Frozen Funds: Exemptions and Exceptions

Exemptions for Extraordinary Expenses

According to UNSCR 2140 (2014), paragraph 12(b), funds determined by relevant Member States as necessary for extraordinary expenses are exempt from the measures. These determinations must be notified to the Committee and approved by it.

Example

For instance, a country may determine that funds are needed to cover emergency medical expenses or provide aid in response to a natural disaster. In such cases, the funds can be used without violating the sanctions.

Use of Funds for Judicial Awards

Paragraph 12(c) of UNSCR 2140 (2014) allows for the use of funds subject to a judicial, administrative or arbitral award, provided that the relevant authorities have made the necessary determinations and notifications.

Example

For example, if a company is awarded compensation by an international arbitration tribunal, it can use the funds to pay the award without violating the sanctions.

Exemptions for Pre-Existing Contracts

UNSCR 2664 (2022), paragraph 1, states that designated persons or entities can make payments due under pre-existing contracts, as long as the relevant States have determined that the payment is not directly or indirectly received by a person or entity designated pursuant to the resolution.

Example

For instance, if a company has a contract with a supplier that was signed before the sanctions were imposed, it can still make payments under the contract without violating the sanctions.

Exemptions for Payments Under Contracts

UNSCR 2399 (2018) allows for payments under contracts entered into prior to listing, provided that the contract is not related to prohibited items and the payment is not received by a listed individual or entity.

Example

For example, if a company has a contract with a vendor that was signed before the sanctions were imposed and does not involve prohibited goods or services, it can still make payments under the contract without violating the sanctions.

Exemptions for Vessels Controlled or Operated by OMM

UNSCR 2270 (2016), paragraph 15(c), notes that vessels controlled or operated by OMM are economic resources subject to the asset freeze imposed in resolution 1718 (2006).

Example

For instance, if a vessel is owned and operated by a company that is not designated as a sanctioned entity, it can continue to operate without violating the sanctions.

Exemptions for Payments Under UNSCR 2293

UNSCR 2293 (2016) decides that measures shall apply to individuals and entities designated by the Committee for engaging in or providing support for acts that undermine the peace, stability or security of the DRC.

Example

For example, if a person is designated as a sanctioned individual for providing support to armed groups in the Democratic Republic of Congo, they can no longer receive payments under contracts entered into prior to listing.

Conclusion

The United Nations Security Council has introduced several exemptions and exceptions to its measures imposing sanctions on frozen funds. These exemptions aim to ease humanitarian efforts, promote diplomatic ties, and ensure that the sanctions do not hinder important activities. It is essential for countries to cooperate with the Sanctions Committee and Analytical Support and Sanctions Monitoring Team in monitoring implementation of these measures.