The international community wasted little time in implementing the recent sanctions against Libya. On 26 February 2011, the United Nations passed Resolution 1970 requiring all Member States to implement an asset freeze, a travel ban and an arms embargo. As a result, criminal offences may be committed by UK nationals or companies even where the relevant conduct occurs wholly outside the UK. And as recent cases have shown, the penalties imposed are likely to be severe and there may be little recourse to the courts to challenge the executive power used to implement them.
Offences punishable on indictment with up to two years imprisonment and/or an unlimited fine may be committed where:
- a person deals with funds or other financial assets or economic resources owned or controlled by a designated person or someone acting on their behalf or an entity controlled by a designated person.
- funds or financial assets or economic resources are made available to or for the benefit of a designated person.
- a person intentionally takes part in activities to circumvent the prohibitions or to enable or facilitate the contravention of a prohibition.
Summary offences punishable by up to three months imprisonment and a maximum £5,000 fine are committed when a financial institution fails to notify the Treasury of certain information relating to designated persons coming into its possession in the course of business. A designated person or any other person requested to do so may commit a summary offence by failing to produce information or by providing false information, destroying documents or otherwise obstructing the Treasury.
In a recent case, two former directors of Mabey & Johnson Limited argued unsuccessfully that an Order made under the United Nations Act 1946 was ultra vires because it had been made 10 years after the relevant Security Council Resolution. The two appellants were later convicted and sentenced to 21 months and eight months imprisonment for breaching the Iraqui sanctions regime. They also received directors’ disqualification orders and were ordered to pay prosecution costs. Two other defendants have recently been convicted of Iraqui sanctions offences, both were given prison sentences, one suspended.
This shows that serious penalties are being handed down by English courts for sanctions offences. The wide scope of the Libyan sanctions is a reminder to a wide range of businesses, not just those in the financial sector, of the importance of sound compliance systems when dealing with the trade in goods or services likely to be affected by sanctions. Offshore activity will also be caught where those involved are British citizens or companies.
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