On 20 March 2019, the UK Treasury published guidance to assist with the implementation of and compliance with the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 (the ‘Regulations’) (available here), in accordance with Section 43 of the Sanctions and Anti-Money Laundering Act 2018 (‘the Sanctions Act’).
In summary, this guidance provides best practice methods for complying with the prohibitions and requirements imposed by the Regulations. The Regulations are aimed at furthering the prevention of terrorism in the UK or elsewhere, by protecting UK national security interests. In addition, the Regulations ensure that the UK implements the necessary UN obligations under resolution 1373 (paragraphs 1 and 2; available here) and grants powers to the Treasury to designate persons by name who they believe to have been involved in or are involved in, terrorist activity.
The Regulations impose financial sanctions that apply within the UK and in relation to the activities of all UK persons worldwide (which includes British nationals and legal bodies incorporated under UK law, including all companies established in the UK and their respective overseas branches). The financial sanctions that can be imposed under the Regulations by the Office of Financial Sanctions Implementation (‘OFSI‘),[1] includes the freezing of funds and economic resources of designated persons and the prohibition of economic resources being made available to or for the benefit of, either directly or indirectly, designated persons or entities. The designation criteria for the implementation of an asset freeze on designated persons is set out in Regulation 6.
Broader powers such as the request for information from designated persons (and subsequent offences for non-compliance) are also provided by the Regulations. Such powers are contained in Part 5 of the Regulations, which also provides information on obligations imposed on relevant firms to report information to HM Treasury about known or suspected designated persons or about persons who have committed an offence under the Regulations.
To enable or facilitate a contravention of, or to circumvent, any of the prohibitions in these Regulations is a criminal offence, with the most severe breach of financial sanctions carrying a maximum sentence of 7 years’ imprisonment and / or a fine.[2]
However, there are exceptions to some of the financial sanction prohibitions that don’t require a licence from OFSI. For example, the Regulations grant an exception for acts done for the purposes of national security or prevention of serious crime under Regulation 18.
Further information on the exemptions available and broader guidance on how OFSI implements financial sanctions can be found on the OFSI pages of GOV.UK.
[1] OFSI is the authority responsible for implementing the UK’s financial sanctions on behalf of HM Treasury. Further OFSI guidance can be found here.
[2] The full list of penalties that can be given for a breach of the Regulations is provided in Regulation 28 (see here).
