What should a fund do when it finds a sanctioned holding?

Freeze the position without delay (stop any dealing, transfer or making funds or economic resources available), escalate to the MLRO, confirm the match is genuine, report to the national competent authority within the required time, avoid tipping off the subject, and keep a full record of the decision and actions. Licences or derogations to deal further generally require prior authorisation from the competent authority.

Can you sell a sanctioned holding to get rid of it?

Not unilaterally. Once an asset is frozen you must not deal in it, including selling, transferring or otherwise disposing of it, unless the competent authority has granted a licence or derogation. Selling without authorisation can itself breach the sanctions. Freeze first, then seek guidance.

Who do you report a sanctions match to?

You report to the national competent authority responsible for financial sanctions in your jurisdiction (and follow any separate AML reporting to the Financial Intelligence Unit where relevant). The report should identify the frozen funds or economic resources and the parties involved. Confirm the exact authority and timeframe for your jurisdiction.

What to do when you find a sanctioned holding

Last reviewed 24 June 2026.

If you identify a holding in — or a counterparty that is — a sanctioned, asset-frozen entity: freeze it without delay, stop dealing, confirm the match, report to your competent authority, don't tip off the subject, and record everything. Here's the order to do it in.

1. Freeze, and stop dealing — immediately

An asset freeze means you must not deal in the funds or economic resources, transfer them, or make funds or economic resources available to or for the benefit of the designated party. Halt any pending trades or payments on the position and escalate to your MLRO straight away. Speed matters — the obligation is to act without delay.

2. Confirm the match is genuine

Before you treat it as a true hit, make sure it isn't a false positive. Check identifiers (registration number, LEI, address, date of birth for individuals) and — given the 50% ownership/control rule — whether the entity is caught directly or through a listed owner. Freezing first and confirming in parallel is prudent; un-freezing a confirmed false positive is far easier than explaining a missed real hit.

3. Report to the competent authority

Notify the national competent authority responsible for financial sanctions in your jurisdiction, within the required timeframe, identifying the frozen funds or economic resources and the parties involved. Where AML obligations also apply, make any separate report to the Financial Intelligence Unit. Confirm the exact authority, channel and deadline for your jurisdiction — these differ across member states.

4. Do not tip off

Don't disclose to the subject (or anyone who might inform them) that a report has been or will be made, or that an investigation may follow. Tipping off can itself be an offence and can prejudice enforcement.

5. Record everything

Keep a dated, tamper-evident record: what was found, the evidence and match basis, when you froze, who decided, what you reported and to whom. This is exactly what an auditor or regulator will ask to see — and what demonstrates you acted properly and promptly.

6. Don't dispose without a licence

You generally cannot sell or transfer a frozen asset to "get rid of it" without a licence or derogation from the competent authority. Seek legal advice on whether a licence is available before taking any further action on the position.

Veracore attaches the evidence and a recommended action to every hit and logs the run in a tamper-evident chain — request a free portfolio screen to see what that looks like on your book.

FAQ

What's the first thing to do?: Freeze the position and stop any dealing without delay, then escalate to your MLRO.
Can you just sell it?: No — once frozen you can't dispose of it without a licence or derogation from the competent authority.
Who do you report to?: Your national competent authority for financial sanctions (plus the FIU where AML reporting applies). Confirm the exact body and deadline for your jurisdiction.

The EU 50% ownership rule · EU sanctions screening for fund managers

What to do when you find a sanctioned holding

1. Freeze, and stop dealing — immediately

2. Confirm the match is genuine

3. Report to the competent authority

4. Do not tip off

5. Record everything

6. Don't dispose without a licence

FAQ

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