Nov 2017 Charity & NFP Law Update
According to Global Affairs Canada, economic sanctions, sometimes referred to as financial sanctions, are financial restrictions imposed against countries, non-state actors (including, for example, corporations or terrorist organisations) or other designated persons from a target country. Examples of financial sanctions include asset freezes, export/import restrictions, financial prohibitions, technical assistance prohibitions, and arms embargoes. Financial sanctions, as a general rule, are not to be violated. This can raise challenges for charities, particularly those that operate abroad in regions where financial sanctions are in force and that may inadvertently accept money from or provide monetary assistance to sanctioned targets. To provide guidance in this regard, the United Kingdom’s Office of Financial Sanctions Implementation (“OFSI”), under HM Treasury department, has released a Financial Sanctions Guidance (“Guidance”) of general application, along with a FAQ Factsheet for Charities and Other Non-Governmental Organizations (“Factsheet”) addressing charity-specific issues for UK charities.
The Guidance provides a general overview of financial sanctions, discussing what financial sanctions are, why they exist, when and how to comply with them, as well as OFSI’s approach to licensing, exemption, compliance and enforcement of sanctions. As OFSI recognises that “financial sanctions regimes are in force in many areas where NGOs and charities operate,” the Factsheet acts as a supplement to the Guidance and provides additional information specifically pertaining to charities regarding compliance with financial sanctions. The Factsheet provides a list of frequently asked questions and answers, and discusses general issues concerning charities and financial sanctions, licenses that allow activity prohibited by financial sanctions, dealing with financial services organisations, and provides a list of resources with additional information for charities.
As the Factsheet was produced by OFSI, which is under a UK governmental department, it provides helpful insight to charities in the UK operating abroad, and particularly those operating at the forefront of international development and humanitarian assistance in regions where financial sanctions are in force. While the Factsheet does not have application to Canadian charities, certain Canadian practices regarding sanctions have similarities to those in the UK, such as the availability of permits and certificates. As such, the Factsheet may be a helpful resource to Canadian charities for understanding financial sanctions as they apply specifically to charities, and to assist charities with general due diligence and compliance with financial sanctions.