A Comprehensive Guide on Targeted Financial Sanctions
The authorities have understood how important it is to stop the increasing risk of money laundering. In response, they have laid down some effective laws and regulations that can assist in blocking the intrusion of money launderers. Read along to learn about TFS, which helps in cutting off the resource access of money launderers.
The concept of money laundering stays unexplored, just like the Challenger Deep. Irrespective of how much you try to understand every bit and part of anti-money laundering, you’ll still leave behind something of utmost importance.
Today, we will be targeting the concept of Targeted Financial Sanctions.
So, let's get started.
Overview
The UNSC, United Nations Security Council, is one of the integral parts of the United Nations. The body has the primary responsibility of maintaining peace and security internationally. The UNSC has 15 members who have one vote each. As per the Charter of the United Nations, the members are obligated to adhere to and comply with the Security Council's decisions.
The Security Council is responsible for sanctions that majorly concentrate on improving the settlement of counterterrorism, political conflicts, and nuclear non-proliferation. The regimes involve measures starting from comprehensive economic and trade sanctions. They can impose restrictions on dealings with a specific financial party or carry out commodity transactions.
The UAE is a member of the UN, which makes them committed to executing the UNSCRs that are related to the UN’s sanctions regimes. As per the laws, the people should be informed that according to the UAE laws, the government applies TFS via the Local Terrorist List according to the UNSCR 1373.
Probably, it is challenging to gather everything without getting deep into the details. Let us start with the concept of TFS.
What is TFS?
TFS stands for targeted financial sanctions that include asset freezing without delay and prohibition from carrying out assets, services, or funds directly or indirectly for the benefit of sanctioned groups, entities, or individuals.
The two TFS purposes are-
Asset Freezing Without Delay: Asset freezing means the prohibition of transferring, converting, or disposing of the funds and assets controllers by the authorized individuals, groups, or entities of the Local Terrorist List or UN Consolidated List. it involves-
- The freezing of the financial assets, economic resources, and funds. Following the freezing, the process includes restricting the alteration, transfer, access, or movement of the funds.
- The freezing of the economic resources involves the restriction on their use to acquire the funds and additional assets and services that include but are not limited to, mortgaging or selling them.
These examples can better explain the TFS process-
A FI is a freezing measure that can suspend access to bank accounts or even block transactions.
A DNFBP is a freezing measure that stops the facilitation of the ownership transfer of movable or immovable assets.
VASP is a freezing measure that can block services to transfer or trade virtual assets.
Prohibition From Making Funds Available: Another purpose of the TFS is implementing restrictions on offering funds and other assets to provide financial services to authorized individuals, groups, or entities.
These examples can better explain the process-
VI's is the process of delivering transactional services.
DNFBPs provide:
- Services like legal services are subject to transfer of asset ownership.
- Trading in real estate.
- Selling precious metals.
- Natural resources.
- Selling jewelry.
VASPs provide services that include but are not limited to transferring virtual assets.
How Long Do These Measures Last?
The asset freezing and restrictions have no time limit. The assets and funds can remain frozen, and the restrictions may remain intact until the entity, group, or individual is removed from the Local Terrorist List or until there is a decision to cancel the freeze by UNSC or a competent authority.
What is the Purpose of TFS?
The sole purpose of the TFS is to prohibit certain individuals, groups, or entities from the means to hinder international peace and security, indulge in terrorism or support the proliferation of weapons with financial help.
Certain people or entities are involved in the targeted financial sanctions measures list that keeps them from accessing any financial support or even moving assets. The process's major motive is to maintain international peace and security by blocking out risky parties. Money laundering revolves around illegal means and causes. Monitoring financial transactions is another way to reinforce the financial gateways for moderately scaled businesses and financial institutions.
When we talk about the purpose of TFS, these are implemented in the UAE pursuant to UNSCRs relating to-
- Terrorism and terrorist financing
- The proliferation of weapons of mass destruction
- Other UN sanctions regimes with TFS
The Paramount Target of These Measures
The measures of freezing and restrictions for making funds and services available are applied to -
- Any individual or a group authorized in the Local Terrorist List designated by the UNSC in the Un Consolidated List or issued by the Federal Cabinet.
- Any entity directly or indirectly controlled by a group or an individual designated under A.
- Any entity or individual acting on behalf of or is directed to any individual or a group designated under A&B.
The concept of money laundering is more than just financial transaction monitoring. Government officials are involved in huge processes and purposes to maintain international peace and security.