Sanctions are an important tool of governance in the global financial industry. Most countries have used sanctions or had sanctions placed against either them or their citizens. States increasingly use sanctions to fight economically, rather than physically, and as such, sanctions have become a common tool in foreign relations, peacekeeping and conflict resolution. Given their prevalence, everybody in the financial industry should have a good understanding of what sanctions are, how they work, and why they are used.
The United Nations issues the UN Security Council Consolidated Sanctions List:
- The UN Consolidated Sanctions List is applicable to all member-states of the United Nations and is organized into a list for individuals and a list for groups and entities.
- The UN Security Council composes the sanctions – each of which is backed by a UN Security Council Resolution.
- The UN has no direct legislative power within member-states, so it falls to domestic legislative authorities to enforce UN sanctions.
As a central European governmental body, the EU issues implements a range of financial sanctions:
- The EU Council implements UN Security Council sanctions, along with its own autonomous sanctions, in the EU Consolidated Sanctions List.
- All individuals and entities within the European Union must observe EU sanctions and comply with the sanctions list.
- EU sanctions are also applicable to all EU citizens operating anywhere in the world.
- The EU enforces some sanctions measure directly through EU law, but some measures are delegated to the domestic legislators of member-states.
The Office of Financial Assets Control maintains a number of sanctions list on behalf of the United States Treasury:
- OFAC implements and enforces the international sanctions issued by the United States government.
- OFAC sanctions lists include the Consolidated Sanctions List and the Specially Designated Nationals List.
- All individuals, banks, and financial services institutions within the United States jurisdiction must comply with OFAC sanctions.
- OFAC issues ‘comprehensive’ sanctions which are targeted against countries, and ‘non-comprehensive’ (or ‘selective’) sanctions which are targeted at specific individuals or entities.
HM Treasury maintains the sanctions list of the United Kingdom
- The HM Treasury Sanctions List incorporates the consolidated UN and EU sanctions lists, along with the UK’s own autonomous sanctions.
- All banks and financial institutions are forbidden from doing business with the countries and entities on the HM Treasury Sanctions List.
- British citizens and citizens of overseas territories are also subject to HM Treasury sanctions.
- The Office of Financial Sanctions Implementation (OFSI) is responsible for implementing and enforcing HM Treasury’s financial sanctions.
The Department of Foreign Affairs and Trade (DFAT) implements and enforces sanctions for the Australian government:
- The DFAT sanctions list incorporates the UN Sanctions List along with autonomous sanctions issued by Australia.
- All banks and financial institutions in Australia must comply with the DFAT sanctions list.
- DFAT sanctions also apply to all Australian citizens at home and abroad.