In recent times, there has been a marked increase in the use of
co-ordinated economic sanctions by the European Union, the United
Nations and individual states against rogue states and
organisations and, on a targeted basis, against specific
individuals and entities related to those rogue states and
The number of countries which are the subject of the EU's
targeted economic sanctions continues to grow, with over thirty
countries now affected. This is having material consequences
far outside of those states and organisations. Given Jersey's
role as an international finance centre, it is inevitable that
international sanctions are and will continue to impact upon
Jersey's financial services sector.
The EU's response to the Ukraine crisis has been to pass
legislation imposing financial sanctions on named individuals and
businesses they believe to be responsible for the on-going
situation in Ukraine (the "EU Ukraine
Regulations"). These provide for restrictive measures
directed against certain persons, entities and bodies which were
perceived to be undermining or threatening the territorial
integrity, sovereignty and independence of Ukraine. The EU Ukraine
Regulations laid the groundwork for further targeted sanctions
against Russian individuals and businesses (the "EU
Both the EU Ukraine Regulations and the EU Russian Regulations
followed the sanctions regimes already imposed against Syria,
Libya, Egypt and Tunisia in the aftermath of the Arab Spring and
the more long standing sanctions regimes imposed against Iran and
North Korea, amongst others.
In Jersey, the EU Ukraine Regulations have been implemented by
means of the EU Legislation (Sanctions - Ukraine) (Jersey) Order
2014 on 3 December 2014 as subsequently amended and similarly, the
EU Russian Regulations by way of the EU Legislation (Sanctions -
Russia) (Jersey) Order 2014 on 12 December, 2014. Whether or not
events in Ukraine prompt a further round of sanctions remains to be
seen. However, what is more certain is that this is a rapidly
expanding practice area which is here to stay.
Do trustees need to be concerned? With regard to the EU Ukraine
Regulations, which are consistent with other EU regulations
implementing international sanctions as applied in Jersey, the
essential question is whether, on or after the coming into force of
the legislation, any assets of a trust can be said to be
"funds" or "economic resources" which are
"belonging to, or owned, held or controlled by" a
designated person. If they can, they must be
"frozen" and no person may "deal with" the
Whether trust assets constitute a fund or economic resource of a
designated person is not necessarily a straight forward question
for a trustee. Indeed, a settlor or third party reserved with
a power to direct a trustee to pay trust assets to himself or to
another person, or to direct the sale and investment of trust
assets, may well fall within the meaning of "controlled".
The reference to funds and economic funds simply being
"held" shows that there is no need for the designated
person to actually have any beneficial interest in the assets or
title to the assets. Trust issues by their nature are rarely the
same and will require careful analysis on a case by case basis.
Given the complexity of these issues and the severe penalty for
breach, trustees should take legal advice as early as possible with
a view to avoiding any breach.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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