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Financial Sanctions and Freezing of Funds

International financial sanctions

International sanctions are restrictive measures limiting or suspending economic or commercial cooperation and, for example, transport and communications links or diplomatic relations with a particular state or groups.  The objective of sanctions is, as part of other foreign policy measures, to influence the policies or actions of a state or a group of people considered to pose a threat to international peace and security. 

In addition to financial sanctions, the range of sanctions includes restrictions on export and import and restrictions on admission, for example. Nowadays, the aim is to target sanctions as precisely as possible, and the EU or the UN no longer impose comprehensive embargoes. 

The sanctions binding on Finland are based on decisions of the UN Security Council, in addition to which the EU can also impose so-called autonomous restrictive measures on its own initiative. Autonomous sanctions of both the UN and the EU are governed by EU law through Council decisions and regulations. EU regulations are legislative acts that are directly binding on all entities and natural persons in the EU Member States. In addition to country-specific sanctions regimes, there are also thematic sanctions that can be imposed with the aim of preventing terrorism, use of chemical weapons and cyberattacks.

Sanctions regulations often impose an obligation to freeze the funds and other economic resources of the persons and entities listed in their annexes. In addition, it is prohibited to make funds or economic resources available, directly or indirectly, to the designated persons. The competent authority may allow activity prohibited by financial sanctions through granting a licence.

Government enforces sanctions

Although sanctions are based on EU legislation, the Member States are responsible for enforcing them. It is the duty of the members of the United Nations and the European Union to enforce the sanctions imposed by these bodies (Sanctions Act). In Finland, the Ministry for Foreign Affairs coordinates the national enforcement of sanctions and acts as the national licencing authority.

A decision to freeze funds of a natural or legal person is in Finland enforced by the debt enforcement authorities. The Helsinki Enforcement Office is centrally responsible for the freezing of funds. Parties subject to the reporting obligation have a special obligation to provide the enforcement authority with information on the funds and other assets of the listed individuals or entities without delay. Violations and attempted violations of EU sanctions regulations are punishable. 

Finland has also introduced a national mechanism for the freezing of funds to combat terrorism. The Act on the Freezing of Funds with a View to Combating Terrorism enables, for example, the freezing of funds of a natural or legal person suspected of, charged with or convicted of a terrorist offence under the Criminal Code. The decision to freeze funds is made by the National Bureau of Investigation.

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