Investigations Flashcards
What is the investigations decision tree (five step decision tree) ?
- Is there an applicable sanctions restriction?
- What is this sanctions restriction about?
- Has this sanctions restriction been violated?
- How has the sanction violation occurred?
- Record and document
What are the questions relevant for whether a sanctions violation has been violated?
- Does the FI have a relationship with the sanctions target?
- Has the financial institution made funds available to the target?
- Has the financial institution facilitated a transaction for, or on behalf of, the target, or facilitated trade activity that is prohibited or restricted?
How many days does OFAC require all transactions rejected for sanction-related reasons be reported by?
10 business days
What are examples of key trade activity lists?
- Common Military List of the EU- list of weapons and dual goods under the Wassenar Arrangement
- US Dept of Commerce Bureau of Industry and Security (BIS) Denied Persons List (list of individuals and entities whose export privileges have been denied due to past conduct
- United States Nuclear Regulatory Commission controls (regulate the types of nuclear equipment, such as reactors and components, and fuel used in nuclear weapons that require licenses when exported
- UK Strategic Export Control Lists (list of goods that require an export license)
- France’s Directorate General of the Treasury List (table of countries with related sanctions and measures)
When is the freezing obligation triggered in the Uk?
- A firm must either know with certainty, or have “reasonable cause to suspect” that it is in possession or control of the funds or economic resources of a designated person, or that the firm is otherwise dealing in these funds or resources.
What is reasonable cause to suspect?
Where there are factual circumstances from which an honest and reasonable person should have inferred knowledge or formed the suspicion of wrongdoing.
In the Uk, what should a firm do as soon as certainty or reasonable cause to suspect is established?
(1) freeze the designated person’s assets;
(2) make the assets unavailable to the designated person or for that person’s benefit
(3) not deal with the assets
If there is a hit for a Dutch insurance company, what should they do?
- the assets of customers identified as designated persons must be frozen immediately and remain frozen either until the relevant sanction is changed and the obligation to freeze the assets is lifted, or an exemption is granted, or a notice to the contrary is received from the Ministry of Finance or the supervisory authorities. Until and unless notice is received from the regulator, keep the funds frozen.
- All hits must be reported to the relevant supervisory authority (de Nederlandsche Bank or the Dutch Authority for the Financial Markets)
- The supervisor then assesses the report, and if the hit is confirmed, reports it to the Ministry of Finance
What is the difference for frozen assets re interest bearing accounts?
The EU does not require firms to place frozen assets in an interest bearing account, unlike OFAC in the US. Funds frozen under OFAC sanctions must be placed in an interest bearing account, and interest is commonly applied at a commercially reasonable rate.
What are notable distinctions between the application of the OFAC 50% Rule for aggregate persons vs. a single person?
Aggregate below 50% - not blocked
Single below 50% - still blocked
What are general licenses?
They authorize a particular type of transaction for a class of persons without the need to apply for a license.
What is impt to note re an application for a license for a transfer of funds?
Besides license for transfer, shiuld also consider license in destination country.
What is the UN Focal Point for Delisting?
Individuals and entities, except for those on the ISIL and Al-Quaeda sanctions list, may petition for removal from the UN sanctions list through the Focal Point process or through their state of residence or citizenship. The Focal Point then reviews and makes a decision as to whether to grant the request for delisting.
How can targets listed by EU apply for delisting?
By applying straight to the EU General Court, but only for autonomous sanctions (those imposed by EU) and only when the listing criteria is no longer met. Additionally the EU reviews its sanctions lists periodically, and can decide to delist targets on its own initiative.
How does a US target apply for delisting?
A target can request removal from the SDN list by filling a petition through an administrative (rather than court) process.
In contrast, removal from the BIS list of denied parties (targets subject to US trade restrictions) happens only when the prohibition itself expires. However, people on this list can apply to be delisted from other lists generated by the BIS.
