Handbook of Anti-Money Laundering.

CHAPTER 10FINANCIAL SANCTIONS

10.1 WHAT ARE FINANCIAL SANCTIONS?

Financial sanctions are orders which prevent firms from dealing with individuals or organisations who can be linked to the financing of terrorism. They are issued by international bodies such as the United Nations and the European Union as well as by individual jurisdictions. This is not an area where risk-based regulation applies. The goals of the rules are clear – these are people and organisations that a firm should not deal with.

Individuals or organisations linked with the financing of terrorism or nuclear proliferation are known as “targets” and will be specifically referred to. This is an approach which operates within the international community through the provision of lists, as well as through individual governments acting unilaterally. For example, it is an offence under UK law to provide funds to those on the international list unless, in the case of financial institutions, a licence is obtained from Her Majesty's Treasury. Financial sanctions are mostly focused on international targets, and currently there are around 50 UK individuals and entities on the HM Treasury sanctions lists.

10.2 FAILING TO COMPLY

Firms which allow individuals connected with financing terrorism to maintain accounts or undertake transactions with them risk criminal penalties. In this case, the penalties would be enforced by the jurisdictional legal services against the firm, and in some cases also against the management directly. ...