Sanctions and Anti-Money Laundering Act 2018

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Sanctions and Anti-Money Laundering Act 2018
Act of Parliament
Royal Coat of Arms of the United Kingdom (variant 1, 1952-2022).svg
Parliament of the United Kingdom
Long title An Act to make provision enabling sanctions to be imposed where appropriate for the purposes of compliance with United Nations obligations or other international obligations or for the purposes of furthering the prevention of terrorism or for the purposes of national security or international peace and security or for the purposes of furthering foreign policy objectives; to make provision for the purposes of the detection, investigation and prevention of money laundering and terrorist financing and for the purposes of implementing Standards published by the Financial Action Task Force relating to combating threats to the integrity of the international financial system; and for connected purposes.
Citation 2018 c. 13
Introduced by Boris Johnson (Commons)
Tariq Ahmad, Baron Ahmad of Wimbledon (Lords)
Territorial extent United Kingdom
Dates
Royal assent 23 May 2018
Status: Current legislation
History of passage through Parliament
Text of statute as originally enacted
Revised text of statute as amended

The Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) is an Act of Parliament of the United Kingdom applying to the United Kingdom.

Contents

The Act has two purposes; a) To enable the UK to create its own sanctions framework, allowing it to issue sanctions rather than adopting EU or UN models, and b) to make provisions of the purposes of the detection, investigation and prevention of money laundering and terrorist financing, and to implement standards published by the Financial Action Task Force (FATF), removing the need to adopt EU directives. [1]

Introduction of the Act

The Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) was introduced to allow the UK to impose economic and other sanctions, and money laundering and terrorist financing regulations. Without introducing the Act, the UK would be at risk of breaching its international obligations as a member of the United Nations following Britain's exit from the EU (colloquially referred to as Brexit).

The Act allows the UK to implement sanctions passed by resolutions of the UN Security Council which were previously implemented through EU regulations under the EU’s Common Foreign and Security Policy.

On 1 May 2018, the UK House of Commons, without opposition, added the "Magnitsky amendment" to the Sanctions and Anti-Money Laundering Bill that allowed the British government to impose sanctions on people who commit gross human rights violations. [2] [3]

The act received royal assent on 23 May 2018, and by 12 July 2020 the Act was being used to sanction 49 individuals. Of those sanctioned 25 were Russian, 20 were Saudi Arabian, two were from Myanmar and two organisations were North Korean. [4] Chief Executive of Hong Kong Carrie Lam was mentioned in Parliament by both parties that month in connection with the Act. [4]

From the 31 December 2020, types of sanctions in the UK have changed due to Brexit and it is important that all organisations comply with and understand the new laws. [5]

The Sanctions and Anti-Money Laundering Act 2018

The power to make sanctions regulations

Much of the act covers the UK’s powers to make and enforce its own sanctions. [6] The Act confers broad powers upon the Secretary of State and the Treasury as the "appropriate Minister" to impose sanctions regulations for compliance with a UN obligation or any other international obligation, or for a purpose that would:

For this reason, it is easier for the UK to impose sanctions under SAMLA 2018 if it is deemed appropriate by ministers. Under the UK’s prior adherence to EU regulations sanctions were only to be imposed when strictly necessary. This increase of UK powers to impose sanctions has been criticised by some, with Lord Judge in the House of Lords commenting that it was a "bonanza of regulations", [7] further stating that the Bill should be rechristened as “the ‘Sanctions and Anti-Money Laundering (Regulation Bulk Buy) Bill". [7]

The types of sanction outlined in the bill are:

  1. Financial sanctions
  2. Immigration sanctions
  3. Trade sanctions
  4. Aircraft sanctions
  5. Shipping sanctions
  6. Other sanctions for the purposes of UN obligations [1]

By way of "other sanctions", the Act allows the "appropriate Minister making the regulations" [6] to impose sanctions they deem appropriate to comply with a UN obligation.

Designation by Description

Under section 12 of SAMLA 2018, it allows the designation of persons by "description" as well as by name. This is not currently covered by EU regulations to which the UK left through leaving the EU.

For a sanction to apply to persons by description, several conditions must be met:

Anti-money laundering regulations

The Act covers anti-money laundering and terrorist funding. Through further regulations, it allows the British government to make provisions for enabling or facilitating the detection or investigation of money laundering and terrorist financing, or the prevention of either. In addition, it allows the Financial Action Task Force (FATF) to combat threats to the integrity of the international financial system via the implementation of Standards.

The Act addresses concerns over the transparency of ownership of foreign companies, requiring the Secretary of State to publish regular reports on the progress made in creating a register of beneficial owners of overseas entities. [1] [6]

Related Research Articles

<span class="mw-page-title-main">Office of Foreign Assets Control</span> Agency of the United States Department of the Treasury

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department. It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives. Under Presidential national emergency powers, OFAC carries out its activities against foreign states as well as a variety of other organizations and individuals, like terrorist groups, deemed to be a threat to U.S. national security.

In general, compliance means conforming to a rule, such as a specification, policy, standard or law. Compliance has traditionally been explained by reference to the deterrence theory, according to which punishing a behavior will decrease the violations both by the wrongdoer and by others. This view has been supported by economic theory, which has framed punishment in terms of costs and has explained compliance in terms of a cost-benefit equilibrium. However, psychological research on motivation provides an alternative view: granting rewards or imposing fines for a certain behavior is a form of extrinsic motivation that weakens intrinsic motivation and ultimately undermines compliance.

<span class="mw-page-title-main">Financial Action Task Force</span> Intergovernmental organization to combat money laundering and terrorism financing

The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, Groupe d'action financière (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering and to maintain certain interest. In 2001, its mandate was expanded to include terrorism financing.

<span class="mw-page-title-main">Know your customer</span> Financial institution and company-related term

Know Your Customer (KYC) guidelines and regulations in financial services require professionals to verify the identity, suitability, and risks involved with maintaining a business relationship with a customer. The procedures fit within the broader scope of anti-money laundering (AML) and counter terrorism financing (CTF) regulations.

The USA PATRIOT Act was passed by the United States Congress in 2001 as a response to the September 11, 2001 attacks. It has ten titles, each containing numerous sections. Title III: International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 is actually an act of Congress in its own right as well as being a title of the USA PATRIOT Act, and is intended to facilitate the prevention, detection and prosecution of international money laundering and the financing of terrorism. The title's sections primarily amend portions of the Money Laundering Control Act of 1986 and the Bank Secrecy Act of 1970.

<span class="mw-page-title-main">Anti–money laundering</span> Financial integrity policy framework

Anti-Money Laundering (AML) refers to a set of policies and practices to ensure that financial institutions and other regulated entities prevent, detect, and report financial crime and especially money laundering activities. Anti-Money Laundering is often paired with the action against terrorism financing, or Combating the Financing of Terrorism, using the acronym AML-CFT. In addition arrangements intended to ensure that banks and other relevant firms duly report suspicious transactions, the AML policy framework includes financial intelligence units and relevant law enforcement operations.

Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors.

In domestic and international commercial law, a beneficial owner is a natural person or persons who ultimately owns or controls an interest in a legal entity or arrangement, such as a company, a trust, or a foundation. Legal owners, commonly described as the "registered owners", may hold those interests as beneficial owners or for the benefit of someone else, in which case they may be described as a "nominee".

The Financial Action Task Force blacklist, is a blacklist maintained by the Financial Action Task Force.

The chief compliance officer (CCO) is a corporate executive within the C-suite responsible for overseeing and managing regulatory compliance issues within an organization. The CCO typically reports to the chief executive officer or the chief legal officer.

Anti-money laundering (AML) software is software used in the finance and legal industries to help companies comply with the legal requirements for financial institutions and other regulated entities to prevent or report money laundering activities. AML software can facilitate faster and more accurate compliance and investigations.

<span class="mw-page-title-main">Financial crime</span>

Financial crime is crime committed against property, involving the unlawful conversion of the ownership of property to one's own personal use and benefit. Financial crimes may involve fraud ; theft; scams or confidence tricks; tax evasion; bribery; sedition; embezzlement; identity theft; money laundering; and forgery and counterfeiting, including the production of counterfeit money and consumer goods.

In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may hold. The terms "politically exposed person" and senior foreign political figure are often used interchangeably, particularly in international forums.

<span class="mw-page-title-main">Asia/Pacific Group on Money Laundering</span> Inter-governmental organisation against serious financial crime

The Asia/Pacific Group on Money Laundering (APG) is a FATF style regional inter-governmental (international) body, the members of which are committed to effectively implementing the international standards against money laundering, the combating the financing of terrorism (CFT) and financing the proliferation of weapons of mass destruction. APG was founded in 1997 in Bangkok, Thailand, and currently consists of 42 member jurisdictions in the Asia-Pacific region and a number of observer jurisdictions and international/regional observer organisations.

<span class="mw-page-title-main">Magnitsky Act</span> 2012 United States federal law

The Magnitsky Act, formally known as the Russia and Moldova Jackson–Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012, is a bipartisan bill passed by the U.S. Congress and signed into law by President Barack Obama in December 2012, intending to punish Russian officials responsible for the death of Russian tax lawyer Sergei Magnitsky in a Moscow prison in 2009 and also to grant permanent normal trade relations status to Russia.

<span class="mw-page-title-main">2005 Warsaw Convention</span> Council of Europe convention about money laundering and crime investigation

The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, also known as the Warsaw Convention or CETS 198, is a Council of Europe convention which aims to facilitate international co-operation and mutual assistance in investigating crime and tracking down, seizing and confiscating the proceeds thereof.

The Qatar Financial Information Unit (QFIU) is a Qatari government regulatory agency responsible for financial intelligence efforts to combat money laundering and financing of terrorism. Like other national Financial Intelligence Units (FIU) around the world, it requires banks, investment companies, insurers and other financial institutions to report suspicious financial transactions. QFIU then analyzes the information and disseminates the relevant data to law enforcement authorities for further investigation and action.

<span class="mw-page-title-main">International sanctions against Afghanistan</span> Embargo imposed by the United Nations against Taliban-controlled Afghanistan

International sanctions against Afghanistan were implemented by the United Nations in November 1999. The sanctions were aimed at terrorists, Osama bin Laden and members of Al-Qaeda.

<span class="mw-page-title-main">United Nations Security Council Resolution 2253</span> United Nations resolution adopted in 2015

United Nations Security Council Resolution 2253 was prepared by the United States and Russia and was unanimously adopted by the UN Security Council on 17 December 2015. The resolution specified that the sanctions that were already in force against Al Qaeda would also focus on the Islamic State in Iraq and to (ISIL/Da’esh). This resolution summed up the criteria according to which persons and organizations could end up on the sanctions list. Countries were also asked to take stricter action to cut off the financing of terrorist groups.

<span class="mw-page-title-main">Magnitsky legislation</span> Sanctions against foreign individuals

Magnitsky legislation refers to laws providing for governmental sanctions against foreign individuals who have committed human rights abuses or been involved in significant corruption. They originated with the United States which passed the first Magnitsky legislation in 2012, following the torture and death of Sergei Magnitsky in Russia in 2009. Since then, a number of countries have passed similar legislation such as Canada, the United Kingdom and the European Union.

References

  1. 1 2 3 4 "A Quick Guide to the Sanctions and Anti-Money Laundering Act 2018". Reeds Solicitors LLP. Retrieved 27 October 2021.
  2. ↑ Smith, Ben; Dawson, Joanna (27 July 2018). "Magnitsky legislation" (PDF). House of Commons.
  3. ↑ "UK lawmakers back 'Magnitsky amendment' on sanctions for human rights abuses". Reuters. 1 May 2018. Archived from the original on 29 January 2019.
  4. 1 2 Clowes, Ed (12 July 2020). "UK joins game of Russian roulette with sanctions plan". Telegraph Media Group Limited.
  5. ↑ "Understanding Sanctions In The UK". ComplyAdvantage. Archived from the original on 15 February 2021. Retrieved 15 February 2021.
  6. 1 2 3 "Sanctions and Anti-Money Laundering Act 2018". Government Legislation Website.
  7. 1 2 Moiseienko, Anton (20 December 2018), "Entry Sanctions as an Anti-corruption Policy", Corruption and Targeted Sanctions, Brill | Nijhoff, pp. 82–119, doi:10.1163/9789004390478_004, ISBN   9789004369023, S2CID   201456014 , retrieved 27 October 2021
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