Understanding sanctions lists

Sanctions are measures imposed by governments or bodies to achieve the objectives of the foreign policy of a country or a group of countries without the use of armed force. Sanctions are measures implemented to protect international law, human rights, and rule of law.

The main sanctions lists that affect most countries worldwide include:

1. OFAC Sanctions 

The Office of Foreign Assets Control (“OFAC”) of the US Department of the US Treasury enforces economic and trade sanctions based on the US foreign policy and national security goals. 

The relevant sanctions target countries, terrorists, drug traffickers, persons engaged in activities relating to the proliferation of weapons of mass destruction and other threats to the US national security.

OFAC sanctions can be either comprehensive or selective and may include blocking of assets and trade restrictions.

OFAC Sanctions Lists include:

  • Specially Designated Nationals (SDN) List
  • Consolidated Sanctions (non-SDN) List
  • Additional OFAC Sanctions List

According to the OFAC website, “US persons must comply with OFAC regulations, including all US citizens and permanent resident aliens regardless where they are located, all persons and entities within the US, all incorporated entities and their foreign branches”.

2. European Union (EU) Consolidated Sanctions List

Otherwise known as “restrictive measures”, EU sanctions aim to safeguard EU’s values, its fundamental interests and security. Also, EU sanctions aim to support democracy, the rule of law, human rights, preserving peace, preventing conflicts, and strengthening international security.

EU sanctions do not target a country or population. EU sanctions may target governments of third countries, companies, and individuals. Measures include:

  • Asset freezes
  • Travel bans
  • Economic and financial measures (import and export restrictions, restrictions on banking services etc)
  • Arms embargoes (prohibition on exporting goods set out in the EU common military list)

There are three types of sanctions regimes in the EU.

  1. Sanctions imposed by the United Nations (UN) and are transposed into EU law
  2. Reinforcing sanctions imposed by the UN by applying stricter and additional measures
  3. Implementing fully autonomous sanctions regimes.

There are more than 30 EU autonomous and UN transposed sanctions regimes in place globally.

All decisions to adopt, amend, lift, or renew sanctions are taken by the EU Council. Each EU member state is responsible for the implementation of all sanctions within their respective jurisdictions.

The European Commission is responsible for ensuring the uniform application of sanctions.

Other countries that implement sanctions include EU candidate countries, European Free Trade Association and European Economic Area (EEA) countries.

3. United Nations Security Council (UNSC) Consolidated List

The UNSC Consolidated list are imposed by the UN Security Council which is responsible for the maintenance of the international peace and security. UNSC sanctions aim to support peace, deter non-constitutional changes, prevent terrorism, protect human rights, and promote non-proliferation.

The Security Council has 15 members. The 5 permanent members which include China, Russia, the US, France and the UK. The permanent members have veto powers. There are also 10 non-permanent members. 

The Consolidated List consists of two sections:

  1. Individuals
  2. Entities and other groups.

UNSC sanctions have taken different forms including:

  • Comprehensive economic and trade sanctions
  • Arms embargoes
  • Travel bans
  • Financial or commodity restrictions.

All UN member states must comply with the UNSC sanctions list.

4. HM Treasury Sanctions List

The Office of Financial Sanctions Implementation (OFSI), part of the HM Treasury is the authority responsible for the implementation of financial sanctions in the UK.

The most common types of financial sanctions are:

  • Targeted asset freezes
  • Restrictions on a wide variety of financial markets and services (investment bans, restrictions on access to capital markets, cease of banking relationships and activities etc)
  • Directions to cease all business.

UK financial sanctions apply to:

  • All individuals and legal entities who are within or undertake activities within the UK’s territory
  • All UK nationals and legal entities established under UK law, including their branches, irrespective of where their activities take place.

5. The Australian Sanctions

The Australian Sanctions Office (ASO) is the regulator of the Australian government’s sanctions. Australia implements both, the UNSC sanctions but also it has its own autonomous sanctions imposed by the Australian foreign policy.

The most common sanctions measures include:

  • Restrictions on trade in goods and services
  • Restrictions on engaging in commercial activities
  • Targeted financial sanctions, including asset freezes on designated persons and entities
  • Travel bans on certain persons.

Australian sanctions apply to activities in Australia and to activities undertaken overseas by Australian citizens and Australian-registered corporate bodies.

Non-compliance with sanctions

It is a criminal offence to contravene sanctions that a country is subject to. The penalties for non-compliance include monetary fines, imprisonment, but also can extend to other penalties.

Obliged entities are required to have a sanctions compliance program in place and ensure the effective implementation to ensure that there are no prohibited dealings with persons that are subject to sanctions. 

iSPIRAL was proud a sponsor of the 12th NextGen Payments & RegTech Forum which took place on November 2-3, 2022. The 12th NextGen Payments & RegTech Forum was held at the prestigious Amathus Beach Hotel & Resort, in Limassol, Cyprus and is considered to be the ultimate meeting point for future oriented financial service enthusiasts in the payments and the regulatory space.

The agenda was full of insightful speeches and panel discussions on topics around the latest market trends, digitalization, regulations, innovation and technology. On day 1, Our Managing Director, Christos Ttiniozou, joined other industry experts on the panel about The Ethics of AI in Financial Services.  During the panel, Christos shared his point of view on the AI revolution and how this is implemented on the iSPIRAL solutions and how businesses can enhance their user  experience with state-of-the art onboarding processes.

On day 2, our AML & Compliance Director, Branka van der Linden, participated in a panel discussion about the  RegTech and Compliance Innovation: Key Trends & Challenges. The panelists shared their opinion on the importance of automating compliance management and increasing transparency and cost-efficiency. As a closing, they shared best practices that could be followed to align technology and people.

The event was a great opportunity to catch up with existing clients and partners as well as meet with new businesses that are looking for a RegTech partner for their AML, KYC, and Onboarding needs.

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