- Issued:01 January 2011
- Last revised:20 July 2019
We have created this guidance to provide general information about sanctions. For particular information regarding financial sanctions, you should refer to the Practical Guidance document.
What are sanctions?
A sanction is a measure adopted against a country, regime, or person believed to be violating international law.
The two key supranational bodies to adopt sanctions measures are the United Nations (UN) and the European Union (EU).
The UN Security Council can take measures to maintain, or restore, international peace or security. Such measures include economic sanctions to international military action. Each Member State is then called upon to implement the requirements of a sanctions measure in its own territory.
The EU applies sanctions in pursuit of specific objectives of the Common Foreign and Security Council, as set out in the Treaty of the European Union. EU sanctions are adopted to ensure compliance with UN sanctions requirements, and autonomously by the EU to advance specific EU objectives. EU Regulations imposing sanctions apply directly in Member States. Further legislation is, however, required in each Member State to impose penalties for sanctions breaches under EU Regulations.
A country may also impose sanctions unilaterally as an extension of its foreign policy, for example the United States via the Office of Foreign Assets Control (OFAC sanctions), or United Kingdom through the Office of Financial Sanctions Implementation (OFSI sanctions), part of HM Treasury, which is the competent authority for the implementation of financial sanctions in the UK.
Why are sanctions used?
Each measure adopted will have its own objective in respect of the particular country, regime or person. Examples of objectives that sanctions measures may seek to achieve are:
- A change in the conduct of a particular country, regime or person
- To place pressure on a country, regime or person to comply with set objectives
- As a punitive measure when international peace and security are threatened and diplomatic efforts have failed
- To deter, prevent and suppress the financing of terrorism and terrorist acts.
What form do sanctions measures take?
Sanctions tend to take the form of restrictive/coercive measures. Measures may be economic, diplomatic or cultural such as:
- The freezing of funds
- The withdrawal of financial services
- Bans or restrictions on trade
- Bans or restrictions on travel
- Suspension from international organisations.
Financial Sanctions can limit the provision of certain financial services or restrict access to financial markets, funds and economic resources and are generally imposed to.
- coerce a regime, or individuals within a regime, into changing their behaviour (or aspects of it) by increasing the cost on them to such an extent that they decide to cease the offending behaviour
- constrain a target by denying them access to key resources needed to continue their offending behaviour, including the financing of terrorism or nuclear proliferation
- signal disapproval, stigmatising and potentially isolating a regime or individual, or as a way of sending broader political messages nationally or internationally
- protect the value of assets that have been misappropriated from a country until these assets can be repatriated.
How are sanctions measures implemented in Jersey?
Currently, Jersey enforces all UN and EU sanctions regimes through the local sanctions Orders, which implement the relevant EU sanctions Regulations. While the UK is an EU member this means that Jersey’s sanctions align with those of the UK. It is the Government’s intention to continue to align its sanctions with those of the UK following the UK’s departure from the EU.
On 19 July 2019 the Sanctions and Asset-Freezing (Jersey) Law 2019 (SAFL) came into force to ensure that all UN, EU, and UK terrorism asset-freeze designations continue to be effective in Jersey immediately, and that the Island can continue to meet its obligation to implement non-terrorism related UN asset-freeze designations without delay. SAFL adds the power to implement UK sanctions to the ability to implement UN and EU sanctions, bringing them together into one piece of legislation.
EU and UK sanctions and Brexit
Jersey will continue to implement UN and EU sanctions measures by implementing the relevant EU sanctions Regulations until there is more clarity over what the UK will do once it exits the EU. Upon Brexit, any UK sanctions regulations in force would not be implemented immediately as a period of time will be needed to draft replacement Jersey sanctions Orders and make any other necessary changes.
On 19 July 2019 all existing Jersey sanctions Orders that were made under the European Union Legislation (Implementation) (Jersey) Law 2014 (the 2014 Law) were grandfathered in under SAFL and, for the time being, will continue to operate in the same way as they did previously. Guidance by regime can be found on the JFSC website.
A sanctions Order may provide that an EU Regulation is to have effect in Jersey as though it were an enactment.
A sanctions Order may also use ambulatory references with the effect that any amendments to the lists in the Annexes to the EU Regulation will automatically apply. This means that any additional asset-freeze designations are effective immediately in Jersey.
A sanctions Order Implementing EU sanctions takes the following format:
- EU Legislation (Sanctions – Country X) (Jersey) Order [Year]
- For example: EU Legislation (Sanctions – Al-Qaida) (Jersey) Order 2014.
In the past, United Nations sanctions orders were prepared in line with section one of the United Nations Act 1946, forwarded to the Privy Council for Royal Assent and registered in the Royal Court. This process was slow and has now been replaced by the EU sanctions process described above. However, until all the UN sanctions orders have been replaced by equivalent EU measures, some of the older UN orders will still remain in force.
The orders that remain in force are listed on the Jersey Legal Information Board website. Changes made by the UN Sanctions Committee may effect various changes without the need for a fresh order; for example, amendments made to a list of ‘designated persons’.
Who is required to comply with sanctions measures implemented in Jersey?
In broad terms, sanctions measures implemented in Jersey apply to all:
- Persons (legal and natural persons) located in or operating in or from within Jersey.
- Persons (legal and natural persons) incorporated or constituted under the Law of Jersey.
Certain sanctions measures may place duties on specific persons or sectors. For example, the sanctions measures against Iran place certain additional duties on financial and credit institutions incorporated, constituted or doing business (in whole or part) in Jersey.
As a country’s sanctions measures tend to be applicable to nationals of that country and bodies constituted or incorporated under the law of that country, wherever those persons are situated, it is important to understand any obligations that may follow from having such links to another country.
Why is it important to comply with sanctions legislation?
Failure to comply with Jersey sanctions legislation is a criminal offence and penalties include prison terms and fines.
Penalties for breaching sanctions are set out in the legislation implementing the particular sanction measure(s). A person guilty of an offence is liable on conviction to imprisonment and/or a fine. Prosecutions may take place not only against a business, but also key players within a business if a breach takes place with their connivance or neglect.
Compliance with sanctions legislation is important for a number of reasons. If a person does not comply with sanctions measures, a person may help finance or assist:
- terrorism or terrorist organisations
- the production, development or use of weapons, including chemical, nuclear and biological warfare (weapons of mass destruction)
- political repression or human rights abuses within a state.
Helping to assist or finance any of the above is likely to result in reputational damage to a business, and to the Island.
How long does a sanctions measure last?
Some sanctions measures are for a specific duration, others are unlimited. It is important to check the time frame of a sanctions measure by reference to the relevant legislation.
Who has responsibility for sanctions matters in Jersey?
A range of individuals and departments have responsibilities under sanctions legislation.
The Ministry for External Relations
The Minister for External Relations is responsible for the overall sanctions policy in Jersey. This includes:
- Co-ordinating the introduction of sanctions measures, via Jersey legislation
- Acting as the reporting depository for sanctions matters
- Licensing exemptions.
Under SAFL all relevant financial institutions have reporting obligations and must inform the Minister of External Relations, as soon as practicable, with any information that would ‘facilitate compliance’ with EU sanctions regulations that are implemented in Jersey. It is important to be aware that this obligation is in addition to the obligation to report SARs to the FIU.
On 19 July 2019 existing sanctions licences that were issued under sanctions Orders made under the 2014 Law remain valid. However, if these Orders are revoked and replaced with new Orders implementing UK sanctions regulations made under SAMLA, existing licences may need to be amended or replaced.
New licence applications in respect of an asset-freeze, can be made in the usual way by completing the Asset-Freeze Licence Application Form. Suspected breaches of sanctions prohibitions can be reported in the same way: by completing the Suspected Breach Notification Form. Once completed the forms should be returned to email@example.com.
States of Jersey Customs and Immigration Service
The States of Jersey Customs and Immigration Service are responsible for the enforcement of any sanctions targeting the movement of goods.
In Jersey controls over the export and import of goods are governed by the Customs and Excise (Import and Export Control) (Jersey) Order 2006 and the Open General Export Licence.
Jersey Financial Services Commission
Under Article 5 of the Financial Services (Jersey) Law 1998, the JFSC has the power to generally supervise persons registered by it. Article 11 of the Money Laundering (Jersey) Order 2008 (the MLO) requires that relevant persons must maintain appropriate policies and procedures in respect of that person’s financial services business in order to prevent and detect money laundering. Under Article 11(3)(e) of the MLO this includes policies and procedures to determine whether a business relationship or transaction, or proposed business relationship or transaction, is with a person connected with a country or territory that is subject to measures for purposes connected with the prevention and detection of money laundering, such measures being imposed by one or more countries or sanctioned by the European Union or the United Nations. As a result the JFSC monitors financial services businesses to ensure that they comply with Article 11(3)(e) of the MLO.
The JFSC also conducts outreach to raise Industry awareness of sanctions vulnerabilities, with a view to securing the efficient and effective provision of financial services in or from within Jersey under Article 8(3)(d) of the Financial Services Commission (Jersey) Law 1998.
The responsibility for monitoring and ensuring compliance with sanction measures rests with individual businesses, for example banks, through their compliance officers.
Financial sanctions cover the provision of funds, economic resources and/or financial services.
Financial sanctions are either comprehensive or targeted.
Comprehensive sanctions are aimed at a particular regime and may result in the:
- prohibition of the transfer of funds to a sanctioned country
- freezing of a particular government’s assets
- freezing of assets of corporate entities and/or the residents of a sanctioned country.
Targeted sanctions are aimed at particular individuals or entities.
Common misconceptions about financial sanctions
(Adapted from the ‘financial services firms approach to UK financial sanctions’ published by the FORMER Financial Services Authority in April 2009)
The following are commonly held misconceptions regarding financial sanctions:
- Individuals and entities who are the subject of sanctions are all based overseas
- This is incorrect as sanctioned individuals and entities can be based anywhere, including in the UK.
- Financial sanctions are a form of FCA enforcement action.
- Financial sanctions are measures adopted by the international community and are not a form of FCA enforcement action.
- Customer due diligence checks for anti-money laundering purposes are the same as screening sanctions lists.
- Checking a client’s identity alone will not confirm whether the individual is the subject of sanctions measures.
- Sanctions targets are the same as Politically Exposed Persons (PEPs).
- Most PEPS are not in fact subject to sanctions. Some, however, will be.
- Funds of those sanctioned cannot be frozen because it may constitute ‘tipping-off’
- Lists detailing sanctions targets are publically available and most individuals or entities will be aware they are on such lists. This means that freezing the assets of a sanctioned person and informing them of that fact alone will not constitute tipping-off. If, however, it is necessary in the circumstances to file a Suspicious Activity Report (SAR) (see section 7 of the Financial Sanctions Practical Guidance) then disclosure of that fact would in the majority of cases constitute tipping-off under Article 35 of the Proceeds of Crime (Jersey) Law 1999, Article 35 Terrorism (Jersey) Law 2002.
- A firm is exempt from the sanctions regime because they only process low value transactions.
- There are no exemptions for low value transactions.
- Sanctions screening is unnecessary where a firm does not hold client money or deal with payments.
- Sanctions screening is necessary even if a firm does not handle money or payments because some sanctions extend to the simple provision of financial services.
- Sanctions do not apply to insurance business, or are a no or low risk area in insurance business.
- Financial sanctions can apply to the provision of all financial services, including insurance.
Challenging European Union and United Nations designations
Any natural person affected by inclusion on a sanctions list issued by the European Commission may make a request to the Commission for the grounds for their listing. Such a request should be sent to:
The Council of the European Commission
Rue de la Loi 175
Persons and entities who are subject to sanctions because they are listed by the Sanctions Committee of the United Nations may petition that Committee for de-listing by contacting the Office of the Ombudsman at the United Nations Headquarters in New York, at the address below:
Office of the Ombudsman
New York, NY 10017