Overview
As a UN member state, New Zealand must give effect to resolutions of the UN Security Council that impose sanctions. New Zealand fulfils its obligation to apply UN sanctions in New Zealand under the United Nations Act and regulations made under it. There are 17 regulations in force in New Zealand that give effect to UN sanctions. Each set of regulations is bespoke to a particular jurisdiction and gives effect to one or more UN Security Council resolutions imposing sanctions on that jurisdiction.
Before 2022 New Zealand exclusively implemented and enforced sanctions imposed by the United Nations. The Russian invasion of Ukraine is the first example of New Zealand imposing sanctions independently of the United Nations, and New Zealand did so by bringing into force the Russia Sanctions Act 2022. The Russia Sanctions Act provides the framework with which New Zealand can impose sanctions in connection with Russian military action. Its purpose is “to enable New Zealand to impose and enforce sanctions in response to military actions by Russia (and by countries or persons who may be assisting Russia)” (section 3(1)). Under the Act and the accompanying Russian Sanctions Regulations 2022, New Zealand has imposed restrictions in relation to travel, dealings with assets and services, and prohibited imports from and exports to Russia.
New Zealand also prohibits the export of goods intended for military use or applications to Russia and Belarus through the Export Controls (Export Prohibition to Specified Places) Notice 2022 (No 2).
The Immigration Act allows New Zealand to impose measures through ‘Immigration Instructions’, including the current travel bans on individuals in relation to human rights violations in Iran.
The Terrorism Suppression Act prohibits wilfully dealing with property in relation to a ‘designated terrorist entity’ or wilfully funding terrorism. Designated terrorist entities include those designated under the Act and those that are a United Nations listed terrorist entity.
National Competent Authorities
The Ministry of Foreign Affairs and Trade (MFAT) is the national competent authority for sanctions in New Zealand.
MFAT is responsible for administering New Zealand’s UN sanctions regime and taking action in relation to the New Zealand UN sanctions regime.
UN sanctions | New Zealand Ministry of Foreign Affairs and Trade (mfat.govt.nz)
MFAT is responsible for administering the Russia sanctions regime in New Zealand. The Russia Sanctions Act specifies that civil enforcement action would be taken by (or in the name of) the Attorney General. It does not specify which agency would be responsible for any criminal prosecution (and none has yet been taken).
Russia Sanctions | New Zealand Ministry of Foreign Affairs and Trade (mfat.govt.nz)
The Terrorism Suppression Act is administered by MFAT and the Ministry of Justice.
Legislation
UN sanctions
United Nations Sanctions (Mali) Regulations 2018
United Nations Sanctions (Libya) Regulations 2018
United Nations Sanctions (Somalia) Regulations 2018
United Nations Sanctions (Democratic People’s Republic of Korea) Regulations 2017
United Nations (Iran – Joint Comprehensive Plan of Action) Regulations 2016
United Nations Sanctions (South Sudan) Regulations 2015
United Nations (Syrian Cultural Property) Regulations 2015
United Nations Sanctions (Central African Republic) Regulations 2014
United Nations Sanctions (Yemen) Regulations 2014
United Nations Sanctions (Guinea-Bissau) Regulations 2012
United Nations Sanctions (Lebanon) Regulations 2008
United Nations Sanctions (ISIL (Da’esh), Al-Qaida, and Taliban) Regulations 2007
United Nations Sanctions (Democratic Republic of the Congo) Regulations 2004
United Nations Sanctions (Kimberley Process) Regulations 2004
United Nations Sanctions (South Sudan) Regulations 2015
United Nations (Iraq) Reconstruction Regulations 2003
United Nations Sanctions (Iraq) Regulations 1991
Russia sanctions
Russia Sanctions Regulations 2022
Terrorism Suppression
Guidance
Russia sanctions (including FAQs)
Compliance, due diligence and understanding evasion risk in the Russia sanctions context
Russia sanctions latest updates
Russia sanctions designation notices
Russia Sanctions Regulatory Charter
A Review of the Russian Sanctions Regulatory Framework
Post-Implementation Review: Russia Sanctions Act 2022 and Russia Sanctions Regulations 2022
Guidance Note: Banking transactions (updated 12 September 2022)
Guidance Note: Duty holder reporting under the Act, 21 February 2023
Guidance Note: Export prohibitions on dual use items
Guidance Note: Permitted activities including exemptions
Guidance Note: Russian energy products
Guidance Note: Update to Exporters
Guidance for the Transport Sector on Sanctioned Aircraft and Ships
Impact of Russia Sanctions on AML/CFT Reporting Entities
Guidance Note: Prohibition on maritime services for Russian oil
Guidance Note: Notifying a customer of asset freeze or blocked transaction
Licensing
Applications for sanctions licenses under the Russia Sanctions Act must be made using this application form and sent to Sanctions@mfat.govt.nz. Applications are considered by either the Minister of Foreign Affairs or the Secretary of Foreign Affairs and Trade.
According to the guidance, the following criteria will be considered when applications are assessed:
- the purpose of the Russia Sanctions Act 2022 and Russia Sanctions Regulations 2022;
- risk of an exemption benefitting a sanctioned person or entity;
- any harm if an exemption is not granted;
- the accuracy of facts and law;
- other factors material to the application; and
- principles of natural justice or procedural fairness.
Applications for amendments or revocation of a regulation can also be made to the Minister using the same application form.
Requests for guidance on whether general exceptions apply to certain circumstances may be made to the New Zealand Sanctions Unit at russiasanctions@mfat.govt.nz.
Apply for an exemption, amendment or revocation
Enforcement
UN Sanctions Regime
A breach of the UN sanctions regime results in criminal, not civil, consequences.
The sanctions regulations specify that a person who contravenes or fails to comply with any provision of the regulation commits a criminal offence.
The United Nations Act then states that a person who “commits, or attempts to commit, or does any act with intent to commit, or counsels, procures, aids, abets, or incites any other person to commit, or conspires with any other person (whether in New Zealand or elsewhere) to commit any offence against any regulations made under this Act” shall be liable on conviction:
- For a term of imprisonment not exceeding 12 months or a fine not exceeding $10,000 for an individual.
- For a fine not exceeding $100,000 for a company.
There has been only one prosecution for non-compliance with UN sanctions regulations in New Zealand. Pacific Aerospace Limited supplied aircraft parts to an entity, on three occasions, knowing that these parts would be sent to repair aircraft based in the DPRK. Pacific Aerospace pleaded guilty to three charges of indirectly exporting a specified good to DPRK. It was fined NZ$35,000 on each of the charges. In sentencing, the Court described the breach as “reckless”, given that Pacific Aerospace was aware generally of the sanctions regulations but had chosen not to fully inform itself of their detail.
Russia Sanctions Regime
A breach of the Russia sanctions regime can have civil and criminal consequences. However, a financial penalty can only be imposed in the event of a criminal breach.
Civil consequences: Breaching a sanction without reasonable excuse can result in the Attorney General issuing a formal warning, requiring an enforceable undertaking, or seeking an injunction to restrain the breach. The Attorney-General does not have a power to seek a pecuniary penalty.
Criminal consequences: Knowingly or recklessly breaching a sanction is an offence punishable by up to 7 years’ imprisonment or a $100,000 fine for an individual, and a fine of up to $1 million for a company. “Knowledge” or “recklessness” involves a relatively significant level of misconduct. That is, a conscious appreciation that certain conduct was in breach of a sanction or risked breaching a sanction.
Terrorism Suppression Act
Breaches of the Terrorism Suppression Act in respect of dealing with property in relation to a designated terrorist entity and funding terrorism are criminal offences. Penalties include:
- Funding terrorism: term of imprisonment not exceeding 10 years where there is knowledge or recklessness, and 14 years where there is intent.
- Dealing with property: term of imprisonment not exceeding 7 years.
- Making property, or material support, available: term of imprisonment not exceeding 10 years.
Reporting
Reporting obligations under the Russia Sanctions Act apply to “duty holders”. A duty holder is a reporting entity under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and those listed in the Russian Sanctions Regulations 2022 who trade in certain commodities with a total value of $10,000 or more (see reporting guidance for list of the commodities).
Duty holders must report when they have reasonable grounds to believe that they are in possession or control of sanctioned assets or are dealing with services that are designated services or related to a designated person. Guidance states that a further report could be required when there is a change in the nature or purpose of the business relationship or assets held or services provided, or any suspicious sanctions-related activity. If duty holders are unsure whether to report or not, they may contact the MFAT sanctions team (sanctions@mfat.govt.nz) for guidance.
When reporting, MFAT encourages duty holders to “provide any information they deem to be relevant in the circumstances.”
Non-duty holders can report suspicious sanctions related activity using the NZ Police 105 website (however they are not required to do so under the Russia Sanctions Act).
Guidance Note: Duty holder reporting under the Act, 21 February 2023
There is also a duty to report under the Terrorism Suppression Act in relation to property owned or controlled by a designated terrorist entity (or property derived or generated from such property). A reporting entity under the Anti-Money Laundering and Countering Financing of Terrorism Act or other person must report to the Commissioner of Police when they have reasonable grounds to suspect that they are in possession or immediate control of such property.
Export controls
New Zealand administers an export control regime which applies to the export of certain technologies out of New Zealand. Relevant technologies that are controlled are defined by reference to the New Zealand Strategic Goods List and include military weapons and dual use technologies that could have a military application. Where it appears likely that an export may come within the scope of the export control regime, exporters should seek assistance to determine whether an export permit is required. If required, the Ministry of Foreign Affairs and Trade is responsible for assessing exports and granting such permits.
Guidance Note: Export prohibitions on dual use items
Guidance Note: Update to Exporters
Customs Export Prohibition (Strategic Goods) Order 2021
De-listing
Applications for an amendment or revocation of a designation under the Russia Sanctions Act must be sent to sanctions@mfat.govt.nz using this application form. Applications are made to, and determined by, the Minister of Foreign Affairs. An application will need to answer the questions: why is the revocation or amendment sought? What harm, if any, is likely to come if a revocation or amendment is not granted?
According to guidance, the following criteria will be considered when applications are assessed:
- the purpose of the Russia Sanctions Act 2022 and Russia Sanctions Regulations 2022;
- risk of an amendment or revocation benefitting a sanctioned person or entity;
- any harm if an amendment or revocation is not granted;
- the accuracy of facts and law;
- other factors material to the application; and
- principles of natural justice or procedural fairness.
When the Minister considers amendment or revocation of a sanction, the Minister must decide the application:
- in a way that is consistent with the purpose of the regulations providing for the sanction; and
- as soon as is reasonably practicable, and notify the applicant of the decision.
Applications can also be made to the Prime Minister under the Terrorism Suppression Act for revocation of a designation as a terrorist entity.
Judgments
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Targa Capital Ltd. v Westpac New Zealand Ltd. [2023] NZHC 230
