 Good morning and thank you very much for coming along today. We always very much appreciate the opportunity to speak to the Australian business community and to our state and territory government colleagues. We appreciate that sanctions takes up an increasing amount of everybody's time. Hopefully this makes it a little easier as we explain the Department of Foreign Affairs and Trade's approach to sanctions and of course very happy to continue the dialogue after my presentation as well. I'll aim to speak for 35 or 40 minutes please feel free to interrupt me as I go along if you have any questions and there will be plenty of time for questions at the end as well. So what I will aim to do today is five things. Firstly I'll provide a general introduction to sanctions, what they are, what they aim to achieve, the current sanctions regimes that we have in place. Secondly I'll talk through some specific sanctions measures that we implement within a sanctions regime. I'll pick on Iran as a case study. Most of the inquiries that we get from you relate to our sanctions in relation to Iran. Thirdly I'll explain the circumstances in which you may be able to apply for a sanctions permit that would authorize an activity that would otherwise contravene a sanctions measure. Fourthly to come to the pointy end I'll explain the sanctions offences and the serious criminal penalties that can apply and fifthly I'll wrap up by running through what it is that Australian businesses really need to know and do in relation to sanctions. So to start with a general introduction to sanctions, what are they? The Charter of the United Nations doesn't actually use the term sanctions anywhere but Article 41 is generally understood as defining what we mean when we refer to sanctions. It talks about measures not involving the use of armed force, including complete or partial interruption of economic relations. The explanatory memorandum to our own autonomous sanctions bill in 2010, now the Autonomous Sanctions Act of 2011, has a slightly more fulsome definition of sanctions but it's along the same line. Measures not involving the use of armed force, imposed in situations of international concern, including the grave repression of the human rights or democratic freedoms of a population by government, or the proliferation of weapons of mass destruction or their means of delivery, or internal or international armed conflict. What do sanctions aim to achieve? Also with reference to that explanatory memorandum to the Autonomous Sanctions Bill, we generally refer to three main aims of sanctions. The first is to limit the adverse consequences of the situation of international concern. The second is to seek to influence those responsible for giving rise to that situation, to modify their behaviour to remove the concern. And the third is to penalise those responsible. I would just add a caveat on the third of those reasons in that sanctions measures can include travel bans and asset freezes against individuals. Those measures are by definition punitive. But there's certainly no substitute for a criminal prosecution. So if you take into account, for example, the fact that we have on our sanctions list people accused of committing genocide, through a sanctions regime, let's say it's in place for 10 years, they might have their assets frozen, they may have difficulty travelling during that time. Of course, if they were prosecuted, they face a substantially greater penalty than that for committing genocide. So I'm cautious in referring to the punitive aspect of sanctions. I'd also just note that sanctions used to be a bit of a blunt instrument. You only have to go back to the 1990s and sanctions implemented against Iraq, for example, following its invasion of Kuwait. They included a complete trade embargo, with fairly poor consequences for the Iraqi civilian population in particular, and for that matter for Australian and other exporters. Sanctions these days are far more highly targeted to meet those three aims and hopefully no others. There are two types of sanctions regimes that the Australian government implements. The first is United Nations Security Council or UNSC sanctions regimes. These are imposed by the UNSC in response to a threat to the peace, a breach of the peace, or an act of aggression. And for the UNSC to impose sanctions it needs to adopt a resolution. That in turn requires the support of nine out of the 15 members of the UNSC and the absence of a veto from any of the permanent five members, China, France, Russia, the UK and the US. Importantly decisions of the UNSC are legally binding upon all UN member states, obviously including Australia. The word decisions is key here. UNSC resolutions need to be read very literally and if you look at a resolution in opposing sanctions you'll see some paragraphs begin with the verb decides. Other paragraphs begin with different formulations. Calls upon is a fairly typical one. It's only the paragraphs beginning with decides that are decisions that are legally binding. That's one of the reasons that we also have our second type of sanctions, Australian autonomous sanctions. These are not imposed because they are legally binding, unlike UNSC sanctions. They're imposed as a matter of choice by the Australian government as a tool of our diplomacy. And they're becoming an increasingly important tool not only for Australian diplomacy but also for that of many of our like-minded. If you look at Canada, the EU, Japan, the US, they all have very extensive autonomous sanctions regimes as well. Autonomous sanctions may supplement UNSC sanctions, including by implementing those calls upon measures that are referred to a moment ago in UNSC resolutions. Or they could be entirely separate from UNSC sanctions. So there are some situations of international concern that haven't risen to being considered by the UNSC but have certainly been considered by the Australian government and we've implemented autonomous sanctions, BG, Myanmar, there are some others. These are the sanctions regimes that we currently implement. Just draw your attention to the overlap of the two circles in the middle there. We have UNSC and Australian autonomous sanctions in place in relation to DPRK, Iran and Libya. So please, if you are dealing with those countries, remember both sides of the house, UNSC and your autonomous. We implement all of these sanctions, both types, UNSC and autonomous through Australian sanction laws. UNSC sanctions are implemented under the Charter of the United Nations Act 1945 and it's various sets of regulations. There's a separate set of regulations for each UNSC sanctions regime. The one exception to that is the counter-terrorism regime imposed by UNSC Resolution 1373 and that's implemented within the Charter of the United Nations Act itself in Part 4. Australian autonomous sanctions are implemented under the Autonomous Sanctions Act 2011. There's only one set of regulations that sits underneath that act and we use that single set of regulations to implement all autonomous sanctions. And importantly, the Charter of the United Nations Act or a Katrina, as it is more affectionately known, and the Autonomous Sanctions Act are both administered by DFAT. So we are a one-stop shop for all sanctions issues. That was all I wanted to say by way of a general introduction to what sanctions are and the sanctions regimes that we implement. So I'll move on to looking at some specific sanctions measures that we implement within a sanctions regime. Katrina and the Autonomous Sanctions Act use very similar terminology to describe sanctions measures. We were very conscious when we drafted the Autonomous Sanctions Act back in 2010, coming into force in 2011, of drawing on the language of Katrina so that whether we're talking about UNSC sanctions or autonomous sanctions, we can in effect talk the same language. That's made it certainly a lot easier for us to implement sanctions and we very much hope it makes it a lot easier for the business community to understand them as well. Different sanctions regimes impose different sanctions measures, but they may include general prohibitions on, and the quoted terms here are drawing on that language used in both Katrina and the Autonomous Sanctions Act. General prohibitions on making a sanctioned supply of export sanctioned goods, making a sanctioned import of import sanctioned goods, providing a sanctioned service, engaging in a sanctioned commercial activity, dealing with a designated personal entity, using or dealing with a controlled asset, or the entry into or transit through Australia of a declared person. And also just note, while it's not formally a sanctions measure, there's also a general prohibition on financial transactions of $20,000 or more with Iran. In formal terms, that's an anti-money laundering and counter-terrorism financing measure. We introduced it following a recommendation from the Financial Action Task Force, which is the global standard set on money laundering and terrorism financing. And that task force called upon all its members to pay particular attention to financial transactions with Iran, and this measure is our response. I mention it here because if you're doing a transaction with Iran and you're coming up against sanctions issues, you're also very likely looking at a transaction that's worth more than $20,000. So this will be relevant to you as well. I will pick on Iran then as a case study to talk through some of these sanctions measures in more detail. I choose Iran because we get more inquiries in relation to Iran than we do in relation to any other sanctions regime. And it's also one of the complex ones where there's UNSC and autonomous sanctions. So it makes for a good example. I'll look at making a sanction supply, providing a sanctioned service, dealing with a designated personal entity, using or dealing with a controlled asset, and that final provision on financial transactions. So making a sanctioned supply, a person does that if the person supplies cells or transfers goods to another person, the goods are export sanctioned goods. And as a direct or indirect result of the supply sale or transfer, the goods are transferred to Iran. And the point that I highlight here is prohibition extends to the indirect supply of export sanctioned goods. That rather begs the question of what is an export sanctioned good? There are some differences between UNSC sanctions and Australian autonomous sanctions here. For UNSC sanctions, we're talking about goods defined by reference to various UNSC and international atomic energy agency documents. And you can find the list of those documents and regulations if you want to thumb through them. What we are talking about in essence, goods related to nuclear proliferation. For Australian autonomous sanctions in relation to Iran, export sanctions goods include arms and related material, which is itself defined broadly. There's an indicative list of items that constitute arms and related material in regulation three of the autonomous sanctions regulations. But in fact, we interpret the term with reference to the end user. So we would regard any good that is supplied to a military force as being arms and related material. In addition to goods that in and of themselves arms and related material are supplied to somebody else. Export sanctioned goods for our autonomous sanctions here also include goods related to chemical and biological weapons. Goods related to the oil, gas and petrochemical industries. And I suspect this won't concern totally much people, but nearly printed or unissued Iranian currency. There are of course very detailed lists of all the goods available in our legislation, but that is a summary of the goods in general that we are talking about. And the real point to notice the dual use goods are certainly included and form the vast bulk of inquiries that we received from you. Turning then to the prohibition on providing a sanctioned service for Iran. A sanctioned service includes the provision of technical assistance or training, financial assistance, a financial service or another service. If it assists with or is provided in relation to a military activity, a sanctioned supply as we just discussed, the manufacturer use of export sanctioned goods with the same definition that we just looked at, or gold precious metals and diamonds and all of those things in relation of course to Iran. Turning to the prohibition on dealing with a designated person or entity, a person is generally prohibited from directly or indirectly making an asset available to or for the benefit of a designated person or entity. A person or entity acting on behalf of or at the direction of a designated person or entity or an entity owned or controlled by a designated person or entity. I note the very broad definition of asset in this context. It's one of those definitions that refers to the defined term in the definition which makes it a little circular, but we're talking about an asset or property of any kind, tangible or intangible, movable or immovable. So in essence anything. And again, just to draw attention to the breadth of this prohibition, it extends to indirectly making an asset available to an entity that is merely owned or controlled by the designated person or entity itself. Just as the definition of sanctioned supply begs the question as to what is an export sanction good. This begs the question of whom or what is a designated person or entity. And again, there are some differences between our UNSC sanctions and our autonomous sanctions for Iran. For UNSC sanctions, we're talking about persons or entities designated by the UNSC Iran Sanctions Committee. Coincidentally, Australia is the chair of that body this year and next. You would doubtless be aware that we are a non permanent member of the Security Council for that two year period. And this is one of our particular responsibilities. For autonomous sanctions in relation to Iran, we're talking about persons or entities that the Minister for Foreign Affairs is satisfied have contributed to Iran's nuclear or missile programs or assisted Iran to breach UNSC sanctions. DFAT maintains a consolidated list of all designated persons and entities in relation to all UNSC and Australian autonomous sanctions regime, so not just Iran. That's available on the DFAT website and it can be searched any which way, basically by person, by entity, by country, by sanctions regime. So we hope that makes it fairly straightforward to determine if you're dealing with a person or entity, which may be designated. The general prohibition on using a controlled asset. I know we have many representatives here today from the financial sector. This is particularly relevant to those of you working for banks. A person who holds a controlled asset is prohibited from using or dealing with it or allowing or facilitating it to be used or dealt with. A controlled asset is an asset that is honed or controlled by a designated person or entity or those various people connected with a designated person or entity. This provision came to life earlier this year, dramatic events, at least for somebody who follows sanctions, when Richard Chachakli was arrested in Melbourne. Richard Chachakli was an associate of Victor Butte. You may have seen the film Lord of War. Victor Butte was an international arms trafficker who provided arms to a good number of the civil conflicts in Africa in particular. Chachakli had evaded international law enforcement for 15 or 20 years. We still don't quite understand why he did this, but he applied to be a protective services officer with the Victorian police. Fully enough, that involved a somewhat rigorous look at his background and his identity was found, he was arrested. In any case, he had bank accounts with several Australian banks. All of the assets there were controlled assets by this definition and so Australian banks were in the position of needing to prohibit any use or dealing with those accounts. We also wound up freezing several other assets. I referred earlier to the very broad definition of asset. Perhaps most comically, we wound up with a lovely set of silver cutlery, which is an asset by the definition so we couldn't allow him or his associates to use or deal with it. As I mentioned earlier, the general prohibition on financial transactions worth $20,000 or more with Iran is not formally a sanctions measure, but it's in the same space, so I will refer to it here. Those transactions are prohibited if a party to the transaction is an individual who is physically present in Iran or a corporation incorporated in Iran. And I would just stress that we only implement this measure in relation to Iran. You needn't worry about it in any other context. The beauty of it, at least from DFAT's perspective, is that it gives us visibility of a very wide range of transactions with Iran, and we can then check those transactions for sanctions compliance. So this has become quite a valuable sanctions compliance tool for us. That's a quick look at some of the particular sanctions measures that we implement in relation to Iran. Moving on to the third part of my talk and looking at how you might get your hands on a sanctions permit to undertake an activity that might otherwise breach one of those sanctions measures. The Minister for Foreign Affairs in some circumstances is delegates, typically a senior official from DFAT, may grant such a permit and the minister or his delegates may attach conditions to the permit. Different sanctions regimes have different criteria which must be satisfied before the minister or his delegate can issue a permit. And I just noted for UNSC sanctions regimes, the criteria tend to be more onerous. They come down on high to us from the UNSC. They are not ones that we have much control over. And while not formally a sanctions measure, the DFAT secretary or his delegates may also grant a permit authorizing a financial transaction of more than $20,000 with Iran. I'll continue to use Iran as a case study to run through some examples of the criteria that need to be satisfied for a permit. So to make a sanction supply to Iran, for UNSC sanctions, the minister may issue such a permit, including if the contract for delivery of the goods includes appropriate end user guarantees. The minister has obtained a commitment from the Iranian government not to use the goods in the proliferation of sensitive nuclear activities or for the development of nuclear weapon delivery systems. And the minister has obtained from the UNSC Iran sanctions committee a determination in advance that the goods would clearly not contribute to the development of Iran's technologies in support of those activities or the development of those systems. A pretty high bar, as you can see. But the conditions that we are legally bound to fulfill because of UNSC decisions. The good news is that granting a permit for our autonomous sanctions is much more straightforward. The minister to issue a permit authorizing a sanction supply to Iran need only be satisfied that it would be in the national interest to do so. And this is typical of all of our autonomous sanctions regimes. Generally the only criterion for granting an autonomous sanctions permit of any kind is national interest. For financial transactions with Iran worth $20,000 or more the DFAT secretary or his delegates can issue a permit for those where he considers it appropriate to do so. Having regard to whether the transaction is necessary for the provision of a basic expense legally required because it is necessary to satisfy a judicial administrative or arbitral judgment made before 1st of March last year. Contractually required under a contract made before that same date. A significant trade transaction that if not completed would have an adverse effect on Australia's trade relationship with Iran or the viability of an Australian business or related to the provision of aid or humanitarian services. And I draw your attention to the fourth of those dot points. The one to do with significant trade transactions. We tend to take a fairly liberal view of what is a significant trade transaction and most transactions that come across our desk we will look to include in that basket with a view to issuing a permit. To come to the pointy end then which will hopefully not concern anybody in this room. Sanctions offences. Contravening a sanctions measure or a condition of a sanctions permit is a serious criminal offense. It's punishable for individuals by up to 10 years in prison and or a fine the greater of four hundred and twenty five thousand dollars or three times the value of the transaction and where that value can be ascertained. It's punishable for bodies corporate by a fine the greater of one point seven million dollars or again three times the value of the transaction where that can be can be sorted out. It's important to note that these offenses are strict liability offenses for a body corporate. They are not for an individual but for a body corporate meaning that it is not necessary to prove that the body corporate had any intent to commit an offense. Giving false or misleading information in connection with the administration of a sanction law is also a serious offense. This most often comes up in connection with applications for a sanctions permit and importantly a sanctions permit is taken never to have been granted if false or misleading information was contained in the application for it. In other words anybody who had relied upon that permit to undertake various transactions those transactions themselves would then very likely the offense of giving false or misleading information is itself punishable by up to 10 years in prison and or a fine of 425 thousand dollars and just to note these offenses apply broadly to any activity in Australia to any Australian anywhere in the world so any overseas officers that you may have and to any person using an Australian flag vessel or aircraft and as I've said a few times now it's not formally a sanctions measure but providing services in relation to an unauthorized financial transaction of $20,000 or more with Iran is an offense for a financial institution. Those of you here representing banks will probably be familiar with the term reporting entity which is actually the term used in the anti-money laundering and counterterrorism financing act. The definition of reporting entity is not entirely straightforward but in essence what we're talking about is Australian financial institutions. So those institutions should they process one of these transactions without authorization is punishable by a fine of up to 8,500 dollars. DFAT has some investigative powers to determine if a sanction offense may have been committed. We can issue a notice requiring a person to give information or documents including under oath for the purpose of determining whether a sanction law has been or is being complied with. The person must comply with the notice despite any other law and it's no excuse that the information that the person might be required to hand across could self incriminate. So in essence there's no way to get out of providing the providing the information. And failure to comply is an offense punishable by 12 months in prison. Now very occasionally we wind up issuing one of these notices as a stick and it it comes as somewhat of a surprise to the person who receives it. More often than not though we we actually wind up issuing them at the request of Australian companies. We've had a number of situations where a company is aware of some information that indicates a possible sanctions breach. The company would like to share that information with us but is concerned about the commercial or other implications of doing so. In those circumstances we can issue one of these notices the company has all the legal coverage and the sort of political coverage it could want in its dealings with its competitors or others. We get the information and are very grateful to receive it and it suits everybody's ends. So please do bear that in mind if you do have information you would like to share with us this is one mechanism that that may be of interest to you. Finally in relation to offenses I'd note that it is a complete defense for a body corporate if it proves that it took reasonable precautions and exercise due diligence to avoid contravening a sanctions measure or a condition of a sanctions permit. And really if you take two phrases away from today make them reasonable precautions and due diligence. What constitutes reasonable precautions and due diligence depends on the circumstances it's very hard to to generalize and to provide advice in a forum like this. What is clear though is that a body corporate would have to demonstrate that it thoroughly considered sanctions issues before undertaking an activity. One option you might want to look at here is to consider including terms related to sanctions in any contract related to an activity. So for example if you are selling goods to an entity include terms in the contract requiring that entity not to on sell them or on lease them in contravention of sanctions that's a pretty good vanguard against any accusation that you didn't take reasonable precautions or exercise due diligence. And another important aspect here of due diligence is please inform us immediately of any changes to an activity that may raise sanctions issues. Coming then to the final part of my presentation what do Australian businesses need to do in relation to sanctions. When planning an activity please do consider whether it may involve any country any good or service or any person or entity subject to sanctions. I've run through some examples to do with Iran today but you can find full details of all of our UNSC and all of our Australian Autonomous Sanctions Regimes on the DFAT website and the address is there on the slide. When you're considering persons and entities involved in a transaction please do take a look at the consolidated list that is also on the DFAT website. If you have any concerns that an activity may contraven sanctions measures please consider seeking legal advice. It's an obvious thing to say but the onus to comply with Australian sanction laws rests on Australians at large individuals businesses. You can submit inquiries to DFAT using our online sanctions administration system or OSIS. You can find that system at that address you need to register as a user before you can start submitting inquiries. I would just note though that coming to us with an inquiry is no substitute for seeking your own legal advice. We are lawyers employed by the Australian government to provide advice to the Australian government. We can't provide legal advice to others. We can provide information. We can give an opinion about its no substitute for satisfying yourself through your own legal advice that everything is okay. I would also ask that you please only consult us where it is really unclear whether an activity may contraven a sanctions measure or not. And just to note that you may also need to consider the sanction laws of other countries. Many of you will be aware that the US in particular not only in the sanction sphere but including in the sanction sphere applies its laws very broadly and extraterritorially and when you're involved in international trade and of course you need to be mindful of other jurisdictions. If you assess that an activity would contraven any sanctions measure in an Australian sanction law consider whether that activity satisfies the relevant criteria for a sanctions permit. And if you assess that it does then you can apply for a sanctions permit using the online sanctions administration system that I referred to a moment ago. This step comes with a few pleas from us. Please don't apply for a sanctions permit until you've undertaken the steps that I've just talked through. We do get the odd permit application that very clearly does not involve sanctions at all. For example trade with a non-sanctioned country where no bad guys are involved. At the other end of the scale we we receive permit applications for exporting arms to Iran. Well we don't think too hard about that. And you'll appreciate that that takes up a lot of our time to start looking at those applications and our time and ultimately yours is much better spent looking at the application somewhere in the middle where there's a real question to be answered. Please do submit an application as early as possible once you've determined that you need to take that step and please include as much information as possible. We very often have a to and fro with an applicant to receive some additional information. We're very happy to do that but it does slow down the process a little so the more you can give us some comfort there. And please note that an informal inquiry on OSIS is different from a formal application for a sanctions permit. If you're in doubt about which one to submit please in the first instance go with the inquiry. An inquiry is informal we can process it informally we can process it pretty quickly. If you need to upgrade to an application no problem we can do that then. On the other hand an application is formal we have formal processes around processing applications we may need to put a submission to our minister. All of these things take time. So if you're in doubt about what you need to do please start with an inquiry. So what does DFAT then do when we receive an application for a sanctions permit? Well we will consider it as soon as we possibly can subject to our current case load and just mentioned a couple of ways where you can help us with our case load. We typically have around a hundred inquiries and applications on foot at any one time I think it's peaked up around 150 and our resources in the usual way are fairly limited so we do appreciate people really thinking before they come through to us. I just note that we may need to consult other Australian government agencies in considering an application we may need to consult other countries we may need to go to a UNSC sanctions committee depending on the case. We generally require complete information about an activity. That includes the full path for any goods or services that you supply from you through any intermediaries to the end user and likewise the full path for your payment from the end user through any intermediaries and back to you. And when we're talking about entities involved in the transaction please remember we're talking about the banks in addition to various companies that you're dealing with in relation to the goods. Finally and this is the thought I really want to leave you with aside from those two phrases of reasonable precautions and due diligence. It goes without saying that DFAP implements Australian sanction laws diligently. We are the Australian government sanctions regulator that is our primary job. But we do also implement them in a way that facilitates trade wherever possible. And we haven't forgotten that we're officers of the Department of Foreign Affairs and trade and that last bit is a key part of our role. We'll always seek to avoid putting Australian companies at a disadvantage vis-a-vis competitors from countries with similar sanction laws. So if you get wind that a Canadian company, an American company, a company in the EU is having an easier time with their sanction regulator than you are having with us let us note and that's something we certainly take into account as we refine our approach going forward. I'd also note that we're very willing to look at creative conditions to sanctions permits and we've had several instances where we've sort of gone backwards and forwards with an Australian company five or six times to craft a condition that is at once practical from the company's perspective and from our perspective fully compliant with Australian sanction laws. So in short if we can make a trade happen we will. But of course it has to be within the limits of the laws that we've mentioned. So for further information and I've referenced these sources a couple of times already the DFAT website details of all UNSC and Australian autonomous sanctions that we implement. There's an attempt on the web page to explain them all in plain language. There are also links to all the relevant pieces of legislation so you can go as deep or as shallow as you as you need to in terms of looking at what these sanctions provide. Also on our website is that consolidated list of all designated persons and entities and the other source to bear in mind is the online sanctions administration system where you can lodge informal inquiries related to sanctions issues or you can lodge a formal application for a cross-sanctions permit. With that thank you very much and I'd be very happy to take your