The Financial Intelligence Centre (FIC) has published a manual bringing together information on the measures accountable institutions and other persons must apply when dealing with sanctioned individuals and entities. It covers screening, reporting, asset freezes, permitted financial services, and applications for delisting.
The publication does not introduce new requirements, but it provides a useful indication of the FIC’s expectations about how targeted financial sanctions obligations should be implemented.
One of the manual’s clearest messages is that sanctions screening should not be treated merely as an onboarding check. Accountable institutions must ensure at onboarding and on an ongoing basis that neither their clients nor people acting on their clients’ behalf appear on the targeted financial sanctions list. Screening should also take place when the United Nations Security Council (UNSC) adopts new targeted financial sanctions measures or expands existing ones.
The manual does not prescribe a standard screening interval. Its frequently asked questions section says screening should occur at client take-on and subsequently when the UNSC adopts new measures or expands existing ones.
Institutions must keep track of list changes
The FIC publishes and maintains a targeted financial sanctions list of people and entities designated under sanctions regimes implemented through sections 26A, 26B, and 26C of the Financial Intelligence Centre Act (FICA). The list is updated within 24 hours of changes made by the UNSC.
Any person may subscribe to automated FIC email notifications about additions to the consolidated list, amendments to existing designations, and the removal of designated people or entities. Accountable institutions registered with the FIC are automatically subscribed, but they should check their status and subscribe if they are not receiving the alerts.
The FIC strongly urges institutions not to unsubscribe. It also says they must not ignore or delete its communications about the list and should ensure the messages are not blocked by spam filters. Institutions are responsible for keeping recipient details and email addresses up to date.
Screening software does not remove responsibility
Accountable institutions must determine whether an existing or prospective client is a sanctioned person or entity. They must assess the likelihood that their client base and target market may include sanctioned parties so they can determine the effort and resources required for screening. Institutions with business relationships involving foreign people and entities are more vulnerable to such exposure.
However, neither reliance on a commercially available screening capability nor an assessment that exposure to targeted financial sanctions obligations is low would constitute a defence to a criminal charge for non-compliance.
A possible match must be assessed
The FIC’s online search tool is intended to help accountable institutions and other asset holders identify possible matches between clients’ names and names on the targeted financial sanctions list. The list can be downloaded in PDF, Excel, and XML formats, and the website allows users to search it and print the search criteria and results.
The tool indicates how similar a name entered by a user is to names on the list, taking account of aliases and subtle name variations. Institutions can narrow results using a person’s name, surname, date of birth, nationality, identifying number, and aliases, but they remain responsible for determining whether a match is valid.
If it is unclear whether a client or entity matches a name on the list, the institution may ask the FIC for assistance through its public query process. Submitting a query does not replace any applicable reporting obligation.
Fact and suspicion trigger different reports
Section 28A of FICA requires an accountable institution to file a terrorist property report if it knows that it possesses or controls property of a person or entity that has committed, or attempted to commit or facilitate, a specified offence, or that is a sanctioned person or entity identified in a UNSC resolution.
The institution’s knowledge about the origin and ownership of the property must be based on facts and objective circumstances rather than a subjectively formed suspicion.
The section 28A report must be submitted as soon as possible, but no later than five days after the institution establishes that it possesses or controls property associated with terrorist and related activities. The FIC may approve submission after the deadline. Once the report is filed, the institution must freeze the identified property and cease conducting business with the entity concerned.
Where the information gives rise to suspicion rather than factual knowledge, section 29 may require a terrorist financing transaction report or a terrorist financing activity report. These reports apply to suspicious or unusual transactions or activities related to terrorist financing and targeted sanctions and must be filed as soon as possible, but no later than 15 working days after the person becomes aware of the facts giving rise to the suspicion.
The manual contains further procedural guidance on submitting reports, dealing with assets that may have been frozen in error, applying for permitted financial services, and seeking delisting.
Click here to download the Targeted Financial Sanctions Manual.
