Jersey new Sanction laws and JFSC guidance in force on Friday 12 February

On Friday 29 January 2021, the Minister for External Relations (the “Minister”) made

• The Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021 (the “Order”),

under the

• Sanctions and Asset-Freezing (Jersey) Law 2019 (the “Law”).

It will come into force on Friday 12 February.

• Jersey’s sanctions guidance is being updated and will be published on gov.je and the JFSC website on 12 February.
• A webinar is planned for Wednesday 3 March, with further details to follow.
• It is recommended that you review this guidance and attend the webinar.

Background and effect of the Order

1. Following the end of the UK-EU Withdrawal Agreement at the end of 2020, the UK ceased implementing EU sanctions, and its own UK sanctions regulations came into force.
2. To remain aligned with the UK on sanctions, Jersey must implement the new UK sanctions regulations.
3. Jersey will no longer affect the UN Security Council (UNSC) or autonomous EU sanctions regimes (i.e. non-UNSC) by implementing the relevant EU regulations.*
   • Jersey will instead affect UNSC and autonomous UK sanctions regimes by implementing the relevant UK sanctions regulations made under the Sanctions and Money Laundering Act 2018 (SAMLA) including all relevant sanctions designations, including all asset-freeze designations.
   • Jersey will continue to implement all UNSC, UK, and EU terrorist asset-freeze designations.
4. The UK sanctions regulations that will be implemented by the Order have been drafted to have substantially the same effect as the EU sanctions regulations they are replacing. However, though the regimes are largely the same, there are some differences now, and there may be increased divergence over time.

Guidance and outreach

1. These differences include changes to those persons and entities subject to an asset freeze.
2. OFSI published a Financial Sanctions Notice on 31 December
   • https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/949055/Notice_Consolidated_List_Changes__31_December_2020.pdf
3. That listed changes to the Consolidated List:
   • https://www.gov.uk/government/publications/financial-sanctions-consolidated-list-of-targets/consolidated-list-of-targets
4. Ands some asset-freeze designations have been removed and are no longer in force
   • (IMPORTANT: these changes will not take effect in Jersey until 12 February), and others have moved to different regimes.
   • However, to date, there are no additional asset-freeze designations that are not already in force in Jersey.
   • The consolidated list records all asset-freeze designations in force in the UK.
5. The UK also publishes the UK sanctions list that lists individuals, entities and ships that are designated or specified for an asset-freeze or other restriction (such as travel bans) under SAMLA.
   • https://www.gov.uk/government/publications/the-uk-sanctions-list
6. These designations will have effect in Jersey.
   • (IMPORTANT: the UK sanctions list does not include asset-freeze designations that were not made under SAMLA regulations).
7. Schedule 1 to the Order sets out the UK sanctions regulations that will be implemented in Jersey.
   • You can view the UK-specific guidance on individual UK sanctions regimes that have been published by the Office of Financial Sanctions Implementation (OFSI) on uk.
   • This guidance includes an overview of the categories of prohibitions (e.g. asset-freezes, investment and financial services restrictions, trade restrictions etc.) in force under different regimes.
8. Jersey’s sanctions guidance is being updated and will be published on gov.je and the JFSC website on 12 February.
   • A webinar is planned for Wednesday 3 March, with further details to follow.
   • It is recommended that you review this guidance and attend the webinar.

Compliance and reporting obligations

1. The reporting obligations that apply are set out at Article 32 of the Law. 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 designated person, and
• It knows, or has reasonable cause to suspect, that the person is a designated person or has committed 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.
2. You should continue to use the suspected breach form  available from the JFSC website to report any suspected breach of financial sanctions and return the completed form to sanctions@gov.je
   • https://www.jerseyfsc.org/media/1872/goj-suspected-breach-notification-form-march-2019.doc
3. Column 5 of Schedule 1 to the Order sets out the regime-specific (e.g. Syria) non-asset-freeze prohibitions in the UK regulations to which an offence will apply in Jersey. Other offences are set out in the Law and the Order.
4. There is no change to the maximum penalties for breaches of financial sanctions. The maximum custodial sentence for a breach of financial sanctions is a term of 7 years imprisonment.

Licences and exceptions

1. Asset-freeze prohibitions: You should continue to use the asset freeze licence form to apply for a license in respect of an asset-freeze and return the completed form to sanctions@gov.je.
• https://www.jerseyfsc.org/media/1870/soj-asset-freeze-licence-application-form-march-2019.doc
2. The provisions on exceptions and licenses for asset-freezes are set out in Part 3 of the Law.
• A license may only be granted by the Minister if there is scope in the relevant UK regulations for an equivalent license to be granted by the UK Treasury.
• Exceptions to an asset-freeze that are set out in UK sanctions regulations do not apply in Jersey; however, they may be considered as a basis for an asset-freeze license application.
3. Non-asset-freeze prohibitions: For license applications that relate to non-asset-freeze prohibitions you should apply in writing to the Minister at sanctions@gov.je.
4. The provisions on exceptions and licenses are set out in Part 3 of the Law.
5. A license may only be granted by the Minister if there is scope in the relevant UK regulations for an equivalent license to be granted by the UK Treasury.
6. Exceptions to a non asset-freeze prohibition that are set out in UK sanctions regulations apply in Jersey.
7. UK General Licenses will not apply to Jersey persons or institutions operating in Jersey; however, they may be considered as the basis for a license application.

Merging, separation, and renaming of certain regimes

1. Some former EU regimes have been merged, separated or renamed by the UK to help reflect their purpose and policy intention. For example,
   • Persons designated under the Ukraine (Sovereignty and Territorial Integrity) and those businesses subject to restrictive measures under the current EU Regulations have been moved to a new Russia sanctions regime.

Repeal of existing Jersey sanctions Orders

1. The Sanctions and Asset-Freezing (Implementation of EU Regulations) (Jersey) Order 2020 (the “2020 Order”) will be repealed.
2. The Sanctions and Asset-Freezing (UK Human Rights Designations) (Jersey) Order 2020 will be repealed and its effects incorporated.
3. The Sanctions and Asset-Freezing (Designation of Lugovoy and Kovtun) (Jersey) Order 2020 will be repealed and its effects incorporated.

*UNSC regimes retained by the implementation of EU Regulations

1. The Order continues to implement 4 EU regulations (listed in Article 8 of the Order) in respect of Haiti, Iraq, Libya, and the former Federal Republic of Yugoslavia (Serbia and Montenegro), respectively, which are currently implemented under the 2020 Order, for which there are no corresponding UK regulations made under SAMLA.
2. These EU regulations implement 4 UNSC regimes from 1990-1994 that concern prohibitions against the satisfying of certain claims with regard to contracts and transactions whose performance is affected by the relevant UNSC resolutions.

https://www.gov.je/gazette/Pages/FinancialSanctionsNoticeNewOrder29Jan2021.aspx