Economic and financial sanctions
Asset freezes
In what circumstances may a person become subject to asset freeze provisions in your jurisdiction? What dealings do asset freeze provisions generally restrict in your jurisdiction?
An asset freeze is a targeted sanction imposed by way of an EU regulation (often as a result of a resolution by the United Nations Security Council) against individuals and entities that are part of, or affiliated with, the governments of non-EU countries:
- who are deemed to be responsible for serious violations of human rights or international law; or
- whose activities seriously undermine democracy or the rule of law.
Asset freezes are designed to prevent these individuals and entities from financing their pernicious activities.
Belgium also imposes asset freezes as a specific restrictive measure against persons and entities within the framework of the fight against terrorism and terrorism financing.
An asset freeze is the most common form of financial sanction and usually consists of two components:
- the obligation to freeze the assets and funds belonging to, or owned, held or controlled by, the listed individuals or entities in question;
- a prohibition against making funds and economic resources available directly or indirectly to, or for the benefit of, the listed individuals or entities.
The freezing of funds prevents any move, transfer, alteration or use of, or access to or dealing with funds in any way that would result in any change in their volume, amount, location, ownership, possession, character or destination. Considering the broad definition used for the terms ‘funds’, ‘economic resources’ and ‘freezing’ under EU sanctions legislation, most dealings with listed individuals or entities are prohibited.
In principle, participating knowingly and intentionally in any activities while aiming to circumvent asset freezes is also prohibited.
General carve-outs and exemptions
Are there any general carve-outs or exemptions to the asset freeze provisions in your jurisdiction?
EU sanctions regulations do not provide for general exemptions or carve-outs. As the sanctions regimes are set out in EU regulations, national legislation cannot provide for national general exemptions.
For asset freezes imposed under EU sanctions legislation, the competent authorities in the member states (Federal Public Service (FPS) Finance – Treasury for Belgium) may, however, authorise the release of certain frozen funds or economic resources, or the making available of certain funds or economic resources, as they deem appropriate insofar as the situation concerned complies with one or more of the derogations set out in the applicable EU sanctions regulation. A limited number of specific exemptions that do not require an authorisation are, in principle, foreseen regarding the prohibition against making funds or economic resources available.
The derogations to the asset freeze usually include:
- the satisfaction of basic needs (eg, foodstuffs, rent, medicines) for listed individuals and their family members;
- the payment of expenses associated with the provision of legal services when the assets are necessary for extraordinary expenses or for humanitarian purposes;
- the payment by listed individuals or entities of amounts due as a result of judicial or arbitral decisions, or under an agreement that was concluded before the listing of the individual or entity concerned; and
- the wind-down of relations with a listed individual or entity.
The exemptions to the prohibition against making funds or economic resources available usually allow the crediting of frozen accounts by financial institutions that receive funds transferred by third parties into the account of a listed individual or entity, provided that any additions to such an account will also be frozen.
FPS Finance – Treasury can derogate from national asset freezes on the same grounds.
List of targeted individuals and entities
Do the competent sanctions authorities in your jurisdiction maintain a list of individuals and entities blocked under asset freeze restrictions?
The European Union publishes and regularly updates a consolidated list of persons, groups and entities who are subject to EU financial sanctions as a result of the various sanctions regulations adopted under the Common Foreign Security Policy. In addition, the EU Sanctions Map offers the possibility to check personal and territorial restrictions – other than financial sanctions (including asset freezes) – applicable to persons and entities listed in the annexes to the EU sanctions regulations.
Belgium has also published a national list of persons and entities who are subject to national financial sanctions within the framework of the fight against terrorism and terrorism financing.
Other restrictions
What other restrictions apply under the economic and financial sanctions regime in your jurisdiction?
Apart from asset freezes, the European Union imposes a wide range of economic and financial restrictions (other than trade restrictions) that vary depending on the sanctioned country concerned. For comprehensive sanctions regimes (eg, those applicable to Russia or North Korea), the European Union imposes bans on investments, loans, insurance services, and other financial and non-financial services that can relate to a specific sector or entity, or the sanctioned country, a SWIFT ban, etc. Ancillary to trade restriction, EU sanctions regulations usually prohibit the financing of certain import or export transactions.
Pursuant to its national legislative framework on sanctions, the Belgian government can, in principle:
- adopt monitoring obligations;
- levy special duties;
- suspend economic dealings;
- block rail, air, post and radio connections; and
- seize assets.
Licensing – scope
Are the competent sanctions authorities in your jurisdiction empowered to issue a licence to permit activities which would otherwise violate economic and financial sanctions? If so, what is the extent of their licensing powers and in what circumstances will they issue a licence?
Under EU sanctions regulations, the national authorities of EU member states are competent to issue authorisations to allow activities that are, in principle, prohibited under the applicable sanctions regime insofar as the regulation concerned provides for the possibility to derogate from the applicable restrictions.
The derogations to the asset freeze usually include:
- the satisfaction of basic needs (eg, foodstuffs, rent, medicines) for listed individuals and their family members;
- the payment of expenses associated with the provision of legal services when the assets are necessary for extraordinary expenses or for humanitarian purposes;
- the payment by listed individuals or entities of amounts due as a result of judicial or arbitral decisions, or under an agreement that was concluded before the listing of the individual or entity concerned; and
- the wind-down of relations with a listed individual or entity.
Whether an authorisation can be granted will be assessed by FPS Finance – Treasury based on the criteria set out in the sanctions regulation concerned. As derogations are always tailored to specific situations, the applicant must be able to demonstrate that they find themself in the situation concerned.
Licensing – application process
What is the application process for an exemption licence? What is the typical timeline for a licence to be granted?
FPS Finance – Treasury, which is competent for derogations from financial sanctions, requires derogation requests to be sent by email to [email protected]. Its website sets out the information to be included in the derogations request. Since Russia’s invasion of Ukraine and the adoption of comprehensive EU sanctions in this respect, the time to obtain an authorisation has significantly increased (more than one month).
Approaching the authorities
To what extent is it possible to engage with the competent sanctions authorities to discuss licence applications or queries on economic and financial sanctions compliance?
The applicable legislation does not provide for any formal interaction or discussion process with the competent authorities. However, it is advisable and common practice to contact FPS Finance – Treasury at an early stage to provide all relevant information on the envisioned transaction. After the adoption of EU sanctions against Russia, the Treasury is, however, reluctant to take a position on sensitive or new types of transactions.
For financial institutes, the National Bank of Belgium can be approached as it has issued its own recommendations on asset freezes in this respect.
Reporting requirements
What reporting requirements apply to businesses who hold assets frozen under sanctions?
Generally, EU sanctions regulations require individuals and entities to supply any information that could facilitate compliance with imposed asset freezes, such as accounts and amounts frozen, to FPS Finance – Treasury and cooperate with the Treasury for the verification of that information. In practice, any individual or entity that freezes the funds or assets of a listed individual or person must inform the Treasury.
The EU sanctions regulation on Russia explicitly requires individuals and entities to report all information about funds and economic resources within the European Union belonging to listed individuals or entities that have not been treated as frozen.
There are no national reporting obligations under Belgian law with respect to sanctions.
