Snapshot: economic and financial sanctions in Australia

Economic and financial sanctions

In what circumstances may a person become subject to asset freeze provisions in your jurisdiction? What dealings do asset freeze provisions generally restrict in your jurisdiction?

Australia’s targeted financial sanctions prohibit the supply of any asset whatsoever to a designated person or entity. A designated person may be an Australian citizen, foreign national or resident in Australia or overseas. Targeted financial sanctions prohibit directly or indirectly making an asset available to (or for the benefit of) a designated person or entity or an asset-holder using or dealing with an asset that is owned or controlled by a designated person or entity.

The Australian Sanctions Office (part of the Department of Foreign Affairs and Trade) maintains a Consolidated List of all persons and entities subject to Australia’s targeted financial sanctions. If someone is, or believes they are, using or dealing with an asset owned or controlled by a designated person or entity (ie, a freezable or controlled asset), they must immediately hold or ‘freeze’ the asset and inform the Australian Federal Police as soon as possible.

Are there any general carve-outs or exemptions to the asset freeze provisions in your jurisdiction?

There are no general carve-outs or exemptions to the asset freeze provisions in Australia. However, a permit may be obtained in advance to allow an activity that would otherwise be a prohibited sanctions activity. Each sanctions regime is slightly different; however, in general, an application to deal with a controlled asset or the assets of a designated person can only be made for:

• a basic expense dealing;
• a legally required dealing; and
• an extraordinary expense dealing.

The definitions of basic expense dealing, legally required dealing and extraordinary expense dealing are set out in Regulation 5 of the Charter of the United Nations (Dealing with Assets) Regulations 2008 and regulation 20 of the Autonomous Sanctions Regulations 2011 (Cth).  

The ASO sets out information on applying for a permit under Sanctions Permits. A permit application is made online.

If a person or entity is designated on the Consolidated List, they can make a Request to be De-Listed.

If someone owns or controls a frozen asset and believes that it has been frozen in error, a request to unfreeze the asset can be made by contacting the ASO about Wrongly Frozen Assets.

Do the competent sanctions authorities in your jurisdiction maintain a list of individuals and entities blocked under asset freeze restrictions?

The ASO (a part of the Department of Foreign Affairs and Trade) maintains a consolidated list of all persons and entities subject to Australia’s targeted financial sanctions. The Consolidated List is available on the ASO website.

What other restrictions apply under the economic and financial sanctions regime in your jurisdiction?

Australia implements United Nations Security Council sanctions and autonomous sanctions on a number of specific sectors in relation to commercial activities in the Democratic People’s Republic of Korea (eg, restrictions on financial services and joint ventures) and Iran (eg, sanctions relating to nuclear technology, uranium extraction and other weapons technology or materials).

Australia’s autonomous sanctions also target specific sectors in relation to Russia and Ukraine, and Crimea and Sevastopol. In relation to these regions, there are restrictions on certain commercial activities and restrictions on the provision of certain services. For example, it is prohibited to grant loans, credit or establish joint ventures in relation to the transport, telecommunications or energy sectors and the exploitation of oil or gas, or of specified mineral resources, in Crimea or Sevastopol. Australia also targets the petrochemical and oil and gas industries pursuant to its autonomous sanctions against Syria.

Are the competent sanctions authorities in your jurisdiction empowered to issue a licence to permit activities which would otherwise violate economic and financial sanctions? If so, what is the extent of their licensing powers and in what circumstances will they issue a licence?

The various Australian sanctions regimes have different criteria for permitting trade in goods and services that are subject to sanctions.

To grant a permit, the Minister for Foreign Affairs must be satisfied it would be in the national interest to grant a permit. The ASO website provides that factors relevant to considerations in the ‘national interest’ include: the broader objectives of a particular sanctions regime, whether the activity is in the interests of, or would be advantageous to Australia as a whole (which may include economic, security, and any other relevant foreign policy considerations), and any effect on Australia’s international reputation, standing or external relations.

In relation to United Nations Security Council (UNSC) sanctions, the Minister of Foreign Affairs may need to notify or receive the approval of the UNSC before granting a sanctions permit.

What is the application process for an exemption licence? What is the typical timeline for a licence to be granted?

The application process for a sanctions permit is explained in detail on the ASO website. In summary, the application is made online via the ASO portal ‘Pax’. To obtain a permit, the applicant must detail all information about the proposed trade activity. This includes:

• details and specifications of the goods;
• information on the end use of the goods; and
• details on the consignee, third party transport providers, intermediaries, brokers and, of course, the end user. End user certification may also be required.

The ASO endeavours to process permits as quickly as possible; however, it provides an estimated timeline of six to eight weeks to process an application submitted online via Pax and recommend allowing three months for the entire process. This is because the application process might take longer than six to eight weeks depending on a range of factors including the complexity of the application and the current workload of the ASO.

To what extent is it possible to engage with the competent sanctions authorities to discuss licence applications or queries on economic and financial sanctions compliance?

The ASO website encourages businesses and individuals to engage with their office via Pax or email in relation to permits, and compliance. The ASO welcomes questions, and applications for indicative assessments in relation to whether a proposed activity may be affected by Australian sanctions law.

Additionally, businesses and individuals can request help from the Australian Federal Police to assist with the determination as to whether or not an asset is owned or controlled by a designated person or entity (see Regulation 41 Charter of the United Nations (Dealing with Assets) Regulations 2008 (Cth) and Regulation 23 Autonomous Sanctions Regulations 2011 (Cth)).

What reporting requirements apply to businesses who hold assets frozen under sanctions?

Individuals and entities that hold frozen assets under targeted financial sanctions are required to report to the Australian Federal Police (AFP). They must report as soon as practicable after realising that the asset is ‘frozen’ (ie, that the asset is owned or controlled by a designated person or entity). The following information must be provided to the AFP:

• as much information about the asset (including information about the owner or controller of the asset) as is known to the person; and
• the reasons for why they believe the asset is frozen.

See Regulation 42 of the Charter of the United Nations (Dealing with Assets) Regulations 2008 (Cth) and Regulation 24 of the Autonomous Sanctions Regulations 2011 (Cth).

There may also be additional reporting obligations if the relevant business is:

• a cash dealer under section 16 of the Financial Transaction Reports Act 1988 (Cth) to report a suspicious transaction; or
• a reporting entity under the Anti‑Money Laundering and Counter‑Terrorism Financing Act 2006 (Cth).