Ukraine crisis creates new compliance duty

US fund managers with Eastern Europe connections will need to check updated lists of sanctioned individuals and businesses. 

Private fund advisors with possible ties to the ongoing geopolitical conflict in Ukraine are being advised to regularly monitor government lists of people and businesses restricted from conducting business in the US.

On Thursday President Obama signed an executive order that places new restrictions on individuals and companies that are viewed as supporting Russia’s annexation of Crimea.

The Treasury Department updated its list of “Specially Designated Nationals” that are blocked from dealing with US entities following the order.

On the updated list are a number of Russian officials and a bank used by Russia's political elite. Under the order, the sanctions could expand to Russian industrial sectors, including energy, metals and mining and financial services.

Earlier this year Treasury also updated its “Foreign Sanctions Evaders List (FSE)”, a list of individuals and entities seen as working against US sanctions on Syria or Iran.

Names on the FSE list are not necessarily on the Specially Designated National list, meaning the fund’s compliance personnel need to “screen against both lists”, said Doug Cornelius, chief compliance officer at real estate group Beacon Capital Partners, in a blog posting.

“Most likely, you are using software or a third-party service provider, so check to make sure the FSE List was added to the screening protocol,” he said.