Financial sanctions are imposed by countries and international bodies like the UN to pressure targets to change behavior or comply with objectives. Sanctions usually involve asset freezes targeting individuals and entities. The UK and US maintain sanctions lists that financial institutions must screen customers against to comply with regulations. WAY Fund Managers screens new and existing clients against the HM Treasury and OFAC lists to ensure it does not provide services to sanctioned parties.

1. The Sanctions Regime

2. Why do Countries apply financial sanctions?
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Countries will apply financial sanctions as part of international moves to
bring pressure to bear on target groups or regimes (due to measures
adopted by the United Nations) or to meet domestic policy objectives.
Sanctions are normally used by the international community for one or
more of the following reasons:
- to encourage a change of behaviour of a target country or regime
- to apply pressure on a target country or regime to comply with set
objectives
- as an enforcement tool when international peace and security has
been threatened and diplomatic efforts have failed
- to prevent and suppress the financing of terrorists and terrorist acts.

3. What are financial sanctions?
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Financial sanctions are normally one element of a package of measures
used to achieve one or more objectives listed in the previous slide. Current
financial sanctions measures typically take the form of targeted asset
freezes on individuals or entities.
Under the United Nations Charter, the UN Security Council can take
enforcement measure to maintain or restore international peace and
security. Such measures range from financial sanctions to international
military action. The range of sanctions can vary from comprehensive
financial and trade sanctions to more targeted measures such as arms
embargoes, travel bans, financial or diplomatic restrictions. Post World War
2 targeted sanctions are the norm.
In addition, the European Union applies sanctions in pursuit of the specific
objectives of the Common Foreign and Security Policy (CFSP) as set out in
the Treaty of the European Union.
The home state may include domestic financial restrictions measures – a
good example is the United States sanction regime against Cuba.

4. Financial Sanctions – asset freezing and other measures
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Financial sanctions usually include an asset freezing regime. This involves:
- a prohibition on dealing with funds or economic resources belonging to or
owned, held or controlled by designated person
-a prohibition on making funds or economic resources available, directly or
indirectly to or the benefit of a designated person.
An asset freeze prevents anyone dealing with funds or economic resources which
belong to, or which are owned, held or controlled by a designated person.
Please note that it is a criminal offence to knowingly – or with reasonable cause
to suspect – make funds available, directly or indirectly to a designated person.
Making funds indirectly available to a designated person would involve the funds
being routed via a third party. So, for example, it would be a criminal offence to
give funds to a designated person’s friend knowing that some or all of the funds
will be given to the designated person.

5. Sanction Lists
• How do I know if I am dealing with a sanctioned individual?
• In regards to the United Kingdom, HM Treasury publishes a consolidated
list of designated persons (sanctions targets) that have been designated
as being subject to financial sanctions by the United Nations and/or the
European Union and/or domestically by the UK under specific legislation.
• Other countries may publish their own lists of financial sanctions targets,
but only the Consolidated List published by HM Treasury contains the
designated persons that are the subject of financial sanctions in force in
the UK.
• The Treasury publishes the list as part of its efforts to facilitate
compliance with financial sanctions measures in the UK. Where there is a
legal basis for an asset freeze in the UK, the name of the target will be
included on the Treasury’s consolidated List. Collectively, the individuals
and entities are called financial sanctions targets and other persons are
generally prohibited from engaging in financial dealings with them.

6. Sanctions List 2
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As mentioned previously other countries may have their own lists of financial
sanctions targets.
In regards to the United States, the Office of Foreign Assets Control is formally
charged with maintaining the Sanctions List of the United States.
The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury
administers and enforces economic and trade sanctions based on US foreign policy
and national security goals against targeted foreign countries and regimes,
terrorists, international narcotics traffickers, those engaged in activities related to
the proliferation of weapons of mass destruction, and other threats to the national
security, foreign policy or economy of the United States. OFAC acts under
Presidential national emergency powers, as well as authority granted by specific
legislation, to impose controls on transactions and freeze assets under US
jurisdiction. Many of the sanctions are based on United Nations and other
international mandates, are multilateral in scope, and involve close cooperation
with allied governments.

7. The Sanctions Regime at WAY Fund Managers
WAY Fund Managers have a legal and regulatory obligation to ensure that they
do not provide financial services to individuals and entities as listed on the HM
Treasury Sanctions list. WFM manage their obligation by ensuring that all new
clients and entities are screened against the most recent list and also scan the
WFM database against an HM Treasury updates which are received on a regular
basis. OFAC screening is also conducted on an ongoing basis.
Should a match be found, the account must be frozen straight away and reported
to the Financial Crime Team.
One of the first examples of Sanctions dates back to before 1812 and was by
the United States against Great Britain for the harassment of American
sailors.
(Source; Office of Foreign Asset Control – Administrator / enforcer US Sanctions)
(Source; Office of Foreign Asset Control – Administrator / enforcer US Sanctions)

8. The Sanctions Regime at Fund Partners Ltd
With regards to Fund Partners Ltd, the Transfer Agent (IFDS) for the Fund
Partners funds use a screening tool called ‘Datanomics’. Datanomics screens the
Fund Partners’ client database against a number of Sanctions lists including HM
Treasury and OFAC and provides the results of this screening for WAY Fund
Managers’ Financial Crime Team to review. Any matches will be flagged for
urgent attention.
Should a match be found, the account must be frozen straight away and the WAY
Financial Crime Team will liaise with IFDS and the relevant authorities.

9. The Sanctions Regime at WAY Fund Managers
The Sanctions regime is constantly evolving. One only needs to keep tabs on
recent political news items to understand how an individual or entity can by
added or deleted to the aforementioned lists.
WAY Fund Managers receive continuous updates from HM Treasury and
OFAC on the current status of their designated lists. Any changes are
immediately updated and screened against to ensure that the lists used are
current and that the WAY database does not include any individuals on the
HM Treasury or OFAC lists.
Please be aware of the recent fines that have been received by
RBS, Standard Chartered and Barclays for recent flotation of the Sanctions
regime. Sanctions screening is not something to be taken lightly.
Any Questions?

10. North Korea = Daily Telegraph / AFP/Getty
Ratko Mladic/Reuters