Financial Crime World

Targeted Financial Sanctions (TFS) Guidance for Banks and Financial Service Providers

Introduction

This guidance provides essential information on complying with Targeted Financial Sanctions (TFS) regulations for banks, financial service providers (FSPs), and designated non-financial business and professions (DNFBPs).

Prohibitions

When dealing with individuals or entities on the UN Consolidated List or a domestic designations list, you must be aware of the following prohibitions:

  • You are generally prohibited from rendering financial or related services to these individuals or entities.
  • These prohibitions extend to associated individuals and entities that may not appear on a sanctions list but are subject to TFS.

Ownership

Understanding ownership structures is crucial in complying with TFS regulations. Here’s what you need to know:

  • “Owned” means having a legal entitlement, either directly or indirectly, to 25% or more of an entity.
  • If the beneficial ownership of an entity rests with a designated individual, all entities in the ownership chain are subject to TFS.

Control

Exercising control over decisions about financial or operational matters is another critical aspect of TFS regulations. Here’s how you can determine if a legal person/entity is controlled by another:

  • Satisfaction of at least one of several criteria is sufficient to establish that a legal person/entity is controlled by another:
    • Having the right or exercising the power to appoint or remove a majority of members of an administrative, management, or supervisory body.
    • Controlling alone or pursuant to an agreement with other shareholders in or members of a legal person/entity.

Reporting

As a bank, FSP, or DNFBP, you must report to the Financial Intelligence Unit (FIU) any assets frozen or actions taken in compliance with the prohibition requirements of the Regulations. You must submit a report if:

  • You find that one of your customers is a designated individual or entity.
  • You are otherwise in possession or control of a freezeable asset.
  • You are requested to provide a financial or related service prohibited by the Regulations.

By following this guidance, you can ensure compliance with TFS regulations and prevent potential risks associated with non-compliance.