Jersey firms froze £700m in Russian assets last month

Thursday 14 April 2022

Jersey finance firms froze more than £700m in Russian assets last month – while at least one was approached by a customer trying to avoid sanctions imposed in the wake of Russia’s invasion of Ukraine.

Jersey has pledged to keep its sanctions regime fully aligned with the UK, and to "take targeted measures to prevent Jersey services providers or structures being abused" – including placing sanctions on high-profile individuals including former Chelsea FC owner Roman Abramovich and his one-time business partner, metal magnate Oleg Deripaska.

On Tuesday, police raided premises in Jersey suspected to be connected to Mr Abramovich, leading the Royal Court to impose a freezing order on assets believed to be valued more than $7bn suspected to be connected to the oligarch. Questions have been raised over whether it these will impede the sale of Chelsea FC.

Shortly after the saisie judiciaire was confirmed by the Law Officer's Department yesterday, External Relations Minister Senator Ian Gorst confirmed that his department had received more than 90 reports from locally-based financial institutions, "relating to sanctions compliance, including, but not limited to, assets that have been frozen."

Rounded to the nearest £100,000 and converted into GBP, the assets totalled £713,300,000 at the end of March.

Pictured: Jersey's Royal Court has imposed a saisie on assets worth $7bn suspected to be connected to Roman Abramovich, who was added to Jersey's sanctions list alongside Oleg Deripaska in March.

The Government has pledged to publish regular monthly updates on the freezes. The figure for April will be published in May.

"Our legislation to give force to these measures has severe criminal consequences, and any links to sanctioned entities or suspected breaches must be reported to the appropriate authorities," Senator Gorst said.

Last week, the JFSC issued guidance warning firms of their obligations in relation to sanctioned individuals and firms.

Intentionally participating in any activities knowing that the effect of them (whether directly or indirectly) is to circumvent the freezing of funds is a criminal offence, which could lead to a prison term of up to seven years and/or a fine.

"We would remind relevant financial institutions that, dependant on the authority publishing the sanctions list, differences may exist between those persons designated as being subject to sanctions," the regulator said.

"We are aware of at least one Jersey-based business being approached recently to take on a new customer, where it appears that the purpose and rationale for wanting to establish the relationship in Jersey was to avoid sanctions in place, or likely to be introduced, in another jurisdiction.

"Relevant financial institutions are reminded to be mindful of attempts at jurisdictional arbitrage and the risks to which this may expose them and the island."

The guidance described it as "imperative" that management "is facilitating regular and relevant training to staff and monitoring the delivery of such to ensure that staff are being training with the appropriate frequency, including as a result of trigger events."

"In the current circumstances, and considering the heightened risk environment, it is important that relevant financial institutions make their staff aware of the legal provisions, which are in place relating to the failure to implement sanctions measures appropriately," they added.