This post examines the sanctions licensing process in the British Virgin Islands (the BVI), the Cayman Islands, Bermuda, and Anguilla.

As indicated in our previous blog posts, when a person or an entity is designated by the United Kingdom (a Designated Person) on the Consolidated List of Financial Sanctions Targets, then the funds or economic resources of such Designated Person, whether held directly or indirectly must be frozen. Territory persons must not deal with these funds or economic resources in any manner or make them available to or for the benefit of the Designated Person. To do otherwise would be a criminal offence under the applicable sanctions regime to which the prohibition and the asset freeze relates. The only exception to the prohibition on the asset freeze and to allow a Territory person to deal with the frozen funds or economic recourses would be to apply to the competent authority of the United Kingdom Overseas Territories for a financial sanctions licence.

What is a financial sanctions licence?

A financial sanctions licence is a written authority from the relevant competent authority of the UKOT that is responsible for the sanctions implementation. Without obtaining a financial sanctions licence, if a Territory person deals with the funds or economic resources of the Designated Person the Territory Person may be held criminally liable under the sanctions regime and subject to fines, custodial sentences or both. Applying for and obtaining a financial sanctions licence is the best resource to protect Territory persons who may have to deal with Designated Persons and their funds and economic resources from time to time.

An application, if successful, will result in the competent authority of the UKOT issuing a financial sanctions licence which may, depending on the facts of the case and the grounds for the application contain specific permissions and conditions. These conditions, if present, set the scope of the financial sanctions licence. As such, the Territory person to whom a financial sanctions licence is granted should pay strict attention to the terms under which the financial sanctions licence is granted. If the Territory person is in doubt or has any questions, they should consult with the competent authority who can advise on the scope of the financial sanctions licence and any terms or conditions imposed on the financial sanctions licence.

How to obtain a financial sanctions licence?

The competent authority in each UKOT will have designated forms that will need to be completed and submitted together with the necessary exhibits (information and documents) upon which the applicant is basing the claim for the financial sanctions licence. The licensing application form is a very important document and care and attention should be paid when completing the form to ensure that all of the information that is being provided to the competent authority can be supported both by facts and law. The competent authority will use the information in the application form and any supporting material provided to determine whether the licence application is successful or not. The applicant should ensure that all required and applicable fields on the licensing application form is completed as relevant to the case and the ground(s) being relied upon.

When explaining the legal basis for the application the applicant must keep in mind the specific legal grounds that are set out in the applicable sanctions legislation. These grounds are fixed in law and the facts of the case will need to fit within one or more of the grounds and be substantiated by the relevant documentary evidence in order for the application to be successful.

Information on where to find the sanctions application forms can be found at the links below:

• BVI: https://fiabvi.vg/International-Sanctions/Guidance-and-Forms
• Cayman Islands: https://www.fra.gov.ky/contents/page/1
• Bermuda: https://www.gov.bm/international-sanctions-measures
• Anguilla: there is no specific designated form – however the form provided here can be used as a substitute and adapted for Anguilla

For information on where to email the competed sanctions application forms, please refer to our previous blog post here.

How long does it take to obtain a financial sanctions licence?

Provided that a full and complete application is submitted to the competent authority, the respective licensing teams within the competent authorities will review the application and consider its merits against the facts, law and the documentary evidence provided with the application. The competent authority may liaise with other Government departments as well eg the Attorney-General’s Chambers and the UK Secretary of State. To the extent that additional information is required, the licensing teams within the competent authorities will contact the applicant with further questions. If there are supplementary questions after an application is filed, all questions will need to be satisfactorily answered before a decision is taken in relation to the application. The approximate work timeframe for reaching a decision on a fully completed application is a window of four weeks. In practice though, this timeframe can be protracted as applications will turn on the facts of the case and their complexity levels.

Competent authorities do the best they can to process financial sanctions applications. However, there are instances when the competent authorities are required, for example, to notify other international agencies, for example, the United Nations, before a financial sanctions licence is granted. This applies in cases where the matter applies to certain UN-designated individuals or entities. If this process applies, the local UKOT competent authorities will need to liaise with the UK counterparts and then the UK authorities (in particular, the Office of Financial Sanctions Implementation) will need to liaise with the UN departments. This can add time on to the four weeks mentioned above.

There are certain types of applications that are given priority over others. Priority would be given in cases of urgency in particular with humanitarian cases.

Given the volume of cases that competent authorities tend to work on, to the extent that a financial sanctions licence is expiring soon, it would be important to apply for the extension of the financial sanctions licence ahead of time to give the competent authority sufficient notice and time to deal with the extension request. If a financial sanctions licence does expire and it not extended before the expiration date this will necessitate a fresh application being submitted to the competent authority.

What happens after a decision is taken by the competent authority?

At such a time when the competent authority has reached a decision on an application for a financial sanctions licence, the competent authority will inform the applicant of the outcome in writing. Assuming that the licensing application was successful, it is possible that the competent authority will circulate a draft of the financial sanctions licence prior to the finalised version being circulated. This is done so as to ensure that the details as set out in the financial sanctions licence are correct. This step is not intended for substantive amendments to be made to the draft but instead is done so as to ensure that all factual matters are correct and to invite the applicant to raise any questions on the scope of the financial sanctions licence should it choose to do so.

The competent authority that issues, varies, revokes, or suspends a licence which authorises acts by a particular Territory person must give written notice to that person of the issue, variation, revocation, or suspension of the licence.

The competent authority who issues, varies, revokes, or suspends a general licence or a licence which authorises acts by persons of a particular description must take such steps as that person considers appropriate to publicise the issue, variation, revocation, or suspension of the licence.

What are the general grounds on which an application for a licence can be made?

The grounds tend to be prescribed in the applicable sanctions legislation, however, broadly the grounds are:

• “Basic needs” – which includes:
  • Medical needs
  • Needs for: food, payment of insurance premiums, payment of tax, rent or mortgage payments, utility payments
  • In the case of a person other than an individual, “basic needs” includes: payment of insurance premiums, payment of reasonable fees for the provision of property management services, payment of remuneration, allowances or pension of employees, payment of tax, rent or mortgage payments, utility payments
• Legal services: to enable the payment of reasonable professional fees for the provision of legal services or reasonable expenses associated with the provision of legal services
• Maintenance of frozen funds and economic resources: to enable the payment of reasonable fees or reasonable service charges arising from the routine holding or maintenance of frozen funds or economic resources
• Extraordinary expenses: to enable an extraordinary expense of a Designated Person to be met
• Pre-existing judicial decisions: to enable by used of the Designated Person’s funds or economic resources, the implementation or satisfaction (in whole or in part) of a judicial, administrative or arbitral decision or lien, provided that –
  • The funds or economic resources so used are the subject of the decision or lien
  • The decision or lien –
    • Was made or established before the date on which the person became the Designated Person
    • Is enforceable in the UKOT
  • The use of the frozen funds or economic resources does not directly or indirectly benefit any other designated person
• Prior obligations: to enable by the use of the Designated Person’s frozen funds or economic resources, the satisfaction of an obligation of that person (whether arising under a contract, other agreement or otherwise), provided that –
  • The obligation arose before the date on which the person became a designated person
  • No payments are made to another designated person, whether directly or indirectly
• Consular posts: to enable anything to be done in order that the functions of a consular post or of an international organisation enjoying immunities in accordance with international law may be carried out
• Humanitarian assistance activity: to enable anything to be done in connection with the performance of any humanitarian assistance activity
• Medical goods and services: to enable anything to be done in connection with the provision of medical goods or service for the benefit of the civilian population of a country or to enable the import, export or use of medical goods
• Food: to enable anything to be done in connection with the production or distribution of food for the benefit of the civilian population of a country
• Diplomatic missions: to enable anything to be done in order that the functions of a diplomatic mission or of an international organisation enjoying immunities in accordance with international law may be carried out

Should you have any questions on financial sanctions licensing or if you would like to apply for a financial sanctions licence in any of the UKOTs please do feel free to get in touch with us.