Charter of the United Nations (Sanctions—ISIL (Da’esh) and Al-Qaida) Regulations 2008

Designated person or entity is the central concept triggering the prohibitions. It includes Al‑Qaida, ISIL (also known as Da’esh), and any person or entity on the ISIL (Da’esh) & Al‑Qaida Sanctions List maintained by the 1267/1989/2253 Committee, as that list exists from time to time. The list is dynamic: entries can be added or removed by the Committee without Australian legislative amendment. A person dealing with a counterparty that appears on the list at the time of the transaction contravenes the Regulations even if the listing was recent or contested.

Export sanctioned goods means arms or related matériel, which is defined broadly to include weapons, ammunition, military vehicles and equipment, spare parts, and paramilitary equipment. Paramilitary equipment includes batons, clubs, riot sticks, body armour (bullet-resistant apparel and pads and protective helmets), handcuffs, leg‑irons, riot protection shields, whips, and parts or accessories designed or adapted for such equipment. This captures items that may have dual civilian and law enforcement use, such as body armour and batons.

Sanctioned supply occurs when a person supplies, sells or transfers goods to another person, the goods are export sanctioned goods, and as a direct or indirect result the goods are transferred to a designated person or entity. The phrase “as a direct or indirect result” is critical: it catches chain transactions and intermediary deals where the ultimate recipient is designated, even if the immediate buyer is not. The person making the initial supply does not need to know the ultimate destination; the objective chain of transfer is sufficient.

Sanctioned service means the provision of technical advice, assistance or training related to military activities to a designated person or entity. This includes activities such as providing strategic advice, weapons training, logistics support, or any military-related instruction. It does not require a direct supply of goods.

Controlled asset means an asset of a designated person or entity, or funds derived from an asset owned or controlled directly or indirectly by a designated person or entity or by a person acting on behalf of or at the direction of a designated person or entity. The definition catches derivative holdings: if a designated entity owns a company, the shares of that company are controlled assets, and any dividends derived from those shares are also controlled assets. The term “asset” itself is defined in the Charter of the United Nations Act 1945 and includes property of any kind, whether tangible or intangible, movable or immovable, and legal documents or instruments evidencing title or interest.

Strict liability applies to the circumstance that an asset use or dealing is not authorised by a permit. That means the prosecution does not need to prove the person knew the permit was absent. If a person uses a frozen bank account without a permit, they commit the offence even if they mistakenly believed they had a permit or were unaware that a permit was required. The only defence is to show the dealing was in fact authorised by a permit.

The Regulations affect any person, whether an individual or a body corporate, who engages in conduct connected with designated persons or entities or with arms and military services that could reach them. The extraterritorial reach means that an Australian citizen living overseas, a foreign company using an Australian ship or aircraft, or a subsidiary of an Australian corporation can be caught. Financial institutions are particularly exposed because they routinely hold assets and process transactions that may involve sanctioned parties. A bank that maintains an account for a company later found to be owned by a designated person holds a controlled asset and must not allow any use or dealing with it without a permit.

Businesses that manufacture, export, or broker arms or related matériel face a direct prohibition on supplies that could end up with designated entities. This includes not only defence contractors but also suppliers of paramilitary equipment such as body armour, batons, and riot control gear. Even if the immediate customer is a police force or security company, the supplier must assess whether the goods might indirectly reach a sanctioned party.

Organisations that provide technical training for military or security purposes must screen recipients. A private security firm training foreign military personnel, a defence consultancy advising on strategy, or a university running a defence studies program may be providing a sanctioned service if the recipient is a designated person or entity.

Bodies corporate that have effective control over another entity, wherever incorporated or situated, are directly liable if that entity makes a sanctioned supply or provides a sanctioned service. This targets parent companies that direct subsidiaries. It also catches holding structures where an Australian corporation controls an offshore entity that engages in prohibited conduct, even if the parent did not specifically authorise the transaction.

Compliance professionals, legal counsel, auditors, and directors all have duties to ensure their organisations have systems to identify designated persons, freeze controlled assets, and apply for permits where appropriate. The dynamic nature of the UN sanctions list means screening must be ongoing, not a one-off check. The costs of compliance include subscription to sanctions databases, legal advice on permit applications, and the opportunity cost of frozen assets that cannot be used for business operations.

The primary duties are prohibitions: do not make a sanctioned supply, do not provide a sanctioned service, do not make an asset available to a designated person or entity without a permit, and do not use or deal with a controlled asset without a permit. These duties apply to all persons and extend extraterritorially. A person who holds a controlled asset must take positive steps to freeze it and refrain from any dealing unless permitted. The duty not to “allow” or “facilitate” use or dealing means that a bank employee who processes a transfer from a frozen account without authorisation contravenes even if they did not initiate the transaction.

A person also has the right to apply to the Minister for a permit to make an asset available to a designated person or entity or to use or deal with a controlled asset. The application must fall into one of the specified categories under the Charter of the United Nations (Dealings with Assets) Regulations 2008: basic expense dealing, contractual dealing, or extraordinary expense dealing. Basic expense dealings cover things like food, rent, medical expenses, legal fees, and utility charges. Contractual dealings cover payments due under contracts entered into before the person or entity was designated. Extraordinary expense dealings cover other unusual or large expenses.

For a basic expense dealing, the Minister must notify the UN Committee and can only grant the permit after three working days have passed and the Committee has not advised against it. For an extraordinary expense dealing, the Minister may only grant a permit with the Committee’s approval. This means the Minister cannot override the Committee; the UN body has effective veto power over the release of frozen assets. For contractual dealings, the permit process is likely governed by the Dealings with Assets Regulations and may involve similar notification requirements.

Permits are subject to any conditions the Minister specifies. Failure to comply with a condition may invalidate the permit and expose the holder to prosecution. The duty to apply for a permit rests on the person who wishes to make the asset available or use the controlled asset. There is no provision for automatic exemptions; every use requires a permit unless it falls outside the scope of the prohibitions entirely (e.g., if the asset is not a controlled asset or the recipient is not a designated person).

The Regulations themselves do not state specific penalty amounts or imprisonment terms. Instead, they create contraventions that constitute offences under section 27 of the Charter of the United Nations Act 1945. The Act provides that a person who contravenes a UN sanction enforcement law is guilty of an offence punishable on conviction by imprisonment for up to 10 years or a fine of up to 2,500 penalty units, or both. As of 2023, a penalty unit under the Crimes Act 1914 is $275, making the maximum fine $687,500 for an individual. For bodies corporate, the fine can be up to five times that amount. These are serious criminal offences, not civil penalties.

Strict liability applies to the element that the making available or use of an asset is not authorised by a permit. That means the prosecution does not need to prove that the person knew the permit was absent or was reckless about it. If a person deals with a frozen asset without a permit, they commit the offence regardless of their state of mind as to the permit’s existence. However, the prosecution must still prove the underlying facts: that the asset was a controlled asset, or that the recipient was a designated person, and that the person made it available or used it. Mistake of fact as to those elements may still be a defence under the Criminal Code.

Section 15.1 of the Criminal Code applies, giving the offences extraterritorial operation. That means an Australian citizen can be prosecuted for conduct that occurred entirely overseas, and a foreign national can be prosecuted for conduct involving an Australian ship or Australian aircraft. Enforcement is likely handled by the Australian Federal Police, the Australian Border Force, and the Australian Security Intelligence Organisation. The Minister responsible for administering the Regulations is the Minister for Foreign Affairs.

In addition to criminal penalties, the Regulations interact with asset freezing and reporting obligations under the Charter of the United Nations Act and the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Suspected breaches may also trigger civil penalties, infringement notices, or administrative actions such as removal of licences for exporters. The practical risk of enforcement is moderate, given the difficulty of detecting offshore transactions, but the penalties are severe enough to incentivise investment in compliance.

The Regulations sit within a tiered legal framework. At the top is the Charter of the United Nations Act 1945, which gives the Governor-General power to make regulations to give effect to Chapter VII UN Security Council resolutions. The Regulations are one of several sanctions regimes under that Act. Others include sanctions against Iran, North Korea, and the Taliban. The Regulations specifically implement Security Council resolutions regarding ISIL and Al‑Qaida, primarily Resolution 1267 (1999) and subsequent resolutions.

The Charter of the United Nations (Dealings with Assets) Regulations 2008 is a companion instrument that sets out the categories of permitted dealings and the application process for permits under regulation 12. It defines basic expense dealings, contractual dealings, and extraordinary expense dealings and contains procedural rules. Both sets of regulations must be read together. The Minister’s power to grant permits under regulation 12 is expressly made subject to section 13A of the Act, which deals with permits.

The Criminal Code applies through the notes to regulations 8, 9, 10, and 11. Section 15.1 provides for extraterritorial jurisdiction. Section 6.1 defines strict liability. Chapter 2 of the Criminal Code sets out general principles of criminal responsibility, including the physical and fault elements for offences and the burden of proof. Offences under the Act are indictable and may be tried in federal courts.

The Regulations also intersect with anti-money laundering and counter-terrorism financing laws. The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 requires reporting entities to conduct customer due diligence and monitor transactions for suspicion of sanctions breaches. The Australian Transaction Reports and Analysis Centre (AUSTRAC) enforces those obligations. A bank that fails to freeze a controlled asset may face both a criminal charge under these Regulations and a civil penalty under the AML/CTF regime.

Export control laws, including the Customs Act 1901 and the Defence and Strategic Goods List 2021, also apply to arms and related matériel. An exporter may need both a sanctions permit under these Regulations and a conventional export permit. The two regimes are separate; a permit under one does not excuse a breach of the other. Companies must navigate multiple regulatory gateways.

State and territory laws are generally displaced to the extent of inconsistency by virtue of the Commonwealth Constitution section 109, but state police and law enforcement may still assist in investigations.

The source text does not provide a list of amendments. The Regulations were originally made in 2008 and have been amended periodically to reflect changes in UN Security Council resolutions and listings. Notable amendments would have been made after Resolution 2253 (2015), which established the 1267/1989/2253 ISIL (Da’esh) and Al‑Qaida Sanctions Committee, merging earlier sanctions regimes. The note in regulation 4 referring to the Committee and Resolution 2253 indicates an amendment made after December 2015. The note also states that the sanctions list could be viewed on the UN website as of 2021, suggesting that the explanatory text has been updated at least to that year.

Other amendments likely arose from changes to the Charter of the United Nations Act and the Criminal Code. The definitions of Australian aircraft and Australian ship cross reference the Criminal Code, so any amendment to those definitions would flow through. The Regulations have probably been amended to update the permit process under regulation 12 in line with the Dealings with Assets Regulations.

A practitioner should check the Federal Register of Legislation for the current compilation, including all amendments. The version provided appears to be a snapshot that includes the 2015 Resolution reference but may not include later updates. The dynamic nature of the sanctions list means the Regulations themselves remain relatively stable in structure, but the list incorporates entries added by the UN Committee on a rolling basis without a legislative instrument.

The source text does not refer to any court cases, and no case law is provided. Given the nature of the Regulations, litigation is likely rare. Criminal prosecutions for sanctions breaches under the Act are infrequent and often involve complex fact patterns with diplomatic and intelligence sensitivities. Most matters are resolved without a contested trial, through guilty pleas or through administrative action such as freezing assets and revoking permits.

There may be litigation concerning permit decisions. A person refused a permit for an extraordinary expense dealing could seek judicial review under the Administrative Decisions (Judicial Review) Act 1977, arguing that the Minister misapplied the criteria or that the Committee’s advice was not properly considered. Similarly, a person charged with an offence may raise defences based on a reasonable belief that a permit existed or that the recipient was not a designated person.

The strict liability element for the permit requirement could be challenged on constitutional grounds as an infringement of the separation of judicial power, but similar strict liability provisions have been upheld in other contexts. The extraterritorial operation of the offences may also be tested if the conduct occurred entirely overseas and the accused is not an Australian citizen, though section 15.1 of the Criminal Code has been applied broadly.

Overall, there is no significant body of case law interpreting these specific Regulations. Practitioners must rely on the text and on general principles of criminal law and administrative law.

The first gotcha is the breadth of “indirect result” in the definition of sanctioned supply. A business that sells body armour to a local distributor, which subsequently on-sells to a party that is designated, has made a sanctioned supply even if the initial sale was lawful in all respects and the seller had no knowledge of the ultimate recipient. The chain of transfer is objective; there is no requirement that the person intended or foresaw the connection. This creates a risk for wholesalers and intermediaries who do not conduct end-user due diligence.

Second, “controlled asset” includes funds derived from an asset owned or controlled indirectly by a designated person or entity. If a designated person owns shares in a company, and that company pays dividends, the dividend funds become controlled assets. If the company pays salaries to employees, those salary payments may also be controlled assets. This can freeze the entire cash flow of a legitimate business that has a designated shareholder, even if the shareholder has no control over daily operations.

Third, strict liability applies to the permit element. A person who uses a controlled asset without realising they need a permit commits an offence. There is no requirement that the prosecution prove the person knew the permit was absent. This places the burden on asset holders to be aware of both the designation status and the permit requirement. A bank that processes a routine transaction on a frozen account cannot rely on the defence that it was unaware of the freeze or the permit condition.

Fourth, bodies corporate are liable for the actions of entities they effectively control, wherever incorporated. An Australian parent company with a subsidiary in a jurisdiction that does not enforce UN sanctions may be criminally liable if the subsidiary provides a sanctioned service, even if the subsidiary’s conduct was legal under local law. The phrase “effective control” is not defined, leaving room for uncertainty. Factors such as board composition, shareholding, and contractual arrangements will determine liability.

Fifth, paramilitary equipment is defined broadly and includes items like handcuffs, body armour, and riot shields that have legitimate civilian and law enforcement uses. A company that exports these items must ensure they do not end up with a designated person or entity, even if the items are not weapons. The inclusion of “parts and accessories designed or adapted for use in, or with” such equipment widens the net further.

Sixth, the permit process is slow and uncertain. For basic expense dealings, a permit cannot be granted until three working days after the Committee is notified and provided the Committee does not advise against it. The Committee operates on its own timeline and may not respond within the three-day period. For extraordinary expense dealings, the Committee must approve. This means that essential expenses like rent or medical bills may be delayed while the permit is processed. There is no provision for emergency permitting.

First, identify whether your organisation is exposed. Any entity that deals in arms or related matériel, provides military-related services, or holds assets that could be connected to designated persons or entities should have a compliance program. Even universities, charities, and law firms may inadvertently hold controlled assets if they receive donations, fees, or grants from a designated person.

Second, implement screening procedures against the ISIL (Da’esh) & Al‑Qaida Sanctions List maintained by the UN Committee. This list is updated regularly. Screening should cover customers, suppliers, contractors, counterparties, beneficial owners, intermediaries, and ultimate recipients. It should be done at onboarding and at regular intervals thereafter. Automated screening tools are available but human review is needed for ambiguous matches.

Third, if a match is found, immediately freeze any assets belonging to or derived from that designated person or entity. Do not permit any use or dealing with those assets, including transfers, withdrawals, or changes to account details. Notify the relevant authorities, including the Department of Foreign Affairs and Trade and potentially the AFP. Seek legal advice before making any notification that could tip off the designated party.

Fourth, assess whether any proposed transaction involving a designated person or a controlled asset falls within a permitted category under the Charter of the United Nations (Dealings with Assets) Regulations 2008. If it is a basic expense dealing (such as food, rent, or legal fees), prepare an application for a permit under regulation 12. The application must specify the category of dealing. For basic expense dealings, the Minister must notify the UN Committee and may grant the permit after three working days, provided the Committee does not advise against it. For extraordinary expense dealings, the Minister must obtain the Committee’s approval. Permit applications should be supported by evidence of the need and the amount.

Fifth, ensure that any supply of arms or related matériel is subject to end-user controls. Obtain end-user certificates, conduct due diligence on the recipient and any intermediaries, and include contractual clauses prohibiting re-export to designated persons. Monitor the supply chain for any indications that goods are being diverted.

Sixth, train employees on the prohibitions. Staff in procurement, sales, finance, and legal roles should understand what constitutes a sanctioned supply, a sanctioned service, and a controlled asset. They should know how to recognise a red flag and whom to contact internally.

Seventh, document all compliance steps. Keep records of screening results, permit applications and approvals, freezing actions, and training. The Regulations do not impose explicit record-keeping obligations, but such records are essential to demonstrate due diligence in the event of an investigation or prosecution.

Eighth, review the delegation arrangements under regulation 13. The Minister has delegated certain powers to the Secretary of the Department and to SES employees. Practitioners dealing with the Department on applications should confirm the delegate has authority to make the decision.

Finally, seek specialist legal advice. The interaction between sanctions laws, export controls, anti-money laundering rules, and criminal law is complex. The dynamic nature of the UN list and the potential for strict liability make formal compliance frameworks advisable for any entity with material exposure.