Asset freezing can be quite chilling for banks

It is not unprecedented for the assets of a ruling family to be frozen by UK authorities while they are still in power. The ruling junta in Burma, Saddam Hussein and President Milosevic of Serbia have all endured (or continue to endure) that in the past.

What is interesting is the coordinated way in which the Treasury, BIS and FCO have been working on this order behind the scenes for a few days – directly liaising with Britain’s largest banks as well as the FSA, BBA and Bank of England. As soon as all Britons had been extracted out of Libya and the legal permission had been given by the UN, the asset freezing order took effect tonight.

While is it unclear exactly how much Libyan assets in the UK are worth, we can safely say it’s in the ‘hundreds of millions’. Some reports have said that Col Gaddafi’s son Saaif owns a plush house in Hampstead but most of the assets are probably of the paper variety.

The asset freezing order, which was signed into effect by George Osborne but still needs Parliamentary approval, also bans agents of the Gaddafi family touching the assets. So if for example a lawyer or a UK bank were to knowingly move (or try to move) shares or cash out of Britain, that could lead to criminal proceedings. Even to unwittingly move assets is also very risky as the court of public opinion may be far less amenable than the Crown Prosecution Service.

That’s why the UK banking community has undertaken to comb its own books to see what might constitute an asset belonging to the Gaddafi clan and slap a big Toxic sticker all over it.

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About BBC Joe Lynam

BBC Business Correspondent covering banks, economy, companies, credit, management, tech, IT, government, markets etc. This is my private Blog and and such doesn't necessarily represent the views of the BBC
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