Afghanistan: OFSI issues updated charity sector guidance on additional sanctions and remittance

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Hogan Lovells

[co-author: Iris Karaman and Maria Gunayon]

On 1 November 2021, the Office of Financial Sanctions Implementation (OFSI) published an updated charity sector guidance regarding the UK’s humanitarian activity following Afghanistan’s Taliban takeover. The notice follows the advice alert by OFSI on the heightened risk for charities and NGOs engaging in financial activity with Afghanistan.

On 1 November 2021, OFSI published an updated charity sector guidance regarding Afghanistan’s additional sanctions and alternative remittance systems. This guidance replaces advisory notices issued by OFSI on this subject.

The charity sector guidance is relevant to charities and non-governmental organisations (NGOs), in particular those operating in areas where financial sanctions are in force. The guidance should be read together with OFSI’s financial sanctions guidance.

How will the financial sanctions protect charities and NGOs?

The UK first enforced financial sanctions relating to Afghanistan in 1999 in accordance with the United Nations (UN) resolutions. A number of individuals and entities including members of the Taliban are subject to financial sanctions (designated persons). At the time of writing, the UK has not implemented sanctions against the Taliban as an entity.

What this means

OFSI supports a targeted approach to sanctions, such that it minimises unnecessary disruption or delay of legitimate humanitarian activity. The latest guidelines include:

  • consider conducting enhanced due diligence measures in accordance with the risks: entities that may be owned or controlled by designated persons;
  • asset freeze and some financial restrictions in accordance with the risks: entities that are owned or controlled, directly or indirectly, by a designated person;
  • alternative remittance systems enhanced due diligence measures in accordance with the risks: Hawala banking through Informal Value Transfer Systems (IVTS) and Money Services Business (MSB). If the only option is to facilitate a payment through Hawala banking, obtain as much information about the Hawala provider and discuss the payment route in advance; and
  • take appropriate measures to report financial sanctions breach: early reporting to OFSI, mitigating factors are taken into account which may reduce a penalty or remove the enforcement action.

In effect, the latest update puts in place sanctions measures to ensure the UK continues to meet its obligations under the UN sanctions regime relating to Afghanistan.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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