What Are Sanctions?

Sanctions are restrictive measures that are put in place by the United Nations (“UN”) Security Council, or the United Kingdom (“the UK”) to achieve a specific foreign policy or national security objective, as well as maintain international peace and security.

Sanctions come in many forms and are developed in response to a particular circumstance. It may include designations for financial sanctions, including asset freezes; trade sanctions including arms embargoes and restrictions; and immigration sanctions, known as travel bans.

Sanctions may:

  • limit the provision of certain financial services;
  • restrict access to financial markets, funds and economic resources

The UN imposes financial sanctions through Resolutions passed by the UN Security Council and requires member states to implement them. UN designations are implemented automatically in the UK.

The UK imposes financial sanctions, which are implemented through a combination of statutory instruments and primary legislation including:

  • Sanctions and Anti-Money Laundering Act 2018
  • Counter Terrorism Act 2008
  • Anti-Terrorism, Crime and Security Act 2001

Why Are Financial Sanctions Used

International sanctions measures, including targeted financial sanctions are generally imposed on an individual, entity or regime to:

  • Coerce a regime, or individuals within a regime, into changing their behaviour by increasing the cost on them to such an extent that they decide to cease the offending behaviour;
  • Constrain a target by denying them access to key resources needed to continue their offending behaviour, including the financing of terrorism or nuclear proliferation;
  • Signal disapproval, stigmatizing and potentially isolating a regime or individual, or as a way of sending broader political messages nationally or internationally; and/or
  • Protect the value of assets that have been misappropriated from a country until these assets can be repatriated.

Who Is Subject to Financial Sanctions?

Financial Sanctions which are in effect, generally apply to:

  • Any person in the Virgin Islands;
  • Any person who is a British citizen, a British Overseas Territories citizen, a British subject, a British National (Overseas) or a British protected person who is ordinarily resident in the Virgin Islands;
  • A body incorporated or constituted under the laws of the Territory; and
  • any person on-board a ship or aircraft that is registered in the Territory.

The requirement of ensuring compliance with the obligations rests with the relevant entity or professional that is:

  • A body registered, incorporated or constituted under the laws of the Virgin Islands or any part of the Territory and supervised by the Financial Services Commission.(This includes all Financial Institutions);
  • A body registered, incorporated or constituted under the laws of the Virgin Islands or any part of the Territory and supervised by the Financial Investigation Agency. (This includes all Designated Non-Financial Businesses and Professions [DNFBPs] and Non-Profit Organisations [NPOs]; and
  • any person on-board a ship or aircraft that is registered in the Territory.

Accordingly, all relevant persons are required to fully comply with the obligations set out in the legislation and to ensure that it has in place appropriate risk based mechanisms, policies and procedures to assess applicants for business, customers and business relationships to determine whether they are under any sanctions imposed by the UN and EU which are extended to the Territory as Sanctions Orders by the UK through Orders in Council.