So, what can't you do with terrorists?
It's limited in scope, since these are individuals. You can't give them access to funds or “economic resources”, which is another way of saying assets that aren't monetary instruments.
HMT defines what actions are prohibited:
(a) in relation to funds—
(i) use, alter, move, allow access to or transfer,
(ii) deal with the funds in any other way that would result in any
change in volume, amount, location, ownership, possession, character or destination, or
(iii) make any other change that would enable use, including portfolio management;
(b) in relation to economic resources, exchange or use in exchange for funds, goods or services.
subject to any exceptions or licenses.
The Act differentiates from providing assets to a designated person, and providing assets that ultimately benefit a designated person. In the second case, the litmus test is whether or not the designated person is able to discharge a significant financial obligation that they have some responsibility for.
When the asset in question is non-monetary, HMT prohibits only the provision of assets that the designated person is likely to exchange for monetary instruments, goods or services.
The exceptions are simple: you can credit interest or other earnings (e.g. dividends) to a frozen account (i.e. an account that contains funds or monetary instruments belonging to or benefitting the designated person). Also allowed is the crediting of the account with payments contracted/agreed to before the account was frozen (Mr. Watchlist is not sure why assets gained during the designation period cannot be credited if the account is frozen).
On the outgoing side, the Act specifies that social security payments can be made to non-designated person from funds not belonging to a designated person (see above distinction between ownership and benefit) “whether or not the payment is made in respect of a designated person.”
HMT can grant general or specific licenses. The license specifies what things are authorized by it, whom it is granted to, any conditions and the relevant time period, if any. They can, of course, modify or revoke the license at any time.
When the license is granted, changed or revoked, Treasury must given written notice of specific licenses to those person(s) it applies to, or provide appropriate publicity of general licenses.
As you can imagine, providing materially false information or misleading, inaccurate or fraudulent documents is illegal (in British English – “person commits an offence”). Similarly, if you don't limit yourself to any conditions or timeframe of a license, that's illegal, too.
Lastly, any activities that that circumvent or facilitate circumvention of the prohibitions is illegal. The Act specifically notes that the offender “intentionally participates in activities knowing that the object of effect of them is (whether directly or indirectly)” getting around the sanctions – a bit of wiggle room on both ends.
Link:
UK Social Security overview (from US Social Security Administration)