Al-Qaida (Asset-Freezing) Regulations 2011
(13 years ago)
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Lord Sassoon
That the Grand Committee do report to the House that it has considered the Al-Qaida (Asset-Freezing) Regulations 2011.
Relevant document: 29th Report from the Joint Committee on Statutory Instruments.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, asset freezing is a vital and necessary global response to the threat from al-Qaeda. It is a tool to disrupt the flow of funds to al-Qaeda, helping to prevent them executing attacks and supporting their networks.
As a permanent member of the UN Security Council, we are committed to meeting our obligations under the UN charter, and we support the UN’s al-Qaeda asset-freezing regime. The regulations before the Committee today will ensure that we continue to meet our international obligations and prevent funds from reaching persons associated with al-Qaeda. In particular, they reflect UN Security Council Resolutions 1988 and 1999, which were agreed in June this year.
I will provide further detail on these changes. First, it is important to clarify that the regulations we are debating today do not apply to the terrorist asset-freezing regime mandated by Resolution 1373. That resolution is implemented in the UK under the Terrorist Asset-Freezing etc. Act 2010 passed last December. The regulations under debate apply only to the UN al-Qaeda asset-freezing regime established under UN Security Council Resolution 1267 and amended by Resolution 1333 and subsequent resolutions. That regime, established in 1999, initially applied an asset freeze only against the Taliban. It was subsequently extended by successor resolutions to apply an asset freeze against Osama bin Laden and individuals associated with al-Qaeda or the Taliban.
The changes we are debating today stem from the latest periodic renewal of the mandate of the United Nations Security Council in June 2011 when it unanimously adopted Resolutions 1988 and 1989. These resolutions split the Resolution 1267 al-Qaeda and Taliban asset-freezing regime into two separate regimes, one in relation to Afghanistan and one in relation to al-Qaeda.
Resolution 1989 provides for the al-Qaeda regime, with which we are concerned today. It maintains sanctions on those individuals and entities associated with al-Qaeda who were designated under the Resolution 1267 asset-freezing regime and strengthens existing due process procedures. The improvements include the introduction of triggered sunset clauses. They will make it easier and more transparent to delist individuals who no longer meet the listing criteria and who are no longer considered to be associated with al-Qaeda. Delisting recommendations by the ombudsperson or requests by the state that made the original designation request will trigger the sunset clause. At that point the person will be delisted after 60 days unless the sanctions committee decides unanimously to maintain them on the list. Resolution 1989 also strengthens the role of the ombudsperson. The resolution recommends increased capacity for the ombudsperson’s office and greater provision by member states of information for case reviews, and encourages individuals to submit delisting petitions to the ombudsperson. The Government believe that these changes represent a very good and very necessary outcome that the UK, together with our Security Council partners, worked extremely hard to achieve.
As your Lordships are aware, the UN al-Qaeda asset-freezing regime is global in its application. All listing and delisting decisions are made by a committee of the UN Security Council, and once individuals or entities are listed, their assets must be frozen by all states as a matter of international law. Throughout the European Union, the al-Qaeda asset-freezing regime is implemented by Council Regulation (EC) No 881/2002, as subsequently amended, and is directly applicable in national law.
To implement and enforce the al-Qaeda asset-freezing regime fully in the UK, domestic regulations are needed to put in place penalties, and licensing and enforcement mechanisms. The key features of the regulations are that they define: the designated persons covered under the al-Qaeda regime; the prohibitions which apply in respect of designated persons; and the criminal penalties which apply to UK persons who breach the prohibitions. There are also provisions for the granting of licences exempting activities from the prohibitions, for the gathering and sharing of information and for allowing closed material to be employed in proceedings that challenge decisions made under the regulations.
These regulations revoke and replace the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010, but I can assure your Lordships that there is no gap in the powers or penalties required to enforce the al-Qaeda asset-freezing regime in the UK. The 2010 regulations continue to have effect until the 2011 regulations come into force.
I know your Lordships understand the importance of the UK meeting its obligations to enforce the UN al-Qaeda asset-freezing regime. The regulations before the Committee are vital to meeting that obligation. Asset freezing is a critical element of the global response to the threat from al-Qaeda, and the UK fully supports the UN’s al-Qaeda asset-freezing regime. At the same time, UN Security Council Resolution 1989 strengthens existing due process procedures, which the UK has been arguing for at the Security Council.
In the Government’s view, the regulations before the Committee today represent an effective, fair and proportionate way of giving full effect to the EC regulation that meets the obligations of the Security Council resolution within the UK. I therefore commend these regulations to the Committee.
Baroness Kramer
My Lords, I have no objection to the regulations and I will take only a few moments of the Committee's time to seek clarification on a couple of points. From the perspective of my colleagues, it is clearly necessary to tackle not only terror but the funding of terror. This legislation is part of that overall approach. We are pleased to see the strengthening of due process and the sunset clauses that are part of the regulations.
I will ask a couple of very small questions. Will the Minister clarify that no practical implications of any significance will follow from separating the al-Qaeda regulations from those applying to the Taliban? Is this just a measure to fall into line with EU and UN resolutions? In moving from the umbrella of one set of regulations to the umbrella of another, will the process be seamless? Is there any possibility of a slip between the two? Obviously, we would not wish to see such an opportunity exploited.
My second question is perhaps of more interest to the wider community. Will the Minister give us some reassurance that these regulations will not put an additional burden on ordinary people? He will be very aware that the combination of anti-money laundering and anti-terror legislation has put a significant burden of cost on both individuals and businesses, not least when it comes to the long delays in fund transfers that the banks explain by saying that it is necessary for them to go through security procedures and checks, during which time the banks seem to hold on to the money and benefit from the interest rather than either party to the transaction. One must live with measures such as that, but we would all find it unfortunate to see any increase in the burden. I would appreciate reassurance on those points, but we support the regulations.
Lord Myners
My Lords, like the noble Baroness, Lady Kramer, I have no issues of principle with this legislation. However, I would like the Minister's help on a couple of issues. The Explanatory Memorandum states that policy in the area of sanctions needs to be effective, proportionate and dissuasive. I would like the Minister to address Regulation 14(1)(a) and (b) and say whether the levels at which the penalties are set can truly be described as “dissuasive”. Given the consequences of terrorist action, the proposed penalties appear to be quite modest. I would also like the Minister to explain the level 5 standard referred to in Regulation 14(2).
I would also like to know—this is a very important issue—why a proposed breach of Regulation 8(3) by a financial institution does not incur a criminal penalty. Why are financial institutions exempted from criminal penalties while individuals are subject to them?
I turn to Regulation 9(4)(b). Can the Minister explain the criteria employed by HMT in determining an appropriate publicity strategy, and how the licences will be publicised under the regulations—specifically, where and when?
Under Regulation 20(1), how many licences are currently issued under Regulation 7 of the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010, and how many have been issued under the 2010 regulations since they were passed by Parliament?
Finally, it would be helpful if the Minister would confirm that legal aid will be made available to individuals who are subject to freezing orders. The consequences of these freezing orders are draconian and chilling. It is incumbent upon us to ensure that anyone threatened with the consequences of having their assets frozen has access to appropriate legal advice. Will the Minister confirm that that will continue to qualify for legal aid?
Lord Davidson of Glen Clova
My Lords, first, I thank the Minister for introducing these regulations. Perhaps I may say immediately that this side of course supports the principle underlying these regulations, particularly as they substantially update, replicate and, to a degree, improve the regulations that were introduced by the previous Government on the same topic. Their purpose to keep in place protections for the UK against financing terrorist activity is wholly supportive. We also recognise the necessity of these regulations to maintain the UK’s criminal penalties for breaches of the underlying European Council regulation.
In discussions regarding the predecessor 2010 regulations, a tangential concern was expressed about the UN processes in designating persons on the target list. While all the time recognising that the Council regulation on which these regulations are based does not merely require a replication of the UN target list, it nevertheless takes considerable account of it. I fully appreciate what the Minister has indicated by way of improved protections at the EU side but it would be interesting to hear from the Minister, following the discussions at UN level, what particular developments have taken place in enabling challenges to be made by an individual to their being placed on the UN target list.
I endorse the observations made by my noble friend Lord Myners in relation to the areas in which he seeks clarification. In conclusion, the Opposition support the balance that these regulations strike between security and liberty.
Lord Sassoon
I am afraid that I did not quite catch the noble and learned Lord’s question and I want to try to give him the service of an answer. His noble friend asked me lots of questions but since the noble and learned Lord asked only one, I want to make sure that I got it right. Perhaps he would not mind clarifying the question.
Lord Davidson of Glen Clova
It will be my pleasure. I was seeking clarification or explication of the processes which the UN employs for putting individuals on the target list and the way in which discussions by the UK Government at the UN level have improved the potential for challenge by individuals finding themselves on the UN target list. One fully appreciates that the UN target list is not simply replicated by the EU target list. It applies its own judgment in relation to these. But, given that the EU takes considerable account of what the UN does by way of placing individuals on the target list, it would be helpful to understand how a challenge might be made by an individual at the UN level. I appreciate that this is entirely tangential but it would be interesting to know as this matter has caused concern in the past.
Lord Sassoon
My Lords, I thank noble Lords very much for this focused short debate and for a number of questions which are absolutely to the point. Even though the noble and learned Lord says that his question is tangential, I do not think that it is at all. It goes to the heart of the UK’s concerns to make sure that when the UN did its review of the regime leading up to June 2011 we made sure that there were additional proper protections. I might come back to that in a minute.
I am grateful that all noble Lords recognise the importance of these regulations but it is equally clear that we should get the details right.
In answer to my noble friend Lady Kramer’s questions, I can certainly reassure her that absolutely nothing will slip through the gaps; there is nothing separating the old and the new regimes. We are putting in place something that ensures that there is a seamless continuation from the old combined resolution regime into the two separate regimes.
On whether there will be any additional burdens on ordinary people, I shall expand that to ordinary people and small businesses because it is important that small businesses do not have any additional burdens placed on them. Consistent with my previous answer, there should be no substantially changed burdens from the previous regimes. In fact, there has been some rationalisation of the drafting of the regulations in the process of coming forward with this new regulation. We continue to have a dialogue with representatives of small firms. I can reassure my noble friend on that. She also asked about the burden on people. It mainly will ensure that private individuals, who are in any way conceivably connected to this regime, have legitimate payments flowing to them. I believe that the regime will continue to ensure that that is the case.
I wondered why the noble Lord, Lord Myners, was writing away so furiously and I now understand that he was setting an exam paper for me.
Lord Sassoon
I am very grateful that, notwithstanding the earlier start time of this business, my Box team was able to get here in good time. The first questions were important ones about the penalties in the regime. I believe that prison sentences of up to two years are dissuasive. We are picking up the penalties from the previous regime and they have, therefore, been considered in the past. On the specific question about level 5, the answer is that it is a £5,000 penalty.
The noble Lord, Lord Myners, then asked about Regulation 8(3) and why there is no criminal penalty on financial institutions. Regulation 8(3) is that which requires financial institutions to tell the Treasury when they credit funds to a frozen account. Indeed, there is no criminal penalty attached to failure to comply with that requirement. Any breaches of that requirement are, I would suggest, properly dealt with as part of the FSA’s supervision of financial institutions for compliance with sanctions legislation, which is required under the Financial Services and Markets Act 2000, which provides a range of powers. Although the noble Lord is right to ask me the question, consideration has been taken of the link through to sanctions that are available under the FISMA regime.
The noble Lord then asked about publicity. If I understood his question correctly, general licences are all advertised on the Treasury website and so they are available to anyone who is interested. Those parties who are in any way involved in this or the other asset-freezing regimes are well aware, and have been for a number of years, of the channels through which the Treasury publicises licences and all other aspects of the regime. That continues, and the feedback that we receive suggests that the publicity mechanisms are effective.
There was a question about the number of licences that have been issued. The total number of licences that have been issued this year under both the Terrorist Asset-Freezing etc. Act and the al-Qaeda regime is 41. I do not have the exact split between the two regimes to hand but something of the order of a dozen were in respect of al-Qaeda designated individuals. If the noble Lord would like the exact number I would be happy to give it to him—he is shaking his head—but it is about a dozen out of 40.
Lastly, if an individual meets the normal legal aid tests then legal aid is available. These regulations have no particular impact on the availability of legal aid. It is perhaps also worth noting that legal aid is available from the European Court for challenges in respect of EU listings. Again, I believe there is no gap in the regulations. I hope that that deals with the questions asked by the noble Lord, Lord Myners.
The noble and learned Lord, Lord Davidson of Glen Clova, asked an important question about people getting on the list—and, I would suggest, being able to get themselves off it. Of course, in these and similar situations, getting people on the list will be a matter of some urgency. It is important that there is appropriate evidence and the UK is very concerned to see appropriate evidence produced in all the asset-freezing regimes, whether at a UN, EU or domestic level. I see cases under these regimes when they come forward and I know how seriously that is taken.
The almost more important question is about the mechanisms for challenge and for getting people delisted if appropriate. What is significant about the new regime under Resolution 1989 is that we were able to get in place, as I described in my opening speech, a series of much better protections in terms of the review processes, the way that the ombudsman role is beefed up, and so on. I feel much happier that, just as in the legislation for our domestic regime last year we were able to put in additional and important protections, so in a different regime the UN has moved in that direction. It was something that the UK pushed hard for.
I hope that I have answered the questions that have been brought up. In conclusion, these regulations provide a framework to implement the Security Council regulation effectively and properly. It is critical to enabling the UK to play its part in both preventing terrorist financing and in meeting those international obligations. Therefore, I commend these regulations to the Committee.