Update on sanctions following Brexit
Guernsey sanctions regime is vital to safeguard the island’s reputation as a secure and well-regulated international financial centre. Following Brexit, the UK has brought various changes to its legal framework for implementing sanctions. Guernsey shifted from following the EU’s framework to the UK in this area, which has led to additional changes and simplification to the local regulations.
Swapping the EU for the UK
Guernsey’s shift to implementing the UK sanctions regime followed Brexit on 31 December 2020. Although UK & EU sanctions regimes are very similar, some differences are worth noting.
Guernsey used to operate its sanctions regime by enacting various domestic ordinances which gave effect to EU sanctions and also to the UK’s separate and autonomous sanctions regime relating to global human rights. Both were given effect in Guernsey by domestic ordinances which have now been repealed. Therefore, the 2020 Regulations (The Sanctions (Implementation of UK Regimes) (Bailiwick of Guernsey) (Brexit) Regulations, 2020) address not only the replacement of the corresponding EU regimes but also the UK’s sanctions regime relating to global human rights. This single enactment is a positive and welcome change as it centralises all relevant provisions into a single enactment.
Preventing and combating serious corruption
The UK has recently implemented a new sanctions regime, the Global Anti-Corruption Sanctions Regulations 2021. These have put in place sanctions measures to prevent and combat serious corruption. They replace The Misappropriation (Sanctions) (EU Exit) Regulations 2020, concerning the misappropriation of State funds from any country outside the UK. They have now been implemented in the Bailiwick of Guernsey by the Sanctions (Implementation of UK Regimes) (Bailiwick of Guernsey) (Brexit) (Amendment – Global Anti-Corruption) Regulations, 2021.
All persons designated under the UK Regulations are included in the regime–specific list and the consolidated list of individuals and entities which can be found on the H M Treasury website. It emphasizes that the nationality and residence of customers is an important part of the customer due diligence process in particular if there is reason to believe that a customer has links to a sanctioned country.
It is vital that businesses continue to take appropriate measures. In particular, they must refrain from taking any action that would breach a UK sanctions regime and report any findings to the Policy & Resources Committee immediately. They should also be compliant with the relevant reporting obligations.
EU and US sanction regimes still apply
Financial services businesses should bear in mind that in addition to the Bailiwick sanctions regime, autonomous sanctions regimes (e.g: EU, US) are still relevant. EU sanctions will apply to any activity within an EU member state and in the US, the Office of Foreign Assets Control’s regulations can be applied to persons and entities trading in US Dollars.
Further guidance on the Guernsey sanctions regime
Complying with the sanctions regime requires a great deal of diligence, care and adequate operational capability. Contact Babbé for expert advice on sanctions and other regulatory matters.Read full insight