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- What is Targeted Financial Sanctions- South African Legal Framework- Mechanisms for Implementation- United Nations Security Council Sanction Regimes
What is Targeted Financial Sanctions
The United Nations Security Council can take action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures, under Article 41, encompass a broad range of enforcement options that do not involve the use of armed force. Security Council sanctions have taken a number of different forms, in pursuit of a variety of goals. In terms of principal objectives sought by the Security Council, the use of sanctions can be grouped into five main categories, namely: conflict resolution, non-proliferation, counter-terrorism, n and the protection of civilians (including human rights).
United Nations Sanctions have evolved from comprehensive economic and trade sanctions against states to targeted measures such as arms embargoes, travel bans and financial or commodity restrictions on states and non-state entities, including individuals. Functionally, there are five main types of targeted sanctions: diplomatic, travel ban, asset freeze, arms embargo and commodity interdiction.
The Security Council has applied sanctions to support peaceful transitions, deter non-constitutional changes, constrain terrorism, protect human rights and promote non-proliferation. Today, there are 14 ongoing sanctions regimes which focus on supporting political settlement of conflicts, nuclear non-proliferation and counter-terrorism.
Targeted Financial Sanctions and asset freezes have also been included in all but one (Guinea-Bissau 2048) of the current sanctions regimes whereby the United Nations proscribe persons or entities against whom member states must take specific actions specified in the resolutions adopted by the Security Council under Chapter VII of the Charter of the United Nations. The respective purposes are asset recovery, non-proliferation and counter-terrorism.
South African Legal Framework
The Financial Intelligence Centre Act (Act No. 38 of 2001) (FIC Act) places the responsibility to administer the targeted financial sanctions (TFS) measures adopted by the United Nations Security Council (UNSC ) in its Resolutions on the Centre.
This inclusion of TFS measures is, inter alia, as a result of Recommendation 7 of the Financial Action Task Force (FATF) Recommendations, which requires member countries to implement the targeted financial sanctions proposed by the UNSC in the context of combating the financing of the proliferation of weapons of mass destruction. The use of TFS by the UNSC also extends beyond the instances relating to the financing of the proliferation of weapons of mass destruction and the relevant provisions of the FIC Act aim at enabling South Africa to meet these international obligations.
Sanctions impose restrictions on activities that relate to particular countries, goods and services, or persons and entities. TFS measures generally restrict sanctioned persons and entities from having access to funds and property under their control and from receiving financial services in relation to such funds and property. In order for these sanctions to be given effect the FIC Act requires accountable institutions to freeze property and transactions pursuant to financial sanctions imposed in the UNSC Resolutions.
In order for these sanctions to be given effect, the FIC Act requires Accountable Institutions to freeze property and transactions pursuant to financial sanctions imposed in the United Nations Security Council Resolutions.
Targeted Financial Sanctions (TFS) provide for financial sanctions only and include a list of all persons and entities who are subject to targeted financial sanctions under the Financial Intelligence Centre Act (Act No. 38 of 2001).
This does not apply to resolutions of the United Nations Security Council contemplated in section 25 of the Protection of Constitutional Democracy against Terrorist and Related Activities Act, 2004 (Act No. 33 of 2004 ).
The Targeted Financial Sanctions (TFS) List includes the names of all proscribed persons and entities.
Mechanisms for implementation
Mechanisms for the implementation of the UNSC Resolutions include the publication in the Government Gazette by the Minister of Finance of a Notice of the adoption of the UNSC Resolution, and the publication of a Notice by the Director of the Centre of persons who are subject to the sanction measures (the sanctions list). These Notices may be revoked if it is considered that they are no longer necessary to give effect to the applicable UNSC Resolutions. Otherwise the sanctions announced in these Notices remain in effect indefinitely.
The Notices by the Minister of Finance and the Director are public statements and are meant to advise both sanctioned persons and entities and accountable institutions who may have them as clients or prospective clients of the relevant sanctions. If an accountable institution has a sanctioned person or entity as a client it is allowed to draw the attention of the person or entity to the relevant sanctions notices.
The acquisition, collection or use of the property of persons or an entity whose names appear in the sanctions is prohibited. This includes the provision of financial services and products to those persons or entities.
In short this means that accountable institutions are not allowed to transact with a sanctioned person or entity or to process transactions for such a person or entity. The status quo as at the time of the imposition of the sanction in relation property or funds of the sanctioned person or entity must be maintained and no financial services may be provided to the person or entity. The only exception to this general prohibition is in specific instances where the Minister of Finance has permitted certain financial services or dealings with property as discussed below.
United Nations Security Council Sanction Regimes
There are 14 ongoing United Nations Security Council Sanctions Regimes which focus on supporting political settlement of conflicts, nuclear non-proliferation and counter-terrorism. Current sanctions regimes include:• Central African Republic • Democratic People's Republic of Korea (North Korea )• Democratic Republic of the Congo • Guinea-Bissau • Iran• Iraq • Lebanon • Libya • Mali • Somalia and Eritrea • South Sudan • Sudan • Yemen • UN Security Council sanctions relating to the Non-Proliferation of Weapons of Mass Destruction (WMD) (UNSCR 1540(2004)• ISIL (h) and Al-Qaida • The Taliban • UN Security Council sanctions relating to terrorism (UNSCR 1373(2001))
For more information on the various reporting obligations regarding specific UNSCR sanction regimes. More information on the UN Sanctions www.un.org/sc/suborg/en/sanctions/information.