The Afghanistan (Asset-Freezing) Regulations 2011 (S.I. 2011/1893)

Summary

This is a UK Statutory Instrument (S.I. 2011/1893) implementing EU sanctions against designated persons connected to the situation in Afghanistan, published by the BVI Financial Services Commission as an alert. It freezes funds and economic resources of persons listed in Annex I to Council Regulation (EU) No. 753/2011 and prohibits dealing with, or making available, such funds or resources to or for the benefit of those designated persons.

• Freezing prohibition: No person may deal with funds or economic resources belonging to, owned, held or controlled by a designated person if they know or have reasonable cause to suspect this.
• No funds/resources to designated persons: No person may make funds or economic resources available, directly or indirectly, to a designated person, or for their benefit, with the requisite knowledge or suspicion.
• Frozen account exception and reporting: Relevant institutions may credit a frozen account with interest, due payments, or incoming transfers, but must inform the Treasury without delay when they do so.
• Suspicious activity reporting: A relevant institution must inform the Treasury as soon as practicable if it knows or suspects a person is a designated person or has committed an offence under the Regulations, and must provide identifying and account information.
• Information requests: The Treasury may require designated persons, licence holders, or any person in or resident in the UK to provide information about relevant funds, economic resources or transactions.
• Licensing: The prohibitions can be lifted only under a Treasury-granted licence, which may be general or specific, conditional, and of limited or indefinite duration; breach of licence conditions or provision of false information to obtain a licence is an offence.
• Offences and penalties: Contravening the prohibitions, circumventing them, or facilitating a breach is a criminal offence, with penalties up to two years' imprisonment on indictment.

The Regulations define 'relevant institution' to include deposit-takers authorised under the UK Financial Services and Markets Act 2000, certain EEA deposit-taking firms, and businesses operating currency exchange, money transmission or cheque cashing services. As a UK instrument extended for awareness to BVI-regulated entities, it is relevant to BVI financial institutions that deal with UK or EU-linked funds or that fall within these definitional categories, though its direct legal force in the BVI depends on extension mechanisms not detailed in this text.

Key obligations

• A person must not deal with funds or economic resources belonging to, owned, held or controlled by a designated person if they know or have reasonable cause to suspect this (regulation 3).
• A person must not make funds or economic resources available, directly or indirectly, to a designated person or for their benefit, with the requisite knowledge or suspicion (regulations 4 to 7).
• A relevant institution must inform the Treasury without delay if it credits a frozen account with due interest, payments under pre-existing obligations, or incoming transfers (regulation 8(3)).
• A relevant institution must inform the Treasury as soon as practicable if it knows or has reasonable cause to suspect a person is a designated person or has committed an offence under regulations 9 or 10, and must provide identifying details and, if the person is a customer, the nature and amount of funds or resources held (Schedule paragraph 1).
• A relevant institution or other person must comply with Treasury requests for information concerning a designated person's funds, resources, transactions or expenditure, where made for monitoring compliance or detecting evasion (Schedule paragraph 2).
• Any person acting under a Treasury licence must comply with its conditions and must not provide false or misleading information to obtain, vary or maintain a licence.

Applies to

relevant institutions (persons with Part 4 FSMA permission), EEA deposit-taking firms with passport rights, undertakings operating currency exchange offices, money transmission businesses, cheque cashing businesses, designated persons, any person subject to UK jurisdiction dealing with designated persons' funds or resources

Deadlines

• 5th August 2011: Regulations came into force.
• without delay: A relevant institution must inform the Treasury when it credits a frozen account under the permitted exceptions.
• as soon as practicable: A relevant institution must inform the Treasury upon knowing or suspecting a person is a designated person or has committed an offence under the Regulations.