Sanctions

Overview

A sanction is a measure imposed by a government using laws and regulations to apply restrictive measures against a country, regime, individual, entity, industry or type of activity believed to be violating international law. Sanction measures include the freezing of funds, a ban or restriction on trade or travel, withdrawal of financial services and suspension from international organisations. Sanctions often have an aim of preventing the proliferation of weapons of mass destruction (nuclear, biological and chemical) and disrupting terrorist operations however they are also used to satisfy foreign and national security goals.

The United Nations and the European Union are key bodies that adopt sanctions measures. As a result of the United Kingdom leaving the EU, the UK now enacts its own sanctions measures, which may be autonomous sanctions regimes or may implement a UN sanctions regime. Where a UK sanctions regime replaces a corresponding EU sanctions regime it is broadly similar, but not identical, to the EU regime.

UK sanctions are given effect within the Bailiwick under the Sanctions (Implementation of UK Regimes) (Bailiwick of Guernsey) (Brexit) Regulations, 2020 made under the Sanctions (Bailiwick of Guernsey) Law, 2018 (“the Sanctions Law”).

The Policy & Resources Committee (“P&R”) administers the Bailiwick’s sanctions regime and the Commission has responsibility for supervising firms’ controls in this respect. To aid with dissemination of sanctions notices issued by P&R, the Commission posts notices on its website and the Bailiwick’s Financial Intelligence Unit distributes the notices to all users of its THEMIS portal.

Identifying and reporting sanctions connections

All businesses must check whether they maintain any accounts or otherwise have any kind of relationship with the designated individuals and entities or to any other natural or legal person, entity or body designated under the legislation and must treat any funds, other assets or economic resources

• directly or indirectly belonging to, owned, held or controlled by them, whether wholly or jointly, or
• that comprise interest, dividends or other forms of property derived from any funds or economic resources that belong to them or are owned, held or controlled by them, whether directly or indirectly and wholly or jointly, or
• belonging to individuals or entities acting on their behalf or at their direction, whether wholly or jointly

as frozen with immediate effect if this is not already the case. Businesses must report any findings to P&R immediately. They must also ensure that they have taken all other steps that may be required in order to comply with the reporting obligations at section 14 of the Sanctions Law.

Businesses must also refrain from making any funds or economic resources available directly or indirectly, wholly or jointly, to or for the benefit of

• any designated person, entity or body
• any entity directly or indirectly owned or controlled by a designated person, entity or body, whether wholly or jointly
• any individuals or entities acting on behalf or at the direction of a designated person, entity or body, whether wholly or jointly

other than in respect of transactions that come within a permitted derogation as determined by P&R, or in accordance with a licence issued by the Policy & Resources Committee, as the case may be.

Sanctions related information or queries should be sent to [email protected]

In accordance with Handbook Rule 12.37, where a relevant business has identified a connection to a sanctioned/designated person, the firm must provide a report to the Commission which sets out, as a minimum: a) the name of the customer, beneficial owner, key principal or the transaction and/or asset linked to a sanctioned/designated person; and b) the nature of the business relationship or occasional transaction, including the transaction and/or asset value.

Guidance

Government guidance on Guernsey’s sanctions regime, including updates on new sanctions regimes, changes to existing regimes, and licences, can be found on the States of Guernsey website.

In May 2022, the Commission published a report on the thematic review of its licensees’/registrants’ effectiveness in monitoring and complying with targeted financial sanctions.

Chapter 12 of of the Handbook on Countering Financial Crime (AML/CFT/CPF) contains guidance and rules requiring firms to have in place:

• Appropriate and effective policies, procedures and controls to identify, in a timely manner, whether a prospective or existing customer, or any beneficial owner, key principal or other connected party, is the subject of a sanction issued by the UN, UK or the States of Guernsey’s Policy and Resources Committee;
• A system and/or control to detect and block transactions connected with those natural persons, legal persons and legal arrangements designated by the Bailiwick’s sanctions regime; and
• Compliance monitoring arrangements which include an assessment of the effectiveness of the firm’s sanctions controls and their compliance with the Bailiwick’s sanctions regime.

Additionally, Chapter 12 requires firms to:

• As soon as practicable after meeting the statutory reporting requirements to the States of Guernsey Policy and Resources Committee under the relevant legislation, provide certain specified details to the Commission on the nature of the sanction connection; and
• Maintain a register of all reports made to the Policy and Resources Committee associated with a sanctioned/designated person.

Links to Further Guidance

In December 2023, P&R published additional guidance to assist businesses in complying with their obligations in relation to targeted financial sanctions that have been implemented in Guernsey.  P&R has also updated its Advisory Memorandum on Sanctions regarding Terrorism and Terrorist Financing in December 2023.  These and additional guidance can be found below:

The Financial Action Task Force (“FATF”) has issued guidance documents in respect of sanctions: