tool that can help protect the reputation and brand of your practice.”

He continues: “It is far better to have as much information as possible about a prospective client before agreeing to an engagement than to later have to step down or experience negative media through association with a client.”

For more information on open source and other electronic client due diligence (CDD) resources please see ICAEW’s dedicated helpsheet.

ICAEW has written articles covering the Economic Crime Bill, which hosts the international sanctions, explaining what they mean for accountants. ICAEW Members are also advised to think about not just the letter of the law but the spirit too, as the reputation of the profession is also at stake.