Sanctions, ownership and related issues

A quick-guide to financial sanctions

Published on 11th May 2016

1. What are financial sanctions?

Financial sanctions are restrictions put in place by the UK government or multilateral organisations (including the EU and UN) that limit the provision of certain financial services or restrict access to financial markets, funds or economic resources in order to achieve a specific foreign policy objective.

2. What sanctions regimes do I need to comply with?

A UK individual or entity must comply with UK and EU sanctions legislation (UN sanctions are enacted through UK and EU legislation). However, consideration should also be given to the US sanctions regime, as certain US sanctions have extra-territorial effect.

3. What types of financial sanctions exist?

The two most common types of asset freezes are:

a)  targeted asset freezes which are applied to named individuals, entities and bodies restricting access to funds and economic resources; and

b)  restrictions on a wide variety of financial markets and services.

4. How do I find out if an individual or entity is subject to financial sanctions?

Sector-specific or country-wide financial sanctions are listed on the Office of Financial Sanctions Implementation (OFSI) website.

Individuals or entities subject to financial sanctions (known as designated persons) can be found on the consolidated list. Individuals or entities subject to specific capital markets restrictions are found here.

5. How do I use the consolidated list?

If an individual or entity is a designated person, they will be included on the consolidated list.

However, caution should be exercised as an asset freeze and some financial services restrictions will also apply to persons and entities that are owned or controlled, directly or indirectly, by a designated person. These persons may not be designated in their own right but are still subject to an asset freeze. It is therefore vital that you understand your transaction in order to ensure that a counterparty is not subject to financial sanctions. Guidance on the issue of ownership and control can be found here.

6. Is there any guidance that can help me understand the sanctions?

Yes, the OFSI has published some helpful guidance. Whilst not legally binding, it does summarise the applicable sanctions regimes and provides some useful examples of situations involving sanctions compliance.

7. What happens if I do not comply with the sanctions regimes?

A breach of sanctions legislation, or a deliberate circumvention, is a criminal offence.

8. I want further advice, who should I contact?

If you are concerned about sanctions compliance, you are advised to seek legal advice. Osborne Clarke has a sanctions team that advises clients on a range of sanctions compliance issues.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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