Financial Sanctions Notice: Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021 12 February 2021

The Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021 (the “External Sanctions Order”), under the Sanctions and Asset-Freezing (Jersey) Law 2019 (the “Law”) has now come into force.

This financial sanctions notice explains:

• What you need to know
• What will change and what will not
• What you need to do

Background and effect of the External Sanctions Order

Following the end of the UK-EU Withdrawal Agreement at the end of 2020, the UK ceased implementing EU sanctions, and its own UK sanctions regulations came into force. To remain aligned with the UK on sanctions, it is necessary for Jersey to implement the new UK sanctions regulations.

Jersey no longer gives effect to UN Security Council (UNSC) or autonomous EU sanctions regimes (i.e. non UNSC) by implementing the relevant EU regulations.* The Island instead gives effect to UNSC and autonomous UK sanctions regimes by implementing the relevant UK sanctions Regulations made under the Sanctions and Money Laundering Act 2018 (SAMLA). This includes all relevant sanctions designations, including all asset-freeze designations. Jersey continues to implement all UNSC, UK, and EU terrorist asset-freeze designations.

The UK sanctions Regulations implemented by the External Sanctions Order have been drafted to have substantially the same effect as the EU sanctions regulations they are replacing. However, though the regimes are largely the same, there are some differences now and there may be increased divergence over time.

Guidance and outreach

These differences include changes to those persons and entities subject to an asset-freeze. OFSI published a Financial Sanctions Notice on 31 December that listed changes to the Consolidated List: some asset-freeze designations have been removed and are no longer in force, and others have moved to different regimes. There are 4 new asset-freeze designations under the Zimbabwe regime that came into force in Jersey on 12 February 2021 (see Financial Sanctions Notice).

The UK publishes the UK sanctions list that lists individuals, entities and ships that are designated or specified for an asset-freeze or other restriction (such as travel bans) under SAMLA. These designations all have effect in Jersey.  (IMPORTANT: the UK sanctions list does not currently include asset-freeze designations that were not made under SAMLA regulations.  Please see the OFSI consolidated list for non-SAMLA asset-freeze designations. These designations are also in force in Jersey.).

Schedule 1 to the External Sanctions Order sets out the UK sanctions regulations that are implemented in Jersey. You can view the UK-specific guidance on individual UK sanctions regimes that have been published by the Office of Financial Sanctions Implementation (OFSI) on gov.uk. This guidance includes an overview of the categories of prohibitions (e.g. asset-freezes, investment and financial services restrictions, trade restrictions etc.) in force under different regimes.

The sanctions guidance on gov.je and the Jersey Financial Services Commission (JFSC) website has been updated. Further updates to the JFSC sanctions guidance will be made over the coming days. A webinar is also planned for Wednesday 3 March, with further details to follow. It is recommended that you review this guidance and attend the webinar.

Compliance and reporting obligations

The reporting obligations that apply are set out at Article 32 of the Law. These obligations include requirements for a relevant financial institution to inform the Minister for External Relations (the “Minister”) if:

• it holds an account of a person, has entered into dealings or an agreement with a person or has been approached by or on behalf of a designated person, and
• it knows, or has reasonable cause to suspect, that the person is a designated person or has committed an offence, and
• the information or other matter on which the knowledge or reasonable cause for suspicion is based came to it in the course of carrying on its business.

You should continue to use the suspected breach form available from the JFSC website to report any suspected breach of financial sanctions and return the completed form to sanctions@gov.je

Column 5 of Schedule 1 to the External Sanctions Order sets out the regime-specific (e.g. Syria) non asset-freeze prohibitions in the UK regulations to which an offence applies in Jersey. Other offences are set out in the Law and the External Sanctions Order.

There is no change to the maximum penalties for breaches of financial sanctions. The maximum custodial sentence for a breach of financial sanctions is a term of 7 years imprisonment.

Licences and exceptions

• Asset-freeze prohibitions: You should continue to use the asset freeze licence form to apply for a licence in respect of an asset-freeze and return the completed form to sanctions@gov.je. The provisions on exceptions and licences for asset-freezes are set out in Part 3 of the Law. A licence may only be granted by the Minister if there is scope in the relevant UK regulations for an equivalent licence to by granted by the UK Treasury. Exceptions to an asset-freeze that are set out in UK sanctions regulations do not apply in Jersey; however, they may be considered as a basis for an asset-freeze licence application.
• Non asset-freeze prohibitions: For licence applications that relate to non asset-freeze prohibitions you should apply in writing to the Minister at sanctions@gov.je. The provisions on exceptions and licences are set out in Part 3 of the Law. A licence may only be granted by the Minister if there is scope in the relevant UK regulations for an equivalent licence to be granted by the UK Treasury. Exceptions to a non asset-freeze prohibition that are set out in UK sanctions regulations apply in Jersey.
• UK General Licences will not apply to Jersey persons or institutions operating in Jersey; however, they may be considered as the basis for a licence application.

Merging, separation, and renaming of certain regimes

Some former EU regimes have been merged, separated, or renamed by the UK to help reflect their purpose and policy intention. For example, persons designated under the Ukraine (Sovereignty and Territorial Integrity) and those businesses subject to restrictive measures under the EU Regulations have moved to a new Russia sanctions regime.

Repeal of existing Jersey sanctions Orders

• the Sanctions and Asset-Freezing (Implementation of EU Regulations) (Jersey) Order 2020 (the “2020 Order”) is repealed.
• the Sanctions and Asset-Freezing (UK Human Rights Designations) (Jersey) Order 2020 is repealed and its effects incorporated.
• the Sanctions and Asset-Freezing (Designation of Lugovoy and Kovtun) (Jersey) Order 2020 is repealed and its effects incorporated.

*UNSC regimes retained by implementation of EU Regulations

The External Sanctions Order continues to implement 4 EU regulations (listed in Article 8 of the External Sanctions Order) in respect of Haiti, Iraq, Libya, and the former Federal Republic of Yugoslavia (Serbia and Montenegro), respectively, which are currently implemented under the 2020 Order, for which there are no corresponding UK regulations made under SAMLA.

These EU regulations implement 4 UNSC regimes from 1990-1994 that concern prohibitions against the satisfying of certain claims with regard to contracts and transactions whose performance is affected by the relevant UNSC resolutions.

Enquiries

Non-media enquiries, reports and licence applications should be addressed to:

Head of International Compliance

External Relations

Office of the Chief Executive

sanctions@gov.je