Financial Crime World

Sanctions Must be Verified and Measures Taken to Ensure Compliance

Strengthening Financial Sanctions: A Move Towards Verification and Notification

In an effort to bolster financial sanctions, officials are emphasizing the importance of verifying information before imposing restrictions on individuals or entities. The Financial Intelligence Unit (FIU) must also be notified of any potential violations.

New Guidelines for Imposing Sanctions

According to new guidelines, if additional information reveals that a natural or legal person is subject to financial sanctions, has violated financial sanctions, or cannot identify the subject of sanctions, the following actions must be taken:

  • The person must apply financial sanctions
  • The FIU must be notified immediately

The guidelines emphasize that even if verification fails to dispel any doubt as to the need to impose sanctions, restrictive measures must continue to be taken. The FIU must also be notified if there is a suspicion that sanctions are being circumvented intentionally or negligently.

Reporting Requirements

Releasing Funds and Notifying the FIU

If a legal or natural person holds funds or assets of a subject of sanctions and the sanction is lifted, the following steps must be taken:

  • The funds must be released immediately
  • The FIU must be notified

Similarly, if a transaction violates any sanctions of another state or organization, including where OFSI and OFAC measures were applied, the FIU must be notified.

Obligations of Financial Institutions

Identifying Unusual Transactions

Financial institutions are reminded that they have specific obligations to identify unusual transactions related to strategic goods sales, which may infringe on the obligations and prohibitions provided for in the Strategic Goods Act.

Supervision by the Financial Intelligence Unit

Monitoring Sanctions Application

The application of financial sanctions is subject to supervision by the FIU, except where the Financial Supervision Authority supervises the activity. The FIU has the right to impose restrictions on the disposal of property if necessary, but only in case of a suspicion that a subject of international financial sanctions has used or disposed of funds or economic resources.

Persons with Specific Obligations

Due Diligence Measures

Section 20 of the International Sanctions Act establishes a circle of persons having specific obligations who are subject to greater due diligence measures in the application of financial sanctions. These individuals and entities include:

  • Credit institutions
  • Financial institutions
  • Virtual currency service providers
  • Account operators
  • Other organizations that are more exposed to risks and violations

The guidelines aim to strengthen financial sanctions and prevent potential violations by requiring verification and notification of potential violations to the FIU.