Overview - International Sanctions in Jersey
Overview
Jersey is a responsible citizen on the world stage and takes compliance with international sanctions extremely seriously.
Sanctions are issued by the United Nations Security Council (UNSC) to maintain and restore international peace and security. They all also often used as a foreign policy tool by individual states, or groups of countries working together, when all other diplomatic methods have failed.
Following the UK’s departure from the EU, the UK implements its own autonomous sanctions. Jersey implements both UNSC sanctions and autonomous UK sanctions.
A wide range of measures can be enforced under sanctions regimes, from asset-freezes to restrictions on the import or export of specified goods, and prohibitions on the provision of financial and other services.
While many parts of government from customs to the law officers have relevant responsibilities the key players are the Minister for External Relations and Financial Services who is the 'Competent Authority' for Jersey. As well as his team, the Jersey Financial Sanctions Implementation Unit coordinates the introduction of sanctions measures and assists the Minister in carrying out his duties as Competent Authority: this includes receiving sanctions compliance reports, processing sanctions licence applications, and publishing financial sanctions notices and guidance.
Application of sanctions in Jersey
The UK's membership of the UN extends to Jersey. This means that Jersey has an obligation to implement UNSC sanctions resolutions.
Both UNSC sanctions and autonomous UK sanctions are implemented by the UK under the relevant Regulations made under the Sanctions and Money Laundering Act 2018 ("SAMLA").
In turn, Jersey implements both UNSC sanctions and autonomous UK sanctions by applying the relevant SAMLA Regulations to acts in Jersey or acts carried out by Jersey persons under the Sanctions and Asset-Freezing (Jersey) Law 2019 ("SAFL"), and an Order made under SAFL - the Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021 (the "Jersey Order").
Sanctions legislation
Historically there were sometimes issues in Jersey passing legislation to implement sanctions imposed by the EU or other bodies in a timely manner. The latest regime under SAFL together with the Jersey Order, ensures that UNSC and autonomous UK sanctions are implemented immediately on coming into force.
Asset-Freeze
Asset-freeze designations are targeted financial sanctions that require anyone holding a listed person's funds or economic resources to apply a freeze. Under SAFL the funds and economic resources are required to be frozen immediately by a person in possession or control of them without notice and without delay. Asset freezes preserve the status quo. They are not a confiscation or transfer of the assets frozen – there is no change in ownership of the frozen funds or economic resources.
Where an asset freeze applies, Articles 10 to 14 of SAFL means that it is generally prohibited for a person to:
deal with the frozen funds or economic resources, belonging to or owned, held or controlled by a designated person
make funds or economic resources available, directly or indirectly, to, or for the benefit of, a designated person
make financial services available, directly or indirectly, to a designated person
engage in actions that, directly or indirectly, circumvent the financial sanctions prohibitions (see Article 17 SAFL)
When do the sanctions requirements bite?
If a person has knowledge or ‘reasonable cause to suspect’ that they are in possession or control of, or are otherwise dealing with, funds or economic resources of a designated person SAFL and the Jersey Order mean that that person must:
freeze such accounts, and other funds or economic resources without notice and without delay (under Articles 10-14 SAFL).
refrain from dealing with the funds or assets or making them available (directly or indirectly) to such persons unless licensed by the Minister for External Relations (“Minister”) under Article 17 SAFL.
report any findings to Minister, together with any additional information that would facilitate compliance with SAFL (under Article 32) .
provide any information concerning the frozen assets of designated persons that MER may request (under Article 33 SAFL). Information reported to MER may be passed on to other regulatory authorities or law enforcement under the powers set out in Article 36 SAFL.
Asset freezing definitions under SAFL
Funds generally means financial assets and benefits of every kind, including but not limited to:
cash, cheques, claims on money, drafts, money orders and other payment instruments
deposits with financial institutions or other entities, balances on accounts, debts and debt obligations
publicly- and privately-traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivatives contracts
interest, dividends or other income on or value accruing from or generated by assets
credit, right of set-off, guarantees, performance bonds or other financial commitments
letters of credit, bills of lading, bills of sale
documents showing evidence of an interest in funds or financial resources
any other instrument of export financing.
Economic resources generally means assets of every kind – tangible or intangible, movable or immovable – which are not funds, but may be used to obtain funds, goods or services.
Reporting obligations
Article 32 of SAFL applies reporting obligations to all sanctions regimes in force. The Minister must be informed by a relevant financial institution if:
it holds an account of a person, has entered into dealings or an agreement with a person or has been approached by or on behalf of a person, and;
it knows, or has reasonable cause to suspect, that the person:
i) is a designated person, or;
ii) has committed, is committing or intends to commit an offence, and
the information or other matter on which the knowledge or reasonable cause for suspicion is based came to it in the course of carrying on its business.
The Minister must be given information including:
the basis for the relevant financial institution's knowledge or reasonable cause for suspicion;
any information that the relevant financial institution holds about the person by which the person can be identified, and;
if the person is a customer or client of the institution, the nature and amount or quantity of any funds or economic resources held by the institution for the person at the time when the institution first had the knowledge or reasonable cause for suspicion.
Reporting forms are required to be completed and returned to the team in government.
As well as reporting under the sanctions legislation the normal obligations to report suspicious activities to the Financial Intelligence Unit also apply independently and are not satisfied by reporting to the Minister.
A relevant financial institution is defined in Article 1 of SAFL and includes:
all financial services businesses regulated by the JFSC under regulatory laws, as specified in Part A Schedule 2 of the Proceeds of Crime (Jersey) Law 1999;
certain other financial services businesses listed in Part B Schedule 2 of the Proceeds of Crime (Jersey) Law 1999;
a person (not being an individual) that is incorporated or constituted under the law of Jersey and carries on such financial services business in any part of the world.
Sanctions licences and exceptions
Licences can be obtained in order to deal with funds or financial resources contrary to the asset-freeze prohibitions. The regime permits a licence to be granted by the Minister.
Non asset-freeze prohibitions: for licence applications that relate to non asset-freeze prohibitions (e.g. restrictions on investments) an applicant should apply in writing to the Minister. A licence will only normally be granted by the Minister if there is scope in the relevant UK Sanctions Regulations for an equivalent licence to be granted by the UK Treasury.
Exceptions to prohibitions apply automatically in certain defined circumstances as set out in Article 15 of SAFL, and in UK Sanctions Regulations implemented in Jersey under the Jersey Order, and do not require you to obtain a licence from the Minister. However, you should be particularly cautious when seeking to use exceptions in implemented UK Sanctions Regulations; many such exceptions are drafted for a specific UK-context (e.g. referring to UK legislation) and legal advice is often needed to be certain of the application.
UK General Licences (non-Russia) do not apply to Jersey persons or institutions operating in Jersey; however, they may be considered as the basis for a licence application.
UK General Licences (Russia Regime): the provisions in respect of non-asset-freezeprohibitions apply automatically in Jersey.
Avoiding Sanctions
Illegitimately trying to evade sanctions is a criminal act. It is the deliberate attempt to avoid or circumvent the impact of the sanctions in place against a targeted country, group, or individual.
Summary
Sanctions legislation and its application to financial services businesses’ policies and procedures should be carefully considered in the light of the sanctions applied to Russia related assets. The sanctions regimes are complicated and legal advice is recommended to help businesses traverse their way through the process.
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