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Assets of those linked to terrorism to be frozen

By Chandani Kirinde

Assets of those designated by a Competent Authority as engaged in terrorist activity will be liable for seizure, according to new regulations formulated by the External Affairs Ministry.

The regulations have been made by the Minister under the United Nations Act of 1968 and are intended to give effect to a 2001 UN Security Council Resolution which sets out wide-ranging strategies to combat terrorism, in particular the financing of terrorism.

A list of designated persons, groups or entities believed to be linked to terrorism will be published in the Gazette based on the recommendations of the Competent Authority, according to the regulations. The CA will be appointed by the External Affairs Minister in consultation with the Minister of Defence.

Once the names are designated, the CA will have the power to freeze all funds, financial assets and economic resources belonging, owned or held by such a person or groups.

The regulations prohibit anyone who has prior knowledge that a freeze on assets is being considered from notifying persons or groups that a freeze order is impending. The effect of an order of freezing would mean a prohibition of any move, transfer, alteration, use of or dealing with funds in any way that would result in any change in their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used or dealt with, including portfolio management.

The Competent Authority will have the power to permit the use of frozen funds or the provision of other assets for essential human needs of individuals such as particular payments for foodstuffs, medicines, the rent or mortgage for the family residence and fees and charges concerning medical treatment of members of that family.

Other payments that can be permitted include payment of taxes, compulsory insurance premiums and fees for public utility service such as gas, water, electricity and telecommunications, payment of charges due to financial institutions for the maintenance of accounts and payment for legal fees or for urgent expenses. Individuals or groups who have been so designated will be notified in writing by the CA if they are based in Sri Lanka.

In the case of those who are domiciled or located outside the country, the CA is required to forward a copy of the written notice to the government of the State of which the individual or group is based and request the government of that State to serve the notice at the first available opportunity.

The regulations allow those on the designated list to seek revocation of the designation and request removal from the list, by application made to the Competent Authority. The regulations also provide for affected persons or groups to seek redress by applying to the High Court for relief in case of frozen funds.

Once the list is published, the financial institutions will be required to inform the CA or the Financial Intelligence Unit if they know of any person on the list.

Banks, finance companies to keep close check on customers

Licensed banks and registered finance companies will be required to verify whether the names of any of their prospective customers appear on any known or suspected terrorist list or alert list, issued from time to time by the relevant authorities, under new regulations made by the Financial Intelligence Unit under the Financial Transactions Reporting Act of 2006.

Every financial institution will also be required to obtain information with regard to one-off or occasional transactions where the amount of the transaction or series of linked transactions exceed Rs.200,000.

However if the financial institution has reasonable grounds to suspect that the transaction or series of linked transactions are suspicious or unusual; the Financial Institution should obtain the necessary information disregarding the specified amount

The regulations also require that financial institutions obtain information on all cash deposits made into savings and/or current accounts by third parties exceeding Rs. 200,000. The new requirements come under the Licensed Banks and Registered Finance Companies (Know Your Customer (KYC) and Customer Due Diligence (CDD) rules Courtesy: The Sunday Times

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