Sanctions Relating To Iran & Iranians Tightened

Attorney General and Minister of Justice Kim Wilson announced this morning (Aug 27) that an order for international sanctions for Iran made by the UK Privy Council in July 2007 has now been extended to Bermuda. Senator Wilson said “By way of background, the 2007 Order makes it a criminal offence for financial institutions, unless they have a licence from the Governor, to have any dealings with the funds or economic resources of designated persons – any individuals or entities acting on their behalf or entities controlled by them; or any individuals or entities determined to have assisted designated persons in evading the sanctions of or violating the provisions of relevant UNSC Resolutions.”

Senator Wilson went on to to say that “This is an important development for Bermuda as the 2010 Regulations now brings into effect in Bermuda, all of the relevant United Nations Security Council (UNSC) Resolutions and the Council of the European Union sanctions relating to Iran and Iranian persons.”

The full text of Senator Kim Wilson`s speech is below:

I am pleased to announce that, on August 20, 2010, as Minister of Justice, in exercise of the power conferred by section 2(1) of the International Sanctions Act 2003, I brought into force the International Sanctions (Iran) (United Nations Measures) Regulations 2010 (BR 52/2010) (“2010 Regulations”). These 2010 Regulations addressed the Iran (United Nations Measures) (Overseas Territories) (Amendment) Order 2007 (“the Order”) made by the Privy Council as a United Kingdom (UK) Order in Council on July 25, 2007. This Order, which was not originally extended to Bermuda, is now therefore in effect in Bermuda. This is an important development for Bermuda as the 2010 Regulations now brings into effect in Bermuda, all of the relevant United Nations Security Council (UNSC) Resolutions and the Council of the European Union sanctions relating to Iran and Iranian persons.

The extension of the Order to Bermuda is part of a range of ongoing actions in relation to Iran taken by the Government of Bermuda in response to, amongst other things, the recent advisories issued by the Financial Action Task Force (FATF) and actions taken by the UNSC and the Council of the European Union. These measures once again demonstrate the commitment of the Government of Bermuda to strengthening the Anti Money Laundering/Anti Terrorist Financing (AML/ATF) regime of Bermuda and to ensuring that Bermuda continues to play an important role in the global fight against money laundering, proliferation financing and the financing of terrorism.

The actions taken by the Government of Bermuda in relation to Iran and Iranian persons and entities this year include the following:

Anti-Terrorism (Financial Restrictions Iran) Order 2010 (“2010 Order”)

On January 15, 2010, pursuant to section 12B(2) of the Anti-Terrorism (Financial and other Measures) Act 2004 (“ATFA”), as Minister of Justice, I made the Anti-Terrorism (Financial Restrictions Iran) Order 2010 (“2010 Order”). This 2010 Order directed AML/ATF regulated financial institutions and insurers to not “enter into, or continue to participate in, any transaction or business relationship” with Bank Mellat, the Islamic Republic of Iran Shipping Lines (IRISL), or any of their branches. On the same day that the 2010 Order was made, as the Minister of Justice, I granted three licences pursuant to section 12K(4) of ATFA exempting specified acts from the requirements contained in the 2010 Order. These actions were taken in response to international concerns about the role these entities were playing to facilitate proliferation financing in Iran.

Advisories on the Risks Relating to Deficiencies in Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Systems and Controls in Specified Jurisdictions.

In April 2010 and then again in July 2010, as Minister of Justice, I issued advisories to the Bermuda financial sector in response to public statements made by the FATF about the risks in a number of jurisdictions, including Iran, arising from inadequate systems and controls to combat money laundering and terrorist financing. By way of background, the FATF is the international body responsible for setting the global standards for combating money laundering and terrorist financing. These standards are known as the FATF Forty Recommendations plus Nine Special Recommendations. Bermuda is a member of the Caribbean Financial Action Task Force (CFATF), an associate member of the FATF. The Bermuda Government supports the work of the FATF and has demonstrated a strong commitment, via its membership in CFATF, to helping the organization carry out its mandate.

In the advisories, certain details about the level and nature of risks in Iran were provided and financial institutions were advised in accordance with the FATF public statements. In the July 2010 advisory, as Minister of Justice, I highlighted that this advice is especially relevant to those entities that have or are considering any business relationships with the specified jurisdictions, including Iran, or persons (individuals or corporate entities) in such jurisdictions.

The Iran (United Nations Measures) (Overseas Territories) (Amendment) Order 2007 (“the Order”)

As noted previously, we have now made this Order applicable to Bermuda. The purpose of the Order is to amend the Iran (United Nations Measures) (Overseas Territories) Order 2007 (“2007 Order”) and to give effect to Resolution 1747 (2007) adopted by the Security Council of the United Nations on March 24 2007, and to the wider restrictive measures adopted by the Council of the European Union. By way of background, the 2007 Order makes it a criminal offence for financial institutions, unless they have a license from the Governor, to have any dealings with the funds or economic resources of designated persons – any individuals or entities acting on their behalf or entities controlled by them; or any individuals or entities determined to have assisted designated persons in evading the sanctions of or violating the provisions of relevant UNSC Resolutions.

Resolution 1747 (2007) subjected certain persons and entities to the asset freezing measures in resolution 1737 (2006) and prohibited the procurement of military goods and technology from Iran. The 2007 Order, also implemented measures adopted by the Council of the European Union, including:

* Restrictions on the supply to Iran of specific proliferation-sensitive goods, additional to those specified by the United Nations; and
* Certain wider measures than in resolution 1747 (2007), including the listing of additional persons and entities subject to asset freezing measures.

The UNSC has more recently adopted Resolution 1929(2010) in relation to Iran. Under this latest resolution one (1) individual and forty (40) additional entities were added to the existing list of designated persons which the UNSC had previously set out in its Resolution 1737 of 2006. Together these resolutions require United Nations member countries to effect financial sanctions against persons and entities listed as designated persons, by preventing their financial institutions from dealing with the funds or economic resources that are directly or indirectly owned, held or controlled by these designated persons.

In Resolution 1929 an asset freeze has been placed on First East Export Bank PLC, a subsidiary of Bank Mellat, which had previously been listed by the UN as a designated person. An asset freeze has also been placed on a number of Islamic Republic of Iran Shipping Line (IRISL) subsidiary entities, namely Irano Hind Shipping Company, IRISL Benelux NV and South Shipping Line. As previously noted, as the Minister of Justice, I had on January 15, 2010 issued a Direction to the Bermuda financial sector imposing restrictions on financial or other dealings with Bank Mellat and IRISL respectively.

Following the issue of UNSCR 1929, the Council of the European Union has now issued Council Implementing Regulation (EU) No 688/2010 (“Regulation 688/2010”) which has added individuals and entities to the list of those subject to asset freezing prohibitions. These entities added include Bank Mellat and the IRISL, together with all of their branches and certain named subsidiaries.

Currently some aspects of the sanctions regime as it applies to Iran and Iranian persons and entities fall within the ambit of the Minister of Justice and others under purview of the Governor of Bermuda. However, we are working closely together to ensure these important measures are effectively implemented in Bermuda. The list of designated persons and entities will be gazetted, as required by the legislation, as a matter of priority. To understand the nature and extent of their obligations, persons can find the relevant pieces of legislation on the website of the Ministry of Justice at www.gov.bm and the National Anti-Money Laundering Committee at www.namlc.bm.

Further, the website of the UK Treasury at www.hm-treasury.gov.uk/fin_sanctions_index.htm can be used to get the details of the regime which is now in place in Bermuda.

In closing, I would like to again thank those in the financial services industry and the relevant agencies who are playing their part to combat money laundering, and terrorist and proliferation financing. I would again highlight that the Government of Bermuda is determined to protect the reputation and economy of Bermuda by seeking to prevent those who are involved in these type of criminal activities from using and enjoying the benefits of our financial system. As Attorney General and Minister of Justice, I will continue to do my part to ensure that these matters are properly addressed within the legislative and operational framework in Bermuda.

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