The Sanctions Regime

• Countries will apply financial sanctions as part of international moves to bring pressure to bear on target groups or regimes (due to measures adopted by the United Nations) or to meet domestic policy objectives.

• Sanctions are normally used by the international community for one or more of the following reasons:

- to encourage a change of behaviour of a target country or regime - to apply pressure on a target country or regime to comply with set objectives- as an enforcement tool when international peace and security has been threatened and diplomatic efforts have failed- to prevent and suppress the financing of terrorists and terrorist acts.

Why do Countries apply financial sanctions?

• Financial sanctions are normally one element of a package of measures used to achieve one or more objectives listed in the previous slide. Current financial sanctions measures typically take the form of targeted asset freezes on individuals or entities.

• Under the United Nations Charter, the UN Security Council can take enforcement measure to maintain or restore international peace and security. Such measures range from financial sanctions to international military action. The range of sanctions can vary from comprehensive financial and trade sanctions to more targeted measures such as arms embargoes, travel bans, financial or diplomatic restrictions. Post World War 2 targeted sanctions are the norm.

• In addition, the European Union applies sanctions in pursuit of the specific objectives of the Common Foreign and Security Policy (CFSP) as set out in the Treaty of the European Union.

• The home state may include domestic financial restrictions measures – a good example is the United States sanction regime against Cuba.

What are financial sanctions?

• Financial sanctions usually include an asset freezing regime. This involves:- a prohibition on dealing with funds or economic resources belonging to or owned, held or controlled by designated person-a prohibition on making funds or economic resources available, directly or indirectly to or the benefit of a designated person.

An asset freeze prevents anyone dealing with funds or economic resources which belong to, or which are owned, held or controlled by a designated person.

Please note that it is a criminal offence to knowingly – or with reasonable cause to suspect – make funds available, directly or indirectly to a designated person. Making funds indirectly available to a designated person would involve the funds being routed via a third party. So, for example, it would be a criminal offence to give funds to a designated person’s friend knowing that some or all of the funds will be given to the designated person.

Financial Sanctions – asset freezing and other measures

• How do I know if I am dealing with a sanctioned individual?

• In regards to the United Kingdom, HM Treasury publishes a consolidated list of designated persons (sanctions targets) that have been designated as being subject to financial sanctions by the United Nations and/or the European Union and/or domestically by the UK under specific legislation.

• Other countries may publish their own lists of financial sanctions targets, but only the Consolidated List published by HM Treasury contains the designated persons that are the subject of financial sanctions in force in the UK.

• The Treasury publishes the list as part of its efforts to facilitate compliance with financial sanctions measures in the UK. Where there is a legal basis for an asset freeze in the UK, the name of the target will be included on the Treasury’s consolidated List. Collectively, the individuals and entities are called financial sanctions targets and other persons are generally prohibited from engaging in financial dealings with them.

Sanction Lists

• As mentioned previously other countries may have their own lists of financial sanctions targets.

• In regards to the United States, the Office of Foreign Assets Control is formally charged with maintaining the Sanctions List of the United States.

• The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. OFAC acts under Presidential national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze assets under US jurisdiction. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close cooperation with allied governments.

Sanctions List 2

WAY Fund Managers have a legal and regulatory obligation to ensure that they do not provide financial services to individuals and entities as listed on the HM Treasury Sanctions list. WFM manage their obligation by ensuring that all new clients and entities are screened against the most recent list and also scan the WFM database against an HM Treasury updates which are received on a regular basis. OFAC screening is also conducted on an ongoing basis.

Should a match be found, the account must be frozen straight away and reported to the Financial Crime Team.

One of the first examples of Sanctions dates back to before 1812 and was by the United States against Great Britain for the harassment of American

sailors.

(Source; Office of Foreign Asset Control – Administrator / enforcer US Sanctions)

(Source; Office of Foreign Asset Control – Administrator / enforcer US Sanctions)

(Source; Office of Foreign Asset Control – Administrator / enforcer US Sanctions)

The Sanctions Regime at WAY Fund Managers

With regards to Fund Partners Ltd, the Transfer Agent (IFDS) for the Fund Partners funds use a screening tool called ‘Datanomics’. Datanomics screens the Fund Partners’ client database against a number of Sanctions lists including HM Treasury and OFAC and provides the results of this screening for WAY Fund Managers’ Financial Crime Team to review. Any matches will be flagged for urgent attention.

Should a match be found, the account must be frozen straight away and the WAY Financial Crime Team will liaise with IFDS and the relevant authorities.

The Sanctions Regime at Fund Partners Ltd

The Sanctions regime is constantly evolving. One only needs to keep tabs on recent political news items to understand how an individual or entity can by added or deleted to the aforementioned lists.

WAY Fund Managers receive continuous updates from HM Treasury and OFAC on the current status of their designated lists. Any changes are immediately updated and screened against to ensure that the lists used are current and that the WAY database does not include any individuals on the HM Treasury or OFAC lists.

Please be aware of the recent fines that have been received by RBS, Standard Chartered and Barclays for recent flotation of the Sanctions regime. Sanctions screening is not something to be taken lightly.

Any Questions?

The Sanctions Regime at WAY Fund Managers

North Korea = Daily Telegraph / AFP/GettyRatko Mladic/Reuters