Targeted Financial Sanctions

The second Interlaken Seminar on Targeting U.N. Financial Sanctions significantly advanced our understanding of the promise and the feasibility of targeting financial sanctions. The contributions of the Swiss government, and Ambassador Rolf Jeker in particular, should be credited for their efforts.

Among the most important achievements of the second Interlaken seminar are:

[1] the construction of a draft model or framework law, and

[2] the definitions of technical terms and creation of a menu of options available to the Security Council when negotiating the text of a proposed resolution involving the use of targeted financial sanctions.

If widely adopted by member states, enabling legislation and detailed definitions of the key terms of sanctions resolutions would facilitate the coordination of national policies and therefore improve the likelihood of an effective targeted financial sanctions regime. There was also a useful discussion of the technical aspects of targeting financial sanctions, particularly with regard to the identification of potential targets and the creation and maintenance of lists of designated individuals.

A key theme that emerges from the conference report (and the conference itself) is the recognition of the amount of detailed work that still needs to be done at the level of implementation to create an effective targeted financial sanctions regime.

With particular regard to elements of domestic legislation required for sanctions implementation, Ambassador Jeker's report notes that "enabling laws were a necessary, but not sufficient, condition for the effective implementation of targeted financial sanctions measures." [paragraph 21, page 11] A number of practical, administrative issues remain as countries attempt to put into effect the domestic machinery and administrative mechanisms for the implementation of U.N. Security Council resolutions.

Indeed, Ambassador Jeker's report notes that "the characteristics of secondary legislation and administrative issues demanded more discussion and analysis, which was not possible at the meeting." [paragraph 22, p. 12] The report also discusses the "need to harmonize national interpretations," [paragraph 24, p. 12] and noted "the institutional requirements for imposing financial sanctions and the need for technical assistance." [paragraph 26, p. 13]

Among its four concluding recommendations to enhance the effectiveness of targeted financial sanctions regimes are:

"The need for Member States to adopt the procedures required for proper implementation of such sanctions as regards financial institutions and banks within their jurisdiction." and

"The need for the Security Council and the Secretariat to devise the exact system of international cooperation needed to provide guidance on targeted sanctions policy." [paragraph 32, p. 15]

For the objectives of Interlaken to be fully realized, countries will need assistance in the implementation of new legislation and the establishment of national infrastructures to achieve a harmonized (or at least better coordinated) targeted financial sanctions regime. The main elements to be addressed in implementation guidance fall into two general categories: [1] national administrative issues, and [2] the development of general guidelines for coordination at the global (U.N.) level. Thus, worthy goals for additional work building on the Interlaken process are the provision of guidance for countries implementing targeted financial sanctions (the compilation of "best practices") and the development of practical recommendations for international coordination.

The first category includes a number of practical issues that need to be addressed to implement an effective targeted financial sanctions program. These issues, which are generally administrative in nature, involve the establishment of the domestic administrative procedures to implement U.N. Security Council resolutions. They are certainly facilitated by domestic enabling legislation, but they are by no means dependent on it. To give effect to such resolutions, the relevant domestic authority should: develop and issue secondary legislation or regulations; offer guidance to banks; notify the public; disseminate information (particularly to financial institutions); monitor compliance; engage in acts of enforcement (including the imposition of penalties); and serve as a liaison with the U.N. Sanctions Committee in the Secretariat.

Given that many countries do not have administrative mechanisms in place, the establishment of that machinery (and procedures to implement targeted financial sanctions fully is a complicated task that might be facilitated through some type of handbook or compilation of "best practices" of different countries. While there is no single administrative model appropriate to every country, such a compilation off best practices could be of significant assistance to Member States (especially those without previous experience with targeting financial sanctions.

The second category includes issues that require additional guidance at the U.N. level or through the coordination of the U.N. and national governments. For example, the issue of targeting - once states have identified targets, the U.N. could act as a depository of different national lists, identifying overlaps and omissions. Such a listing is necessary if sanctions are to be truly effective and applied uniformly be member states. Moreover, the scope of targeting and the criteria for the identification of targets are complicated issues that need to be carefully coordinated in order to have a legitimate and effective effort. Additional work will need to be devoted to this complex and vital task. In addition, further steps could be taken by the U.N. Secretariat to provide guidance and clarification regarding implementation issues at the national level and coordination at the international level.

We have learned a great deal about the promise of targeted financial sanctions from the two Interlaken meetings. At the same time, we recognize that additional work needs to be done to realize the goal of an effective targeted financial sanctions regime.

Prepared by the Watson Institute for International Studies
Targeted Financial Sanctions Research Project