Thematic Sanctions

First Cyber incident-related thematic sanction under the Australian Autonomous Sanctions

Australia recently announced its first sanctions action under significant cyber incidents thematic sanctions against a Russian individual. This  individual was linked to the Medibank Private network cyber incident of 2022 that had resulted in the theft of 9.7 million records, including sensitive personal and medical information of Australians.

What are thematic sanctions? 

The thematic sanctions framework allows the Australian Government to impose targeted financial sanctions and travel bans against foreign individuals and entities complicit in areas like:

-          Proliferation of WMD,

-          Significant cyber incidents,

-          Serious human rights violations or abuse,

-          Serious corruption.

Introduced in 2021, the thematic sanctions framework is part of the Australian Autonomous Sanctions regime, targeting individuals and entities responsible for, or complicit in the activities mentioned above. These sanctions are Australia’s own Magnitsky-style sanctions regulatory framework inspired by the United States' Magnitsky Act.

Sanctions Action

The sanction action involves one or both of the following:

- designating a person or entity that has caused the relevant incident as a designated person or entity (‘designated person’), and

- imposing a travel ban on sanctioned persons, prohibiting them from traveling to, entering, or remaining in Australia.

The sanctions can extend to the designated person’s immediate family members, and those who have obtained financial or other benefit from the incident.

As a consequence of the sanction designation, it prohibits making any asset, directly or indirectly, available to or for the benefit of the designated person. Using or dealing with the assets owned or controlled by the designated person, called ‘controlled asset’, is also prohibited.

Dealing with or making available an asset to the designated person through other means like cryptocurrency wallets, or ransom payments will also breach the sanctions. The only way to deal with such assets is by obtaining a Permit from the Minister for Foreign Affairs.

A person suspecting that they hold a controlled asset may request for the AFP’s help to determine if such asset is owned or controlled by a designated person.

Compliance with Sanctions 

The obligation of complying with Australian sanctions, including thematic sanctions, extends to all Australian individuals and entities, and not just the AML/CTF reporting entities. They must ensure they are not dealing with a sanctioned person, are not making assets available directly or indirectly to or for the benefit of any designated person, and are not using or dealing with any controlled asset of the designated person. If required, they can apply for a Permit for such dealings.

Entities must have appropriate compliance program and framework for sanctions compliance, including controls and systems to undertake sanctions screening and review of alerts. If there is a positive match, it requires appropriate review and actions, including freezing of the account, reporting and other actions, and for the reporting entities, it also requires suspicious matter reporting to AUSTRAC. Adequate governance of the entire chain of action is also necessary.

Regulatory reference:  click here

6 February 2024

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Compliense Advisors is an AML and FinCrime compliance and risk management advisory services provider, with our solutions aligned with your business profile aiming to minimise and mitigate risks associated with money laundering and finCrime activities, and achieving compliance.

Our experience includes designing Sanctions compliance framework, implementing technology solutions for sanctions screening, sanctions advice, and risk assessment; as well as a range of AML/CTF and FinCrime compliance matters.

This article attempts to explain few key perspectives and issues to consider in Australian thematic sanctions and is not exhaustive. This article is for general informational purposes only and should not be considered as a professional advice or a recommendation to take specific actions. We are not a law firm, and do not provide legal advice. Client is responsible for meeting their compliance obligations.

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