Statute Details
- Title: Financial Services and Markets (Sanctions and Freezing of Assets of Persons — Iran) Regulations 2023
- Act Code: FSMA2022-S240-2023
- Type: Subsidiary legislation (SL)
- Enacting Authority: Monetary Authority of Singapore (in exercise of powers under the Financial Services and Markets Act 2022)
- Authorising Act: Financial Services and Markets Act 2022 (FSMA 2022)
- Commencement: 28 April 2023
- Status: Current version (as at 27 March 2026)
- Primary Purpose: Implement UN Security Council Resolution 2231 (2015) measures relating to Iran, including freezing of assets and prohibitions on assistance and financial services
- Key Provisions (from extract): Regulation 5 (asset freezing), Regulation 6 (prohibition on assistance/services/funds where there are reasonable grounds), Regulation 7 (additional prohibitions requiring prior written approval), Regulation 8 (revocation), Regulation 9 (saving/transitional)
- Schedule: “Designated items” (items/materials/equipment/goods/technology within specified classes or descriptions)
What Is This Legislation About?
The Financial Services and Markets (Sanctions and Freezing of Assets of Persons — Iran) Regulations 2023 (“Iran Sanctions Regulations”) are Singapore’s implementing regulations for sanctions measures connected to Iran under United Nations Security Council Resolution 2231 (2015). In practical terms, the Regulations impose compliance duties on financial institutions operating in Singapore (and branches outside Singapore of Singapore-incorporated/established financial institutions) to freeze certain assets and to avoid providing financial services that could facilitate prohibited conduct.
The Regulations are designed to ensure that Singapore-based financial institutions do not inadvertently support sanctioned activities. They do this through (i) mandatory freezing obligations for funds and other economic resources linked to “designated persons”, and (ii) prohibitions on providing assistance, services, funds, or financial services where the institution has information giving “reasonable grounds to believe” that the conduct could contribute to sanctioned activity. The Regulations also introduce a separate approval-based regime for certain dealings with “specified persons”.
Although these Regulations are framed around UN measures, they operate as binding domestic obligations for regulated financial institutions. For lawyers advising banks, payment service providers, insurers, broker-dealers, and other “financial institutions” under the FSMA 2022 framework, the key is to translate the sanctions text into operational controls: screening, due diligence, account handling, transaction monitoring, and escalation/approval processes.
What Are the Key Provisions?
1. Definitions and dynamic designation (Regulation 4)
The Regulations define core terms such as “designated person”, “specified person”, “funds”, “designated item”, and “UN List”. The “UN List” is the UN Security Council’s list of individuals/entities to whom the measures in Annex B paragraph 6(c) of Resolution 2231 apply, as updated on the UN website.
For compliance, the most important feature is the dynamic effect of UN listing changes. Regulation 4(2) provides that if a person is added to the UN List on or after 28 April 2023, they are treated as a “designated person” with effect from the day immediately following the date of addition. If removed, they cease to be designated with effect from the removal date. If particulars are modified, the modifications take effect from the day immediately following the UN modification date. This means institutions must ensure their screening and sanctions databases update promptly and that internal policies address “near real-time” changes.
2. Mandatory freezing of assets (Regulation 5)
Regulation 5 is the centrepiece. Subject to limited exceptions, any financial institution that has in its possession, custody, or control in Singapore any funds, other financial assets, or economic resources owned or controlled (directly or indirectly) by a “designated person” must:
- Immediately freeze the relevant funds/assets/resources; and
- Ensure they are not made available to or for the benefit of the designated person, whether directly or indirectly.
Regulation 5(2) expands the scope by treating funds/assets/resources held by an entity owned or controlled by a designated person, or by an individual/entity acting on behalf of or under the direction of a designated person, as if they were owned or controlled by the designated person. This is a common sanctions “control” concept and is critical for lawyers advising on beneficial ownership, group structures, and agency relationships.
3. Exceptions and permitted use (Regulation 5(3) and (4))
Regulation 5(3) sets out circumstances where the freezing requirements do not apply because the Authority determines the funds/assets/resources are necessary for specific purposes. These include:
- Basic expenses (foodstuff, rent, mortgage discharge, medicine/medical treatment, taxes, insurance premiums, public utility charges);
- Reasonable professional fees and reimbursement of expenses for legal services;
- Routine holding/maintenance fees for frozen funds/assets/resources;
- Extraordinary expenses (subject to Authority determination);
- Civil nuclear cooperation projects described in Annex III of the JCPOA;
- Judicial/administrative/arbitral liens or judgments (with conditions: lien/judgment arose/entered prior to 23 December 2006 and is not for the direct or indirect benefit of a designated person);
- Activities directly related to designated items specified in Annex B paragraph 2 of Resolution 2231, and approved by the Security Council;
- Payments due under pre-designation contracts entered into by a person before becoming a designated person, provided the contract is not related to designated items and not related to prohibited assistance/training/financial assistance/investment/brokering/services under Annex B, and the payment is not directly or indirectly received by a designated person.
Regulation 5(4) addresses income accruing on frozen accounts. A financial institution may credit interest/earnings or payments due under certain pre-23 December 2006 contracts into a frozen account, but once credited, the interest/earnings/payment must be immediately frozen. This prevents “leakage” of value from frozen accounts through accrued returns.
4. Prohibition on assistance/services/funds where there are reasonable grounds (Regulation 6)
Regulation 6 imposes a broad prohibition: a financial institution must not provide financial assistance, investment/brokering/other financial services (including insurance or reinsurance), or transfer funds/economic resources/financial assets/financial services where the institution has information that provides reasonable grounds to believe that the assistance/services/funds/resources/assets could contribute, directly or indirectly, to any “sanctioned activity in Iran or by or on behalf of a person or an individual in Iran”.
“Sanctioned activity” is defined in Regulation 6(2) to mean activities related to the design or technology of ballistic missiles capable of delivering nuclear weapons, including any launch by any specified person using ballistic missile technology. This definition matters because it ties the prohibition to a specific prohibited activity category (ballistic missile-related design/technology/launch), rather than to a general “sanctions” concept.
5. Prior written approval for dealings with “specified persons” (Regulation 7)
Regulation 7 introduces a separate regime: except with prior written approval of the Authority, a financial institution must not (a) provide financial assistance to any specified person, (b) provide investment/brokering/other financial services or related services (including insurance/reinsurance) to any specified person, or (c) transfer funds/economic resources/financial assets/financial services to any specified person.
While the extract truncates the remainder of Regulation 7, the structure indicates that “specified person” is a broader category than “designated person” and includes the government of Iran, nationals of Iran, entities incorporated in Iran or subject to its jurisdiction, persons acting on behalf/direction of those categories, and entities owned or controlled (directly or indirectly) by them. For practitioners, this means there may be two overlapping compliance tracks: mandatory freezing for “designated persons” under Regulation 5, and an approval-based restriction for “specified persons” under Regulation 7.
How Is This Legislation Structured?
The Regulations follow a standard sanctions-instrument format:
- Regulation 1 sets the citation and commencement date (28 April 2023).
- Regulation 2 states the object: assisting in giving effect to UN Security Council Resolution 2231 (2015).
- Regulation 3 provides the application clause, covering every financial institution within the FSMA 2022 definition, including relevant branches.
- Regulation 4 contains definitions, including dynamic “UN List” effects for designation.
- Regulation 5 imposes mandatory freezing and sets out exceptions and permitted credits.
- Regulation 6 creates a “reasonable grounds to believe” prohibition on assistance/services/transfers that could contribute to “sanctioned activity”.
- Regulation 7 restricts provision or transfer of financial services to “specified persons” unless the Authority grants prior written approval.
- Regulation 8 revokes earlier instruments (as indicated by the enacting formula and the presence of a revocation provision).
- Regulation 9 provides saving and transitional provisions.
- The Schedule lists “designated items” (classes/descriptions of items/materials/equipment/goods/technology) relevant to certain exceptions and approvals.
Who Does This Legislation Apply To?
Regulation 3 states that the Regulations apply to every financial institution within the meaning of section 2 of the FSMA 2022. This is not limited to banks; it can include a range of regulated entities that provide financial services, subject to how FSMA 2022 defines “financial institution”.
Importantly, the Regulations also apply to branches outside Singapore of financial institutions incorporated or established in Singapore. Practically, this means Singapore-headquartered groups must ensure that sanctions compliance policies and controls extend across cross-border operations, including account management, correspondent banking relationships, and group-wide screening.
Why Is This Legislation Important?
For practitioners, the Iran Sanctions Regulations are significant because they create immediate, operationally demanding obligations—especially the “immediately freeze” requirement in Regulation 5. Failure to freeze promptly or to prevent funds from being made available to designated persons can expose institutions to regulatory action and reputational risk.
The Regulations also require a nuanced risk-based legal analysis. Regulation 6’s “reasonable grounds to believe” standard is fact-sensitive: it does not require proof that funds will be used for sanctioned activity, but it does require that the institution has information giving reasonable grounds that the assistance/services could contribute directly or indirectly. This places emphasis on transaction monitoring, customer due diligence, and escalation processes when red flags arise.
Finally, the interplay between “designated persons” (freezing regime) and “specified persons” (approval regime) means legal teams must map the sanctions framework carefully. In practice, counsel should support compliance teams with: (i) sanctions screening governance and update procedures aligned with Regulation 4(2), (ii) account freezing and blocked funds workflows consistent with Regulation 5, (iii) documented assessments for Regulation 6 “reasonable grounds” determinations, and (iv) a clear process for seeking prior written approval under Regulation 7 where contemplated transactions involve “specified persons”.
Related Legislation
- Financial Services and Markets Act 2022 (authorising Act; defines “financial institution” and provides regulatory powers)
- Markets Act 2022 (referenced in the metadata provided)
- UN Security Council Resolution 2231 (2015) (the international instrument the Regulations implement)
- JCPOA (Joint Comprehensive Plan of Action) (referenced for nuclear cooperation exceptions)
Source Documents
This article provides an overview of the Financial Services and Markets (Sanctions and Freezing of Assets of Persons — Iran) Regulations 2023 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.