Applying for a treasury license to use assets under sanctions can prove a key move forward for states, sovereign wealth funds and individuals
The UK’s HM Treasury operates a range of financial sanctions that take effect against a “designated person”. This can be an individuals or entities – such as an organisation, company or group. Those designated persons (‘sanctions targets’) are listed in a “Consolidated List” published by the Treasury.
Financial sanctions invariably include asset freezing measures – these mean that funds are frozen by the bank or other institutions involved. Unless licensed by the Treasury a designated person can neither access those funds nor can they be paid or given funds or economic resources. It’s a criminal offence to knowingly – or with reasonable cause to suspect – make funds available to a designated person directly or indirectly.
If a person (whether a designated person or not) needs a licence – for example to make or receive a payment that is blocked by UK financial sanctions – one apply to the Treasury with fully prepared papers giving all relevant information, full details of the transaction and supporting documentation.
The licence can exempt certain transactions from the restrictions of the asset freeze.
Generally there are two sorts of licence:
1. General licences. These are available to every potential beneficiary subject to whatever terms or conditions apply under the sanctions regime concerned; so a general licence allows every transaction, or category of transaction, that is described in the licence to be lawful, whoever the persons who are engaging in them.
2. Individual or specific licences. These are granted to specific parties, and may permit specific transactions or types of spending for example.
Licences can be granted for a range of purposes and may include the allowing the release of frozen funds to pay obligations due by the designated person under a contract entered into prior to their listing, to meet bank charges, to cover basic household or business expenses and reasonable legal costs.
Licences can also allow other arrangements to permit transactions and protect third parties who are not sanctions targets – for example to allow staff salaries to be paid, to allow humanitarian transactions, and to allow the assets of designated persons to be safeguarded and managed.
When considering whether to issue a licence, the Treasury will have regard to the policy objectives of the relevant regime.
Licence applications should be submitted at least four weeks before the licence is needed. Licence applications are dealt with as quickly as possible by the Treasury but do not guarantee that licences will be issued within four weeks of an application being received. There is no charge made by the Treasury to issue a financial sanctions licence.
MS-Legal can safely store the granted licence and produce it for inspection to banks or other parties to a transaction who may ask to see a copy of the licence.
Licences are issued in the light of the known facts of a particular case. The Treasury may amend a licence where the circumstances change or new types of transaction are contemplated.
The Treasury will usually provide an explanation for any decision to refuse a licence and will reconsider refusals if there are new facts. Where a licence is not granted, the transaction concerned cannot legally proceed.
Our experience in dealing with the application process is that it can take between 4 to 6 weeks for the Treasury to consider the application and grant the licence.