Financial Crime World

Accountable Institutions Must Provide Critical Communication to Clients Impacted by Targeted Financial Sanctions

The Centre for Public Integrity has emphasized the importance of accountable institutions providing clear and timely communication to clients who are impacted by targeted financial sanctions. This is crucial in preventing potential breaches of these obligations.

What You Need to Know

  • When an accountable institution determines that a client is a designated person or entity, it must immediately freeze their property and report this information to the Centre.
  • The Centre’s guidance notes that accountable institutions may exercise their discretion when determining the communication they provide to affected clients. However, such communication must be clear and timely.

A Recent Example

In a recent example, Bank C froze the assets of client Mr. T after discovering he was listed as a designated person on the Targeted Financial Sanctions (TFS) list. The bank is required to report this information to the Centre and apply an automatic freeze on funds linked to Mr. T’s property.

Key Takeaways

  • Accountable institutions are not required to seek written permission from the Minister of Finance or the Director of the Centre before releasing frozen assets, provided that the designated person is de-listed by the United Nations Security Council (UNSC) and communicated on the UNSC consolidated list and the Centre’s TFS list.
  • Accountable institutions must scrutinize client information against both the TFS list and the Prevention and Combating of Terrorist and Related Activities Act (POCDATARA Act) list.

Important Guidelines

The Centre has emphasized that accountable institutions must not lift the freeze on a designated person’s property unless:

  • They are de-listed by the UNSC and communicated on the relevant lists
  • A permit is obtained from the Minister of Finance or Director of the Centre

These guidelines aim to ensure that accountable institutions provide effective communication to clients impacted by targeted financial sanctions, while also preventing potential breaches of their obligations.