Financial Crime World

Financial Institutions Face Scrutiny Over Sanctions Compliance in Turks and Caicos Islands

The Turks and Caicos Islands (TCI) have become a key player in the implementation of targeted financial sanctions, with the Governor serving as the competent authority. As part of this effort, the UK has extended its Sanctions Orders to the TCI, which imposes asset freezes and other prohibitions on individuals and entities designated by the UN.

Understanding UN Sanctions Regimes

The UN currently maintains 14 ongoing sanctions regimes, focusing on supporting political settlement of conflicts, nuclear non-proliferation, and counter-terrorism. The enforcement measures imposed by these regimes include asset freezes and other prohibitions in respect of funds owned or controlled by designated individuals or entities.

Key Sanctions Regimes

  • Supporting political settlement of conflicts
  • Nuclear non-proliferation
  • Counter-terrorism

Financial Institutions Must Exercise Caution

Financial institutions operating in the TCI must exercise great caution when considering entering into any form of financial relationship with individuals or entities linked to countries or subjects referred to in the UN sanctions. Many of these sanctions expressly prohibit the provision of financial services, and it is of paramount importance that financial services industries take appropriate measures to comply with these enactments.

Consequences of Non-Compliance

  • Asset freezes
  • Other prohibitions
  • Severe consequences, including criminal prosecution

Guidance from Competent Authorities

The UK Office of Financial Sanctions Implementation (OFSI) has released guidance on financial sanctions, including a consolidated list of all designated persons subject to financial sanctions under UN and UK legislation. The OFSI also maintains a list of asset freeze subjects as designated by the UN and UK.

Key Resources

  • Consolidated list of designated persons
  • List of asset freeze subjects

Regularly Checking for Sanctions Updates

Financial institutions must regularly check for updates to Sanctions Orders, which are published in the TCI Gazette. Failure to comply with these regulations can result in severe consequences, including criminal prosecution.

Consequences of Non-Compliance

  • Severe consequences, including criminal prosecution
  • Asset freezes and other prohibitions

TCI Government Confers Power on Governor to Designate Persons

The Counter-Terrorism (Sanctions) (Overseas Territories) Order 2020 has conferred power on the Governor to designate persons who are or have been involved in terrorism. This order came into force on December 31, 2020.

Key Provisions

  • Power to designate persons involved in terrorism
  • Effective from December 31, 2020

Implementing Comprehensive Sanctions Compliance Programmes

In light of these developments, financial institutions operating in the TCI must adopt comprehensive sanctions compliance programmes to ensure that they are fully compliant with all relevant regulations and guidelines. This includes regular training for employees, robust due diligence procedures, and ongoing monitoring of Sanctions Orders.

Essential Components

  • Regular training for employees
  • Robust due diligence procedures
  • Ongoing monitoring of Sanctions Orders