Exemptions allow acts otherwise prohibited by financial sanctions under specific circumstances that are generally set out in the financial sanctions legislation. Such exemptions apply automatically where the specified criteria are met and, unlike licenses, do not require an application to the competent authority of the relevant EU Member State.
Licenses are written authorizations by the competent authority of the relevant EU Member State permitting acts that are otherwise prohibited by financial sanctions. The competent authority—designated by each Member State—may grant such licenses where the applicable legislation provides grounds enabling it to do so and those grounds are met.
The EU regulations that implement UN and EU sanctions commonly contain the following grounds for obtaining licenses:
- basic needs—expenses necessary to support the existence of the designated person or their family (not to a standard enjoyed before being designated);
- legal fees and disbursements—must be reasonable and involve genuine legal advice or litigation;
- fees or charges for holding or maintaining frozen accounts or economic resources;
- payment of court judgments or arbitral decisions against the designated person or entity—must have been given before the date of designation and cannot be for the benefit of another designated person;
- satisfaction of contractual obligations—obligation must have been incurred prior to the date of designation and cannot make funds available to the designated person; and
- extraordinary expenses—cannot be recurring or easily anticipated, and cannot be used to avoid limitations to other grounds for obtaining a license.
With respect to importing or exporting goods restricted by sanctions, a license may be required from the competent authority of the relevant Member State.