The Financial Industry Regulatory Authority (FINRA) issued a warning regarding obligations triggered due to U.S. government sanctions imposed on individuals and entities in response to Russia's invasion of Ukraine.
FINRA's warning followed an executive order from the Department of Treasury's Office of Foreign Assets Control (OFAC). The order bars financial institutions from processing transactions to five major Russian financial institutions, subsidiaries, or entities acting on their behalf. The executive order also bars activity with Russian elites close to President Vladimir Putin.
According to Alma Angotti, partner with Guidehouse, the warning emphasized a compliance concern that is likely to have far-reaching consequences for broker-dealers to increase supervision of customer procedures and review accounts for potential links to sanctioned entities. Angotti also warns firms to be cautious of new account requests.
OFAC has added a large number of banks and entities to the list of institutions. Investment asset managers, broker-dealers, and banks must ensure that anyone on the OFAC list is not a customer in any capacity. Firms could face issues if they have not previously properly identified everyone during the initial account opening process.
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