Financial Assets and Benefits: A Guide to Compliance with Targeted Financial Sanctions
As the global economy continues to evolve, it’s essential to understand the importance of compliance with targeted financial sanctions (TFS). In this article, we’ll delve into the world of financial assets and benefits, including cash, deposits, securities, interest, dividends, credit, guarantees, and more.
What are Financial Assets?
Financial assets refer to all types of funds, balances on accounts, debts, and debt obligations that can be used to obtain goods or services. This includes:
- Cash, checks, claims on money, drafts, money orders, and other payment instruments
- Deposits with financial institutions or other entities
- Publicly- and privately-traded securities and debt instruments, including stocks, 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
Other Assets: What They Are and How to Deal with Them
Other assets refer to all types of movable and immovable property that are not funds but can be used to obtain funds, goods, or services. This includes:
- Goods, such as items, materials, and equipment
- Tangible and intangible property, including real estate, vehicles, and intellectual property
Dealing with Financial Assets and Other Assets
When dealing with financial assets, you must ensure that all transactions comply with TFS regulations. This means moving, transferring, altering, using, accessing, or otherwise dealing with funds in any way that would result in any change to their volume, amount, location, ownership, possession, character, or destination.
Similarly, when dealing with other assets, you must use them to obtain funds, goods, or services in any way, including selling, hiring, or mortgaging them.
Prohibitions on Financial Services
Under TFS regulations, financial institutions and designated non-financial businesses and professions (DNFBPs) are prohibited from rendering financial or related services to individuals or entities listed on the UN Consolidated List or domestic designations lists. This includes:
- Cash transactions
- Transfers of funds
- Credit and lending
- Insurance and reinsurance
- Trade finance
- Securities and commodity trading
Associated Individuals and Entities
The prohibitions also extend to associated individuals and entities, including those who are owned or controlled directly or indirectly by designated individuals or entities. This means that even if an individual or entity is not listed on a sanctions list, they may still be subject to TFS regulations.
Ownership and Control
Under TFS regulations, ownership and control are defined as follows:
- Ownership refers to having a legal entitlement to 25% or more of an entity.
- Control refers to exercising influence, authority, or power over decisions about financial or operational matters.
Reporting Requirements
Banks, financial service providers (FSPs), and DNFBPs must report to the Financial Intelligence Unit (FIU) any assets frozen or actions taken in compliance with TFS regulations. This includes attempted transactions and any information that may be relevant to TFS enforcement.
In conclusion, compliance with targeted financial sanctions is critical for maintaining a stable and secure global economy. By understanding what constitutes financial assets and other assets, how to deal with them, and the prohibitions on financial services, you can ensure that your institution is in compliance with TFS regulations and helps to prevent the misuse of financial systems for illegal or harmful activities.