Financial Crime World

Frozen Funds: The Asset Freeze

The UK government has implemented strict regulations to freeze the assets of individuals and entities designated under international sanctions. These measures aim to prevent the misuse of funds and economic resources for nefarious purposes.

Exceptions to the Asset Freeze

In certain circumstances, an exception may apply to the asset freeze. For instance:

  • Funds can be transferred to a relevant institution for crediting to an account held or controlled by a designated person in discharge (or partial discharge) of an obligation that arose before the recipient became a designated person.
  • Regulation 18A establishes an exception to regulations 11-15, which provides that prohibitions are not contravened if conduct is authorized by a licence issued under the law of the United Kingdom, the Channel Islands, or any British Overseas Territory for the purpose of disapplying a prohibition in that jurisdiction.

Licensing for Financial Sanctions

A person designated for financial sanctions purposes can apply for a licence from the Treasury to use their funds or economic resources. Schedule 2 of the Regulations sets out the circumstances and activities under which the Treasury may grant a licence, including:

  • The transfer of funds to a relevant institution.

Consequences of Breaching the Asset Freeze

Breaching the asset freeze is a serious offense, punishable by law. Individuals found guilty of breaching the regulations can face fines or imprisonment. For example:

  • Circumventing directly or indirectly the prohibitions of regulations 11-15 can result in a summary conviction with a maximum fine and imprisonment term.

Reporting Obligations

In addition to the asset freeze, individuals and entities are required to report knowledge or reasonable cause to suspect that a person is designated under international sanctions. Failure to comply with these reporting obligations can also result in criminal prosecution.

The UK government takes the asset freeze seriously and has put in place robust measures to prevent its evasion. Anyone found guilty of breaching the regulations can face severe consequences, including fines and imprisonment.