Compliance and Law

Who must comply with financial sanctions in place in the UK?

There may be two legislative instruments imposing a financial sanctions regime in the UK - a Statutory Instrument and/or an EC Regulation.

The relevant Statutory Instruments apply to any person in the UK and to any person elsewhere who is a British citizen, a British Overseas territories citizen, a British Overseas citizen, a British subject, a British National (Overseas), or a British protected person; or is a body incorporated or constituted under the law of any part of the UK or a Scottish partnership, including banks, financial institutions, charitable organisations and non-governmental organisations, in the UK or established under UK law. The UK statutory instruments do not apply to subsidiaries operating wholly outside the UK and which do not have legal personality under UK law.

EC Regulations imposing and/or implementing sanctions are part of Community law, are directly applicable and have direct effect in the Member States. The measures apply to nationals of Member States and entities incorporated or constituted under the law of one of the Member States, as well as all persons and entities doing business in the EU, including nationals of non-EU countries.

Can HM Treasury request information from any person in or resident in the UK to facilitate compliance with financial sanctions legislation?

Please refer to the relevant Statutory Instrument for each specific financial sanctions regime. However, the following provides general guidance on this matter:

HM Treasury (or any person authorised by HM Treasury for that purpose, either generally or in a particular case) ("the requesting authority") may request any person in or resident in the UK to furnish to the requesting authority any information in his possession or control, or to produce to the requesting authority any document in his possession or control, which the requesting authority may require for the purpose of ensuring compliance with a specific Statutory Instrument and/or EC Regulation; and any person to whom such a request is made must comply with it within such time and in such manner as may be specified in the request. The power to request any person to produce documents includes power to take copies of or extracts from any document so produced and to request that person or, where that person is a body corporate, any other person who is a present or past officer of, or is employed by, the body corporate, to provide an explanation of any such document.

Any person who -

without reasonable excuse, refuses or fails within the time and in the manner specified (or, if no time has been specified, within a reasonable time) to comply with any request made under the relevant Statutory Instrument;
intentionally furnishes false information or a false explanation to any person exercising his powers under the relevant Statutory Instrument; or
with intent to evade the provisions of the relevant Statutory Instrument, destroys, mutilates, defaces, secretes or removes any document,

is guilty of an offence.

No information furnished or document produced (including any copy or extract made of any document produced) by any person in pursuance of a request made under the relevant Statutory Instrument shall be disclosed except -

with the consent of the person by whom the information was furnished or the document was produced: provided that a person who has obtained information or is in possession of a document only in his capacity as servant or agent of another person may not give consent for the purposes of this sub-paragraph but such consent may instead be given by any person who is entitled to that information or to possession of that document in his own right;
to any person who would have been empowered under the relevant Statutory Instrument to request that it be furnished or produced or any person holding or acting in any office under or in the service of the Crown in respect of the UK Government;
on the authority of HM Treasury, to the European Commission or to any of the competent authorities listed in the relevant EC Regulation, for the purpose of assisting the Commission or that competent authority to ensure compliance with the relevant EC Regulation; or
with a view to the institution of, or otherwise for the purposes of, any proceedings for an offence under the relevant Statutory Instrument.

Is it an offence to make funds available to a target of financial sanctions legislation?

This is covered specifically in each relevant Statutory Instrument. In general terms, any person to whom the relevant Statutory Instrument applies who, except under the authority of a licence granted by HM Treasury under the relevant Statutory Instrument, makes any funds, economic resources or, in some circumstances, financial (or related) services available directly or indirectly to or for the benefit of persons listed under the relevant Statutory Instrument or EC Regulation is guilty of an offence.

What are the penalties for committing an offence under financial sanctions legislation?

These are covered specifically in each relevant Statutory Instrument. However, in general terms, any person guilty of an offence under the relevant Statutory Instrument shall be liable on conviction to imprisonment and/or a fine. The maximum term of imprisonment is currently seven years or two years in EC regimes.

Where any body corporate is guilty of an offence under the relevant Statutory Instrument, and that offence is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity, that person as well as the body corporate is guilty of that offence and is liable to be proceeded against and punished accordingly.

Are United Nations Security Council Resolutions and European Union Regulations directly applicable in UK law?

EC Regulations imposing and/or implementing sanctions are part of Community law, are directly applicable and have direct effect in the Member States. However, a Statutory Instrument is required to introduce any penalties resulting from a breach of the Regulation into UK law.

United Nations Security Council Resolutions are not directly applicable in UK law. However, under the United Nations Charter, member states are called upon to give effect to any measures decided upon by the Security Council. An EC Regulation or a Statutory Instrument is required to give effect to these measures in UK law. In most cases, a Statutory Instrument would be effected in the UK to introduce the measures ahead of the European Union adopting a Regulation introducing the measures into Community Law. If UN imposed measures are given effect by an EC Regulation, a Statutory Instrument would still be required to introduce any penalties resulting from a breach of the Regulation.