Introduction to Financial Sanctions
What are Financial Sanctions?
Financial sanctions are restrictive measures imposed on individuals or entities in an effort to curtail their activities and to exert pressure and influence on them. These restrictive measures include, but are not limited to, financial sanctions, trade sanctions, restrictions on travel or civil aviation restrictions.
Financial sanctions emanate from the EU and the UN and are contained in sanctions lists. All natural and legal persons are obliged to comply with financial sanctions and can do so by monitoring the EU and UN lists and taking appropriate action as required (see below). The consolidated lists are available here:
The Central Bank of Ireland ("Central Bank") also provides frequent financial sanctions updates on its' Financial Sanctions Updates page with the most recent updates appearing in its' What's New feed.
EU Financial Sanctions
The EU implements Restrictive Measures autonomously at an EU level or as a result of resolutions of the Security Council of the United Nations through the publication of EU Council Regulations. EU Council Regulations are binding on all Member States once published in the EU Official Journal
Targeted Financial Sanctions related to Terrorist Financing and Proliferation of Weapons of Mass Destruction
Targeted Financial Sanctions are a specific type of financial sanction with a stated objective, one of which is the prevention of terrorist financing.
Targeted Financial Sanctions can originate at the supranational level (EU) or international level (UN). While there is a clear obligation to comply with EU Council Regulations, it is also necessary to monitor the designation of persons and entities by the United Nations Security Council Sanctions Committees (“UN Sanctions Committees") in the terrorist financing context. The EU gives legal effect to Targeted Financial Sanction designations by the UN Sanctions Committees through EU Council Regulations.
Once a person or entity is designated ('sanctioned') by the UN Sanctions Committees, funds or other assets should be frozen without delay and not made available, directly or indirectly, to that sanctioned individual or entity. Targeted Financial Sanctions relating to terrorism are dealt with in United Nations Security resolutions 1267 (1999) and 1373 (2001) and their successor resolutions.
Further information on Targeted Financial Sanctions and Terrorist Financing can be found on the Terrorist Financing page.
Financial Sanctions Requirements
There is a legal obligation to comply with EU Council Regulations relating to financial sanctions as soon as they are adopted. Once a person or entity has been sanctioned under EU Financial Sanctions, there is a legal obligation not to transfer funds or make funds or economic resources available, directly or indirectly, to that person or entity.
In certain circumstances, a person can make a transfer to a sanctioned individual or entity if a prior authorisation is received or notification is given to a competent authority. Further information on this procedure can be found on the Derogations page and the Iran Regulations page.
All persons must supply any information related to suspected financial sanctions breaches to the Central Bank of Ireland (the "Central Bank") pursuant to the relevant EU Council Regulations.
The penalties in Irish law for a breach of EU Financial Sanctions are contained in Irish statutory instruments signed by the Minister for Finance. The penalties in Irish law for a breach of EU Financial Sanctions are contained in a statutory instrument signed by the Minister for Finance. A list of Irish statutory instruments in force relating to penalties for the breach of financial sanctions can be found by referring to the Department of Finance website.
Guidance for Financial Institutions
There is an obligation on financial institutions to ensure that they are compliant with financial sanctions, which includes the ongoing monitoring of transactions. To ensure compliance with financial sanctions, it is necessary to monitor both the EU Financial Sanctions list and the UN Sanctions Committees list relating to terrorism and the proliferation of weapons of mass destruction.
What to do if a 'hit' occurs
In the event that a match or a 'hit' occurs against a sanctioned individual or entity, the financial institution must immediately freeze the account and/or stop the transaction and immediately report the hit to the Central Bank along with other relevant information.
Before submitting a report to the Central Bank, the institution should take reasonable steps to ensure that the person or entity identified is the same person or entity as that listed in the relevant sanctions list (i.e. verifying the name with other identifying information).
Competent Authorities for Financial Sanctions
The Central Bank is responsible for financial regulation in Ireland. It is also one of three competent authorities for EU Financial Sanctions and is responsible for the administration, supervision and enforcement of financial sanctions in Ireland as it relates to financial institutions.
The other Irish competent authorities for EU Restrictive Measures are:
The Central Bank has prepared Frequently Asked Questions (FAQs) to assist credit and financial institutions compliance with financial sanctions requirements.
An overview of EU Sanctions is provided by the European External Action Service.
The EU has prepared FAQs on EU Restrictive Measures (September 2014). It has also prepared a paper on Best Practices for the effective implementation of Restrictive Measures.
An overview of UN Sanctions Committees.
The Central Bank can be contacted in respect of applications for prior authorisation/notification and to make financial sanctions reports at:
Financial Sanctions Unit,
Anti-Money Laundering Division,
Central Bank of Ireland,
Iveagh Court, Harcourt Road