The Ukraine (Sanctions) (Overseas Territories) Order 2014 (SI 2014 No. 497)

Summary

This is the UK Order in Council extending the Ukraine sanctions regime to a list of Overseas Territories, including the Cayman Islands, as republished/circulated by CIMA as a general industry notice. It implements an asset freeze against a named list of Ukrainian former officials and their associates (Schedule 4) who were identified as responsible for misappropriation of Ukrainian state funds, mirroring an EU sanctions measure.

Scope of application

Any person in the Cayman Islands.
Cayman-connected British nationals/entities elsewhere.
Persons aboard Cayman-registered ships or aircraft.

Key obligations and mechanisms

Criminal offence: It is a criminal offence to deal with funds or economic resources belonging to, or make funds/economic resources available to, a designated person, subject to knowledge or reasonable suspicion.
Limited exceptions: There are limited exceptions, such as crediting a frozen account with pre-existing interest or contractual payments.
Licensing regime: The Governor, with the Secretary of State's consent, may authorise otherwise-prohibited activity.
Reporting duties: 'Relevant institutions' (deposit-taking businesses) have specific reporting duties to the Governor where they know or suspect a customer is a designated person or has committed an offence under the Order, and when they credit a frozen account under the permitted exceptions.
Published list: The Governor is separately required to publish and maintain an up-to-date list of designated persons.

For Cayman Islands industry, the practical effect is that regulated entities (particularly deposit-taking institutions and other financial service providers) must screen customers and transactions against the Schedule 4 list, freeze any funds or economic resources connected to designated persons, and report promptly to the Governor (in practice, via the Cayman Islands sanctions/AML framework) if a designated person or a suspected offence is identified. Breach of the prohibitions or reporting duties is a criminal offence carrying significant penalties, including imprisonment.

Key obligations

Persons must not deal with, or make available, funds or economic resources belonging to or controlled by a designated person listed in Schedule 4, where they know or have reasonable cause to suspect this (article 4).
A relevant institution must inform the Governor as soon as practicable if it knows or suspects a customer is a designated person or has committed an offence under article 4 or 7(10), including reasons, customer identifying information, and details of funds/economic resources held since the customer became designated.
A relevant institution must inform the Governor as soon as practicable whenever it credits a frozen account under the permitted exceptions in article 5(1)(b) or 5(2).
Persons must not participate in activity intended to circumvent or facilitate contravention of the asset-freeze prohibitions (article 12).
Any person applying for a licence to carry out otherwise-prohibited activity must not knowingly or recklessly provide false statements, documents or information.
The Governor must publish and keep up to date a list of designated persons.

Applies to

relevant institutions (deposit-taking businesses), designated persons, persons in the Cayman Islands, Cayman-registered ships and aircraft operators, British Overseas Territories citizens/entities connected to the Territory

Deadlines

7 March 2014: Date the Order comes into force, from which the asset-freeze prohibitions and reporting obligations apply.
as soon as practicable: Timeframe within which a relevant institution must inform the Governor upon knowing or suspecting a customer is a designated person or has committed a relevant offence, or upon crediting a frozen account under the permitted exceptions.