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Sanctions Compliance

What is UBO and why check it?

UBO stands for Ultimate Beneficial Owner. Checking them is crucial because a company might look clean, but if its real owner is sanctioned, dealing with them puts your business at risk.

What is the OFAC 50% Rule?

This rule states that if a sanctioned person owns 50% or more of a company, that company is automatically considered sanctioned, even if it doesn't appear on any list itself.

How often should I screen partners?

Sanctions lists are updated daily. It is recommended to implement an automated screening system or check partners before every new transaction.

What is the risk for a Georgian company?

The risk involves termination of banking services (de-risking) and international isolation. Banks close accounts of companies that cannot prove sanctions compliance.

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2 min

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Sanctions Compliance is an integral part of corporate governance and risk management for any company with international ties. This service is broader than just trade sanctions; it encompasses financial sanctions, asset freezes, and personal restrictions. Georgian businesses are obliged to comply not only with local but also with international partners' (correspondent banks, foreign investors) requirements regarding sanctions. Sanctions violations can happen inadvertently, for example, if a company shareholder becomes a sanctioned person or if a contractor is indirectly linked to a prohibited sector. Legal.ge offers comprehensive sanctions compliance services to ensure your business remains transparent, trustworthy, and protected in the eyes of the global financial system.

What does this service cover?

Our service covers complete sanctions risk management:

  • Structural Screening: Analyzing the company's ownership structure (UBO - Ultimate Beneficial Owner) to detect links with sanctioned individuals.
  • KYC/AML Procedures: Implementing customer identification and anti-money laundering policies in accordance with international standards.
  • Sanctions Audit: Periodically checking existing contracts and partners against updated sanctions lists.
  • 50% Rule Analysis: Applying OFAC's "50% Rule" to determine if sanctions apply to a company where 50% or more is owned by a sanctioned person.
  • Training and Awareness: Training management and staff on the nuances of sanctions regimes.
  • Emergency Response: Legal assistance in case of account blocking or arising suspicions related to sanctions.

Common Scenarios and Needs

The service is critical for:

  • Banks and Microfinance Institutions: To meet regulator requirements.
  • Real Estate Companies: When accepting large investments.
  • International Holdings: With multinational shareholders.
  • Legal and Audit Firms: During the client onboarding process.

Georgian Legal Framework

The National Bank of Georgia mandates the financial sector to comply with US, EU, and UK sanctions. The Law on Prevention of Money Laundering applies. While the direct obligation is lower for the non-financial sector, in practice, any business requiring banking services must meet these standards.

Step-by-Step Process

The process begins with a company risk assessment. The lawyer analyzes the corporate structure. Internal compliance policies are created or updated. Automated screening systems are implemented. Periodic audits are conducted. In case of an incident, the lawyer communicates with the bank or regulator to resolve the issue.

Why Legal.ge?

Navigating the sanctions maze is difficult. Legal.ge connects you with certified compliance officers and lawyers who will help you build a system that protects your assets and reputation from unforeseen blows.

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