ANALYSIS OF THE LEGALITY OF ECONOMIC SANCTIONS UNDER INTERNATIONAL LAW AND THEIR IMPACT ON ANTI-MONEY LAUNDERING MEASURES

Abstract

Economic sanctions are coercive economic measures taken to express disapproval of the target's acts or to induce that [target] to change some policy or practices or even its governmental structure, as opposed to diplomatic or military measures. Today, the economic sanctions are increasing to a large extent according to the past years and most of them don't comply with the international law. The US is the leading country in imposing economic sanctions. According to Chapter VII of the United Nations, the Security Council may impose economic sanctions in response to an act of aggression in order to restore peace and security. According to Article 41 of the UN Charter, the Security Council may decide measures to be used in order to implement its decisions in peaceful way throughout all members. The US, as a member of the United Nations security council, took this as a way of imposing economic sanction to different countries and the members of the legal community include the undersigned attorneys, legal scholars, and legal organizations called on the international community and the government of the United States in particular, to comply with international law, review the use of broad, unilateral coercive measures that extensively harm civilians. Avoid. These sanctions, are consolidated by SWIFT and it uses them while monitoring AML/CFT and this affect or complicate AML/CFT process view illegality of many of these sanctions under international law. This thesis explains the effect of economic sanctions to the countries and the citizens as result of AML/CFT process. This is a process used by financial system in order to detect and prevent illegal financial transactions. Usually, when banks are transacting internationally using SWIFT System. This system includes sanction screening program which consists on balancing information from transfer instructions to the similar information from sanction lists. All transactions with similar information are alerted and put on hold for assessment. Instructions with content closed to one sanction list are not allowed to pass, required actions may be freezing, reversing or let funds pass through after deep investigation.

The time of doing that investigation can cause different effect like delaying of transaction and others. Other effects are on the bank. If the bank pass transaction (s) to the sanctioned party, and the transaction become successful, that bank may also be sanctioned. The example is the HSBC Bank plc. (HSBC) and the Wells Fargo Bank. This thesis explains in deep the economic sanctions and how they are increasing without complying with the international law. It also explains the effects of those sanctions to AML/CFT process.