Compliance with Targeted Financial Sanctions: Guidelines for Banks, FSPs, and DNFBPs

Targeted Financial Sanctions (TFS) are an essential tool used by governments to combat terrorism, proliferation, and other threats to international peace and security. To ensure compliance with these regulations, banks, financial services providers (FSPs), and designated non-financial businesses and professions (DNFBPs) must adhere to specific guidelines.

Identification of Designated Individuals/Entities

When dealing with clients or customers, it is crucial for banks, FSPs, and DNFBPs to identify any individuals or entities that appear on the UN Consolidated List or a domestic designations list. This includes:

• Checking against lists of designated individuals and entities
• Monitoring for suspicious transactions or activities

Asset Freeze and Financial Services Restrictions

Upon identifying a positive match with a designated individual or entity, these institutions are generally prohibited from rendering financial or related services directly or indirectly. This includes:

• Freezing assets held by the designated individual or entity
• Restricting access to financial services

Extension of Prohibitions to Associated Individuals/Entities

Asset freezes and financial service restrictions also apply to entities owned or controlled by a designated person and individuals or entities acting on behalf of or at the direction of a designated person.

Definition of Ownership and Control

For the purposes of TFS, “owned” means having a legal entitlement, either directly or indirectly, to 25% or more of an entity. “Control” or “controlled” means exercising influence, authority, or power over decisions about financial or operational matters.

Reporting Requirements

Banks, FSPs, and DNFBPs must report to the Financial Intelligence Unit (FIU) any assets frozen or actions taken in compliance with the prohibition requirements of the Regulations, including attempted transactions.

Guidance on TFS for Banks, FSPs & DNFBPs

The guidelines provide detailed explanations of ownership, control, and reporting requirements, as well as examples of situations that may constitute a breach or circumvention of TFS.

Compliance Best Practices

To ensure compliance with targeted financial sanctions, banks, FSPs, and DNFBPs should:

• Implement effective screening procedures to identify designated individuals and entities
• Establish clear policies and procedures for freezing assets and restricting access to financial services
• Provide regular training for staff on TFS regulations and reporting requirements
• Maintain accurate records of transactions and actions taken in compliance with the Regulations