Financial sanctions practical guidance

Introduction

In general terms, local sanctions measures apply to all natural and legal persons:

• located in Jersey
• operating in or from within Jersey
• incorporated or constituted under Jersey Law

This guidance has been produced to assist institutions in developing policies and procedures to address their legal obligations under sanctions legislation.

Overview

Institutions should establish proportionate systems and controls to minimise the risk of a financial sanctions breach. The design of these systems and controls will vary depending on the business model, profile, and customer base of each institution. Institutions should direct their resources and efforts towards assessing where and how their specific business is most vulnerable to breaches of sanctions.

The JFSC supervises regulated persons to ensure that their sanctions systems and controls are:  

• adequate and effective at addressing sanctions risk
• appropriate to respond swiftly to changes in UN and UK sanctions regimes

Below is an overview of how to comply with sanctions, summarising the main messages outlined in this guidance: 

Pre-screening	Screening	Post-screening
Implementing policies and procedures regarding sanctions	How to screen customers sanctions breaches	Systems for investigating a name match
Senior management involvement in devising and approving policies and procedures. Readily accessible and clear. Covers timing, frequency and scope of screening. Incorporates escalation procedures. Takes into account local requirements of jurisdictions in which operating.	At take-on against the OFSI Consolidated List and the UK Sanctions List.  Periodically in accordance with changes to sanctions designations. When data changes.  Of appropriate and sufficient data (including directors, beneficial owners, trustees and third party payees).  By skilled staff.  Takes into account variables.	Make further enquiries to confirm or eliminate name match. Referral to compliance staff of name match. Escalation to senior management where cannot determine if name match an actual match.  If after further investigation and escalation cannot confirm a name match then notify the Minister.
Providing staff training in sanctions matters	How to ensure automated customer screening is effective	Action required on discovering a target match
Accessible. Routinely provided.  Targeted to roles.	Capabilities and limits of any automated system understood. Matching criteria relevant and appropriate to nature and size of business. Prominent flagging of matches.  Use of fuzzy matching.	Freeze funds. Block provision of financial services.  Report to the Minister.  Only file a SAR if there is particular suspicion of criminal activity, drug trafficking or terrorism beyond the fact the individual or entity in question is the target of sanctions.
Risk assessing sanctions vulnerabilities	How to screen controlled goods and services of proliferation concern and their means of delivery	Information a reporter may be required to provide
Appropriate and sufficient. Understands and identifies risks – how and when is the firm most likely to breach sanctions.  Mitigates risk identified.  Formally documented with clear rationale for approach.  Informed by a good understanding of the different regimes. Considers risks posed by particular clients, transactions, services, products and jurisdictions.	Consider risks posed by moving particular controlled goods and their means of delivery by land, sea or air. Import-export activities. Maritime shipping sector. Dual-use items.	Information or other matters on which knowledge or belief of a designated person is based.  Any identifying information held about the designated person The nature, amount or quantity of any funds or economic resources held by, or for, the designated person.
Internal obligations		Obtaining a licence
Be familiar with sanctions legislation in every country in which the firm operates. Pay particular attention to OFAC sanctions which have wide reaching extra-territorial effect outside of the USA.		If you wish to carry out an action contrary to financial sanctions you must first apply for a licence. Application for a licence to be made in writing to the Minister.

 

Ongoing monitoring
Policies and procedures to remain up to date and fit for purpose.
Independent audit of policies and procedures.
Ensure staff knowledge stays current.
Maintain audit trail of screening, target matches and decision and actions taken.
Keep client information up to date.
Check screening requirements of intermediaries.
Keep calibration and automated systems under review.

Implementing policies and procedures regarding sanctions

Institutions should have written policies and procedures in place to deal with sanctions screening. Regular reviews and updates of sanctions policies and procedures should take place to ensure they remain fit for purpose and are enforced. The information in the following sections is an outline of areas that should be taken into account in formulating sanctions policies and procedures.

Senior management should be sufficiently aware of the institution’s obligations regarding financial sanctions to enable them to discharge their corporate governance functions effectively.

Guidance is provided by UK Authorities with the examples of good and poor practice of sanctions compliance.

Good practice	Poor practice
An individual of sufficient authority is responsible for overseeing the institution’s adherence to the sanctions regimes.	The institution believes payments to sanctioned individuals and entities are permitted when the sums are small. However, without a licence from the Minister, this is a criminal offence.
It is clear at what stage customers are screened in different situations (e.g. when customers are passed from agents or other companies in the group).	No internal audit resource is allocated to monitoring sanctions compliance.
There is appropriate escalation of actual target matches and breaches of sanctions.	Some business units in a large institution think they are exempt.
Notifications are timely.

 

Has your institution clearly allocated responsibility for adherence to the sanctions regime? To whom?
How does the institution monitor performance? (For example, statistical or narrative reports on matches or breaches.)
Recommended self-assessment questions:

Providing staff training in sanctions matters

Staff should be trained on an ongoing basis in respect of sanctions matters. As the sanctions arena is constantly evolving it is important for staff knowledge to be kept current. Training can be carried out separately or alongside anti-money laundering training so long as it is:

• appropriate, accessible and routinely provided;
• targeted to specific roles. Detailed training may be given to those involved in customer take-on and monitoring, with more general training to other members of staff.

Examples of good and poor practice include:

Good practice	Poor practice
Regularly updated training and awareness programmes that are relevant and appropriate for employees’ particular roles.	No training on financial sanctions.
Testing to ensure that employees have a good understanding of financial sanctions risks and procedures.	Relevant staff unaware of the institution’s policies and procedures to comply with financial sanctions regime.
Ongoing monitoring of employees’ work to ensure they understand the financial sanctions procedures and are adhering to them.	Changes to the financial sanctions policies, procedures, systems and controls are not communicated to relevant staff.
Training provided to each business unit covering both the group-wide and business unit-specific policies on financial sanctions.

Sanctions vulnerabilities risk assessment

Breaching financial sanctions is an absolute offence so the decision to take a risk-based approach is in itself a risk-based decision. If formulated properly, however, it is appropriate to take a risk-based approach to sanctions screening. If a risk-based approach is taken, an institution should be satisfied that its approach is appropriate and sufficient. With that in mind, it would be wise for an institution to have a formally documented risk assessment covering sanctions with a clear rationale for the approach taken.

In order to conduct a comprehensive risk assessment, a business needs to have a good understanding of the financial sanctions regime and the risks posed by particular customers, transactions, services, products and jurisdictions.

A proper risk assessment should consider how an institution may become involved in breaching sanctions. Relevant factors an institution may take into account in formulating its risk assessment are:

• customer, product and activity profiles;
• distribution channels;
• complexity and volume of transactions (recognising that one prohibited transaction alone would be a breach);
• processes and systems;
• operating environment;
• screening processes of intermediaries;
• geographic risk of where it does business;
• whether trustees, settlors, beneficiaries, directors and beneficial owners of legal persons and third party payees are screened to ascertain whether there is a risk of indirect benefit to a sanctioned person.

Where, as part of a risk assessment, an institution identifies a particular vulnerability the institution should consider looking to ascertain the following information in order to better identify sanctions targets:

• for individuals: place of residence, country of birth, country of origin, citizenship, source of wealth, occupation and countries to or from which transactions are made, known associates;
• for entities: location of business, country in which incorporated, nature of business, beneficial owners of the business, directors, countries from which transactions are made and entities with which transactions are effected.

While sanctions themselves are not risk-based, the institutions should consider their exposure to potential sanctions regimes escalation and be prepared to respond to future sanctions measures in a timely manner. For example, to assess the risk of such practices as:

• engagement in services or transactions prohibited under the UK financial sanctions regime, or
• reliance on prohibited suppliers, intermediaries or counterparties.

Further guidance for business applications to the JFSC's Registry is provided on Registry high-risk and sanction information. 

Examples of good and poor practice include:

Good practice	Poor practice
An institution with international operations, or that deals in currencies other than sterling, understands the requirements of relevant local financial sanctions regimes.	There is no process for updating the risk assessment.
A small institution is aware of the sanctions regime and where it is more vulnerable, even if risk assessment is only informal.	The institution assumes financial sanctions only apply to money transfers and so has not assessed its risks properly.

 

Recommended self-assessment questions:
Does your institution have a clear view on where within the institution breaches are most likely to occur? (This may cover different business lines, sales channels, customer types, geographical locations, etc.)

UK OFSI provides series of Threat Assessment Reports, providing sector-specific assessments of threats and vulnerabilities relating to UK sanctions regimes.

Ownership and control

Generally, financial sanctions apply to specifically designated persons. It is important to note that an asset freeze and some financial services restrictions also apply to businesses and other organisations owned or controlled by a designated person. Competent authorities look to designate owned or controlled entities/individuals in their own right where possible. However, in practice, it can be unclear whether an unlisted person and its assets are owned or controlled by a designated person. The matter must be subject to a case-by-case evaluation, considering the degree to which the entity concerned is owned or controlled. 

An entity is owned or controlled, directly or indirectly, by another person in any of the following circumstances: 

• the person holds (directly or indirectly) more than 50% of the shares or voting rights in an entity;  
• the person has the right (directly or indirectly) to appoint or remove a majority of the board of directors of the entity; or 
• it is reasonable to expect that the person would be able to ensure the affairs of the entity are conducted in accordance with the person’s wishes. 

Schedule 2 of the SAFL contains provisions that apply to interpret the conditions above.

The same approach applies to certain scenarios of minority or joint interests. For more information, please refer to the UK financial sanctions general guidance.

Examples of good and poor practice include: 

Good practice	Poor practice
Entity X is not listed on OFSI’s Consolidated List. However, your research shows that the majority owner of Entity X is designated Entity Y. As the ownership and control criterion has been met, Entity X is also subject to the same restrictions as designated Entity Y.	Unlisted persons could not become subject to sanctions restrictions. No additional research conducted regarding possible association with designated person.
Person A (an individual) is not listed on OFSI’s Consolidated List. However, your research shows that Person A is a family member or friend of designated Person B and there is evidence that Person B is using Person A to enter transactions. As Person B is in control of Person A, Person A is also subject to the same restrictions as designated Person B.

 

How to screen customers to prevent sanctions breaches

Sanctions screening is a control employed by institutions to detect, prevent and manage sanctions risk. Screening should be undertaken as part of an effective Financial Crime Compliance programme, to assist with the identification of sanctioned individuals and organisations, as well as the illegal activity to which the institutions may be exposed. It helps identify areas of potential sanctions concern and assists in making appropriately compliant risk decisions.

When screening customers, attach significance to:

• screening new customers at take-on against personal identifying information on the Sanctions designations lists that are in force in Jersey 
• periodically screening existing customers, within a reasonable time of any changes of sanctions designations, in accordance with an institution’s risk profile 
• including all customers in search parameters, including those that are Jersey or United Kingdom based
• screening for full name, date of birth, address and aliases
• screening existing customers when data changes, e.g. change of director
• ensuring payments are not directly or indirectly made to, or for the benefit of, a target person. Thus, regular screening of directors, beneficial owners, trustees, settlors, beneficiaries and third-party payees against the lists of sanctions designations is essential; 
• considering the nature of the business generally and any potential sanctions pitfalls as a result, such as screening against specified vessels on the UK Sanctions list;
• considering relevance of non-financial sanctions such as those relating to the import and export of goods and screening of goods to address weapons proliferation, depending on business nature, such as banks carrying out trade finance business and those engaged in other activities, such as project finance and insurance, for whom the PF risks are greatest;
• maintaining an audit trail of screening.

Sanctioned parties are known to routinely use false personal information to try to evade detection. In addition, information held by an institution may not exactly correlate to information recorded on the lists of sanctions designations.

The sanctions prohibitions apply to both indirect payments to and payments for the benefit of designated persons. Therefore, where practicable, screening should cover any other associated or related parties, for example, beneficial owners (including trustees, or company directors), that are identified as requiring verification under institution’s risk-based approach to customer due diligence. An institution’s judgment in these matters will need to be consistent with its approach for AML/CFT/CPF purposes, and whether or not full identity details are collected.

The table below gives examples of how the wording or format of a customer name held by an institution may be different from the wording used in the OFSI Consolidated List of targets.

Version in the OFSI Consolidated List	Version used by an institution
Revolutionary People’s Liberation Army	Revolutionary Peoples’ Liberation army/front
Pavlichenko, Dmitry Valeriyevich	Pavliuchenko, Dmitry Valeriyevich
Rockmans, Limited	Rockman Ltd
Salim, Ahmed Fuad	Amed Fuad Salim

To maximise screening, seek to incorporate variables such as:

• different spellings of names (e.g. Abdul instead of Abdel);
• name reversal (first/middle names written as surnames and vice versa);
• shortened names (e.g. Bill instead of William);
• maiden names;
• removing numbers from entities;
• insertion/removal of full stops and spaces.

Examples of good and poor practice include:

Good Practice	Poor Practice
The institution has considered what mixture of manual and automated screening is most appropriate.	Institutions assume that an intermediary has screened a customer, but do not check this.
There are quality control checks over manual screening.	Where a business uses automated systems, it does not understand how to calibrate them and does not check whether the number of hits is unexpectedly high or low.
Where a business uses automated systems these can make ‘fuzzy matches’ (e.g. able to identify similar or variant spellings of names, name reversal, digit rotation, character manipulation, etc.)	An insurance company only screens when claims are made on a policy.
The institution screens customers’ directors and known beneficial owners on a risk-sensitive basis.	Screening of customer data-bases is a one-off exercise.
Where the institution maintains an account for a listed individual, the status of this account is clearly flagged to staff.	Updating from the OFSI Consolidated List and the UK Sanctions List is haphazard. Some institutions use out-of-date lists.
A business only places faith in other institutions’ screening (such as outsourcers or intermediaries) after taking steps to satisfy themselves this is appropriate.	The institution has no means of monitoring payment instructions.
Calibrating of sanctions screening tools to ensure they are appropriate for the identified sanctions risks.	Over-reliance on third party sanctions screening tools.

 

Recommended self-assessment questions:
When are customers screened against lists, whether the OFSI Consolidated List, the UK Sanctions List, internal watch lists maintained by your institution, or lists from commercial providers? (Screening should take place at the time of customer take-on. Good reasons are needed to justify the risk posed by retrospective screening, such as the existence of general licences.)
If a customer was referred to your institution, how do you ensure the person is not listed? (Does your institution screen the customer against the sanctions designations lists itself, or does it seek assurances from the referring party?)
How does your institution become aware of changes to designations on sanctions lists, which are in force in Jersey? (Are there manual or automated systems? Are customer lists rescreened after each update is issued?)

How to make customer screening more effective

Key Points for Effective Screening

• Create a Written Screening Policy
  Define how often and how thoroughly screening will be carried out. A clear policy ensures consistency and accountability.

• Verify Intermediary Screening
  If you rely on an intermediary for sanctions screening, confirm that it has been done effectively:

  • Re-screen if the previous check is outdated
  • Obtain assurance that ongoing screening is in place

• Keep Customer Information Current
  Accurate and up-to-date customer data improves screening effectiveness and reduces false positives.

Automated screening

If using automated screening, the following actions may assist in improving screening quality:

• understanding the capabilities and limits of the particular automated screening system;
• ensuring the system is calibrated to the institution’s needs;
• checking the matching criteria is relevant and appropriate for the nature and the size of the business to ensure fewer false positives are produced;
• ensuring screening rules are appropriately defined, e.g. allow for the use of alternative identifiers;
• including the use of fuzzy matching in the calibration of the system. Fuzzy matching searches for words or names likely to be relevant, even if words or spelling do not match exactly. It can assist in identifying possible matches where data is misspelt, incomplete or missing;
• ensuring prominent flagging of matches so that they are clearly identifiable;
• keeping calibration and automated systems under regular review to ensure they are fit for purpose.

Further information on screening practices may be found on JFSC's public feedback reports:
         AML/CFT and financial sanctions examination on banking sector (August 2014);

          Feedback from sanctions thematic questionnaire and screening systems examinations (June 2023).

The Wolfsberg Group Guidance on Sanctions Screening 2019 provides additional guidance on the effectiveness of sanctions screening for the customers and transactions. 

Screening goods of proliferation concern and their means of delivery

Alongside financial sanctions, the government imposes controls on certain types of trade. As part of this, the export of goods and services for use in nuclear, radiological, chemical or biological weapons programmes is subject to strict controls.

Some sanctions breaching activity, particularly Proliferation Finance activity, is not just about the acquisition or purchase of a controlled good or service.
In many cases sanctions breaching activity has the sole aim of generating access to foreign currency and the international financial system. This can be through what appears to be a legitimate trading entity. For this reason, it is important to understand the full payment chain and consider how any trade may be used to enable illicit activity.  Some vessels also are designated and are financial sanctions targets.

You can assess your goods, software and technology against the UK Strategic Export Control Lists and the Consolidated list of strategic military and dual-use items to determine whether or not they are controlled. Designated vessels list can be obtain from the UK Sanctions List.

The OGEL and Goods Checker Tools can be used to

• check if the items are controlled;
• identify the appropriate control entry.

Examples of good and poor practice include:

Good Practice	Poor Practice
Ensuring staff are aware of dual-use goods issues, common types of goods that have a dual use, and are capable of identifying red flags that suggest that dual-use goods risk being supplied for illicit purposes	No clear dual-use goods policy
Confirming with the exporter in higher risk situations whether a government licence is required for the transaction and seeking a copy of the licence where required.	Failure to undertake further research where goods descriptions are unclear or vague
	Third party data sources are not used where possible to undertake checks on dual-use goods.

 

Recommended self-assessment questions:
Who and where the goods or services are coming from or going to. It is possible that financial sanctions such as an asset freeze may apply to one of the parties or to the financial aspects of the trade.
Who is shipping the goods, and whether they are being shipped on a sanctioned vessel
Whether a designated person is based in a different country to the one you are operating in, but is still subject to financial sanctions in that country.

Further information can be found in the JFSC Guidance on Countering Proliferation of weapons of mass destruction and its financing.

Systems for investigating a match

An institution should implement internal procedures for investigating whether a match against the Sanctions designations lists is an actual match or a false positive.

In formulating such policies consider incorporating the following actions:

• staff seeking sufficient information to enable them to confirm or eliminate a match;
• if necessary, staff making further enquiries of an intermediary, counterparty bank or the customer, or all of the above;
• the notification of potential target matches to senior management, particularly in cases where it cannot be determined if a potential target match is an actual target match;
• a process by which the Minister is notified of confirmed matches or potential target matches that cannot be confirmed after investigation and escalation;
• provision for a clear audit trail of potential target matches and decisions/actions taken.

Action required on discovering a confirmed or potential target match

In the case of a confirmed match, or a potential target match where further investigations and escalation procedures have not confirmed the position either way:

• freeze assets;
• block the provision of any financial service;
• report the match to the Minister. Where there is a requirement to make such a report, the relevant legislation will provide that such a disclosure is without prejudice to any duty of confidentiality or professional secrecy;
• informing a customer that they are, or appear to be, subject to sanctions does not necessarily constitute tipping-off. The names of sanctioned individuals are publicly available;
• holding an account for a sanctioned party or processing a transaction involving a sanctioned party is not in itself grounds for filing a Suspicious Activity Report (SAR) with the FIU, except of terrorism related sanctions targets; only file a SAR if there is a particular suspicion of criminal activity beyond the fact the individual or entity in question is the sanctions designations;
• if you file a SAR about a sanctioned individual, then disclosing that you have filed a SAR will in the majority of cases constitute tipping-off;
• the filing of a SAR does not provide protection in respect of offences that may have been committed under sanctions legislation.

Reporting obligations

All relevant financial institutions have reporting obligations, which must be fulfilled as soon as practicable.

Definition of the “relevant financial institution” can be found in Article 1 of the SAFL. By way of example, relevant financial institutions that are subject to specific reporting obligations include:

• Financial Institutions (FIs) conducting financial services businesses specified in Part 2 Schedule 2 of the Proceeds of Crime (Jersey) Law 1999;
• Designated Non-Financial Businesses and Professions (DNFBPs) listed in Part 3 Schedule 2 of the Proceeds of Crime (Jersey) Law 1999, such as Lawyers, Accountants, Reals estate agents, Casinos, High value dealers, TCSPs;
• Virtual Assets Service Providers (VASPs) as per Part 4 Schedule 2 of the Proceeds of Crime (Jersey) Law 1999;
• a person (not being an individual) that is incorporated or constituted under the law of Jersey and carries on such financial services business in any part of the world, for example, a Jersey company conducting business in France.

Reporting obligations are set out in Article 32 of the SAFL and apply to all Jersey sanctions regimes in force. All sanctions regimes effective in Jersey are listed in Schedule 1 to the Jersey Order 2021 and are described through the Sanctions by country and category.

These obligations include requirements for a relevant financial institution to inform the Minister if:

• it holds an account of a person, has entered into dealings or an agreement with a person or has been approached by or on behalf of a person, and
• it knows, or has reasonable cause to suspect, that the person:
  • is a designated person, or;
  • has committed, is committing or intends to commit an offence, and
• the information or other matter on which the knowledge or reasonable cause for suspicion is based came to it in the course of carrying on its business.

Reports must be made to the Minister and include the information specified in Article 32. Examples of the required reporting information include, but are not limited to, that found in Appendix A: Examples of information to be reported to the Minister.

Additional reporting obligations are enacted for Russia and Belarus sanctions regimes, using special reporting forms. These reports act as the Minister's tools for asset-freezing controls.

It is important to be aware that these reporting obligations are in addition to the obligation to report suspicious activities to the FIU.

If you are unsure of your compliance or reporting obligations under financial sanctions, you should seek independent legal advice.

Information you may be required to provide

Following a report made to the Minister, the reporter may be asked to provide:

• information or other matters on which the reported knowledge or belief is based;
• any information held about the designated person by which the person can be identified;
• the nature and amount or quantity of any funds or economic resources held by, or for, the designated person.

If the report relates to a suspected breach of a sanctions Order then the report should be made using the Sanctions Compliance Reporting Form.

Obtaining a licence

A licence is written authorisation to allow an activity that would otherwise be prohibited by financial sanctions legislation, for example the release of funds to pay for legal representation. A licence may have conditions attached to it, such as reporting obligations. If an institution wishes to carry out an action contrary to a financial sanction, they should request, in writing, a licence from the Minister before any action is taken.

A Jersey General Licence, issued by the Minister, allows multiple parties to undertake specified activities which would otherwise be prohibited by sanctions legislation, without the need for a specific licence. 

The Government of Jersey provides further detailed guidance on sanctions licences and exceptions.

International Obligations

Unless your business and its operations can be territorially restricted to one country, the autonomous sanction regimes of other countries may affect you too. As each country’s sanctions measures tend to be applicable to nationals/citizens of that country and bodies constituted or incorporated under the law of that country, wherever those persons are situated, it is important to understand any obligations that follow from having links to another country. The range of countries requiring consideration will be largely relevant to your business. Key considerations may include, but not limited to:

• your physical location;
• where you conduct your business and take your customers;
• where are your customers located;
• where you store your data;
• what is the currency of the transactions;
• supply chain location.

If an institution operates or is incorporated or constituted outside of Jersey, it should give consideration to sanctions obligations that may arise as a result. For example if you are a United States incorporated company with a branch in Jersey, the branch in Jersey should have regard to United States sanctions (see below). If you are a United States citizen employed in an institution in Jersey, again United States sanctions should be considered.

Depending on the provider, automated screening software used in respect of customer due diligence may also provide you with international sanctions information. To give an example, “World-Check” searches in relation to a customer should highlight any sanctions measures in place internationally in respect of a person.

Although the aforementioned are useful information tools, further research would still be required to establish what implications sanctions measures have for any customer business of an institution. If searches were to reveal a customer on sanctions lists in the United States, Canada and Australia, for example, consideration should be given to any way in which the institution, by way of its structure or operation and the remit of legislative provisions in those countries, may be in breach of those sanctions. Establishing that a customer is on a sanctions list in one or more countries is likely to also raise the question of reputational risk to the business and the Island, if business with that person is to be commenced or continued.

With a wide rage of the UK trade sanctions, any transactions across the UK boarder should be assessed with regards of the UK OTSI Guidance How suspected breaches of trade sanctions are assessed by the Office of Trade Sanctions Implementation (OTSI) - GOV.UK

Article 11(3)(e) of the Money Laundering (Jersey) Order 2008 includes policies and procedures to determine whether a business relationship or transaction, or proposed business relationship or transaction, is with a person connected with a country or territory that is subject to measures for purposes connected with the prevention and detection of money laundering, such measures being imposed by one or more countries or sanctioned by the UK or the United Nations. The JFSC does not consider that this provision requires an institution’s policies and procedures to apply all sanctions measures imposed by one or more other countries to their business in Jersey. The reference to measures imposed by one or more countries is intended as a reference to FATF countermeasures as applied by one or more country. The only sanctions measures specifically referred to are targeted financial sanctions made by the United Nations and/or UK (in connection with the UNSCR 1373) for purposes connected with the prevention and detection of the financing of terrorism and the proliferation of weapons of mass destruction. The JFSC does, however, consider it appropriate for institutions to have regard to the way in which their business model may result in: (i) breaches of local sanctions legislation; and (ii) sanctions legislation in other countries.

United States Sanctions

Sanctions are applied by a number of US government bodies the principal one of which is the Office of Foreign Assets Control of the US Department of Treasury (OFAC). OFAC maintains a list of designated individuals and entities which is available from Office of Foreign Assets Control.

United States financial sanctions are not automatically applicable in Jersey, but they do have far-reaching extra-territorial effect. This means that even if an institution is not operating, incorporated or constituted in the United States, OFAC sanctions may still be applicable. Institutions should be particularly mindful of OFAC sanctions if:

• they employ United States citizens or permanent aliens;
• transact in US dollars;
• enter into transactions involving United States operations or accounts;
• have United States offices, subsidiaries, branches or agencies or a relationship with a United States institution.

Some OFAC sanctions measures, for example those in place in respect of Iran, also specifically apply in respect of foreign financial institutions.

Failure to comply with OFAC sanctions could expose an institution to criminal or civil liability in the United States.

Institutions may find the following OFAC search tool helpful.

Appendix A: Examples of information to be reported to the Minister for External Relations 

Reporting Area Example	Example
Person is a designated person	A customer or client is a designated person. You must provide the Minister for External Relations and Financial Services with any information you hold about the designated person by which they can be identified.
Offences	Exact offences will depend on the particular legislation, but can include: making funds or economic resources available to a designated person (except where an exemption applies or under a licence); dealing with funds or economic resources that must be frozen (except where an exemption applies or under licence); activities that circumvent an asset freeze; breaches of licensing conditions; providing, directly or indirectly, technical assistance or brokering services, financing or financial assistance, related to the certain goods or services; selling, supplying, transferring or exporting, directly or indirectly, certain goods or services.
Funds and economic resources	You must include details of any funds and economic resources that you have frozen.
Credits to frozen accounts	You must inform the Minister for External Relations and Financial Services without delay whenever you credit a frozen account with: payments due under prior contracts; payments made under judicial decisions rendered in an EU member state; funds transferred to an account by a third party.

Appendix B. Common Terms

This Appendix provides a list of common and useful terms related to financial sanctions. It also includes references to some key legal provisions of the Sanctions and Asset-Freezing (Jersey) Law 2019 (the SAFL). It is for reference purposes and is not a list of ‘defined terms’. All Article references are to SAFL unless otherwise stated. More common terms can be found in the Sanctions Glossary.

Term	Meaning
Designated person	A person, group or entity that is a designated person for the purpose of asset freezes against designated persons (Part 3 of SAFL) by virtue of any one or more of the following: a provision included, under Article 3(4)(c), in an Order implementing a UK sanctions provision; the operation of Article 19; an interim terrorism designation made by the Minister for External Relations and Financial Services under Article 20; a final terrorism designation made by the Minister for External Relations and Financial Services under Article 22; the operation of Article 27(1); an Order under Article 27(2); the operation of Article 29; an interim UN asset-freezing Order under Article 30; a final UN asset-freezing Order under Article 31.
Financial Services	This is any services of a financial nature, including insurance-related services consisting of any of the following: direct life assurance; direct insurance other than life assurance; reinsurance and retrocession; insurance intermediation, such as brokerage and agency; services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services. banking and other financial services consisting of any of the following: accepting deposits and other repayable funds; lending (including consumer credit, mortgage credit, factoring, and financing of commercial transactions); financial leasing; Payment and money transmission services (including by credit, charge and debit cards, travellers’ cheques and bankers’ drafts); providing guarantees or commitments; financial trading; participating in issues of any kind of securities (including underwriting and placement as an agent, whether publicly or privately) and providing services related to such issues; money brokering; asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services; settlement and clearing services for financial assets (including for securities, derivative products and other negotiable instruments); providing or transferring financial information, and financial data processing or related software (but only by suppliers of other financial services); providing advisory or other auxiliary financial services in respect of any activity listed in this section (including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy). any service that: is provided by way of financial service business, within the meaning of Article 2 of the Financial Services (Jersey) Law 1998, or by way of a virtual currency exchange business, and doesn't  fall within the above. “Virtual currency exchange business” means the business of conducting one or more of the activities or operations to, for or on behalf of another natural or legal person or arrangement set out in paragraph 24(2)(a), (b) and (c) of Schedule 2 to the Proceeds of Crime (Jersey) Law 1999.
Financial Trading	Trading for own account or for account of customers, whether on an investment exchange, in an over-the-counter market or otherwise, in any of the following: money market instruments (including cheques, bills and certificates of deposit); foreign exchange; derivative products (including futures and options;) exchange rate and interest rate instruments (including products such as swaps and forward rate agreements); transferable securities; other negotiable instruments and financial assets (including bullion).
Funds	Financial assets and benefits of every kind, including any of the following: cash, cheques, claims on money, drafts, money orders and other payment instruments; virtual assets, as defined in paragraph 1 of Schedule 2 to the Proceeds of Crime (Jersey) Law 1999; deposits with relevant financial institutions or other persons, balances on accounts, debts and debt obligations; publicly and privately traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivative products; interest, dividends and other income on or value accruing from or generated by assets; credit, rights of set-off, guarantees, performance bonds and other financial commitments; letters of credit, bills of lading and bills of sale; documents providing evidence of an interest in funds or financial resources; any other instrument, being an instrument of export financing.
Economic resources	Assets of every kind, whether tangible or intangible, movable or immovable, actual or potential that are not funds but can be used to obtain funds, goods or services.
Owned, held or controlled	The term “owned, held or controlled” by a person includes a reference to: an account, funds or economic resources owned, held or controlled directly or indirectly by that person; an account, funds or economic resources in which the person has any legal or equitable interest, regardless of whether the interest is held jointly with any other person and regardless of whether any other person holds an interest in the account, funds or economic resources; any tangible property (other than immovable property), or bearer security, that is comprised in funds or economic resources and is in the possession of the person; other conditions under Article 2A.
Indirect payment	Payment being made to someone acting on behalf of the designated person.
Payment for the benefit of a designated person	This is: payment being made to third parties to satisfy an obligation of the designated person; if that person thereby obtains, or is able to obtain, a significant financial benefit.
Relevant financial institution	This is: a person (whether or not an individual) who carries on financial services business, within the meaning of the Proceeds of Crime (Jersey) Law 1999, in or from within Jersey; a person (not being an individual) that is incorporated or constituted under the law of Jersey and carries on such financial services business in any part of the world.
Deal with (in relation to funds)	This is to: use, alter, move, allow access to, or transfer, the funds; deal with the funds in any other way that would result in any change in their volume, amount, location, ownership, possession, character or destination; make any other change that would enable use of the funds, including by way of, or in the course of, portfolio management.
Deal with (in relation to economic resources)	This is to: exchange, or use in exchange, for funds, goods or services.
Sanctions licence	A licence is the Minister's written authorisation to allow an activity that would otherwise be prohibited by financial sanctions legislation.
Terrorism, act of terrorism, terrorist entity	Have the same meaning as in the Terrorism (Jersey) Law 2002.
Involved person (in relation to terrorist activity)	Means a person, who: is or has been involved in terrorist activity; is owned or controlled (directly or indirectly) by a terrorist entity or by a person who is or has been involved in terrorist activity; is acting on behalf of or at the direction of a terrorist entity or a person who is or has been involved in terrorist activity;  is a member of, or has pledged allegiance in any way to or is otherwise associated with, a terrorist entity or a person who is or has been involved in terrorist activity.
Terrorist activity	Refers to Article 18: engaging in, or being responsible or providing support for, the commission, preparation or instigation of an act of terrorism; facilitating, promoting or encouraging terrorism; providing or receiving training for the purpose of terrorism; travelling or attempting to travel from or into the British Islands for the purpose of terrorism; recruiting for terrorism; soliciting funds, or otherwise procuring funds, for the purpose of financing the travel of a person recruited for terrorism; organising, providing support for or otherwise facilitating the travel of a person recruited for terrorism; being responsible for a coercive action against a person on behalf of, or in the name of, a terrorist entity or a person who is involved in an activity mentioned in any of sub-paragraphs (a) to (d); supporting or assisting another person, knowing or believing that other person to be a terrorist entity or to be involved in an activity mentioned in any of sub-paragraphs (a) to (f); providing financial services, or making available funds or economic resources, for the purpose of terrorism or for an activity mentioned in any of sub-paragraphs (a) to (h);  being involved in assisting the contravention or circumvention of  Part 3 in relation to a person designated under this Part, or a provision of the law of a country or territory other than Jersey that corresponds to a provision of Part 3 in relation to terrorism or in relation to a power corresponding to any of the powers in this Part.