Sanctions and Anti-Money Laundering Bill [HL]
Tuesday 21st November 2017
(7 years, 1 month ago)
Lords ChamberSanctions and Anti-Money Laundering Act 2018 View all Sanctions and Anti-Money Laundering Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 69-I(a) Amendments for Committee, supplementary to the marshalled list (PDF, 69KB) - (20 Nov 2017)
Lord Judge
Lord Judge (CB)
My Lords, the noble Lord, Lord Pannick, and I are bringing forward Amendments 1 and 23 in relation to Clauses 1 and 7. I will get this out of the way. We are both members of the Constitution Committee. We do not speak for the committee, but we do highlight its recent report on the Bill and we shall rely heavily on it; perhaps we should invite the Committee to spend some time studying it closely.
The second preliminary matter is this. I acknowledge the letter sent by the Minister to the noble Lord, Lord Pannick, which was copied to me. I acknowledge his kind invitation to see if we could organise a meeting. Unfortunately, for personal family reasons I could not manage those dates, but I will begin by thanking him for his customary courtesy.
At Second Reading I described the Bill as a “bonanza of regulations”. In truth, on reading it again I can still find nothing of true substance in it except regulation-making powers. Clause 1 deals with regulations—and then on and on we go. Let me throw in, just casually, Clauses 14, 35 and 44. Good old Henry VIII comes stumbling in crush all the regulations that have been made and to make any others he wishes. We really should rechristen this Bill the “Sanctions and Anti-Money Laundering (Regulation Bulk Buy) Bill”.
Everyone who spoke in the Second Reading debate acknowledged that the asserted objectives were desirable. Compliance with our treaty obligations with the United Nations and other countries is admirable. Arrangements currently exist in this field which at the moment are governed on the basis of EU law; they are part of our law but they have come through to us on the basis of the 1972 Act. No one has yet said that those powers are inadequate, yet the Bill is not simply bringing what I shall describe as EU law into domestic law and preserving it—rather, it goes much further. It vests more far-reaching powers in the Minister to rule by regulation on these issues and, beyond fulfilling our treaty obligations, it throws in powers to deal with terrorism. Terrorism is criminal activity that is already subject to vast tranches of primary legislation, so we are producing a Bill that is bung-full of regulations and nothing else in order to enable our international obligations to be fulfilled—but more so—while at the same time extending these powers to criminal activity that is already governed by statute.
I recognise that legislation by regulation is unavoidable, and that some regulation is inevitable and justifiable. However, in the context I have endeavoured to paint—I could have gone on for hours, but I will not—I remind your Lordships that the Constitution Committee said on this issue:
“Given that the purpose of the Bill is to address the need for domestic powers to impose, amend and revoke sanctions after Brexit, it is important to ensure that there are sufficient safeguards and there is adequate parliamentary scrutiny to make the delegated powers constitutionally acceptable”.
While I have page 4 open, I will draw attention to some of the phrases in different paragraphs, such as “constitutionally inappropriate for Ministers”. The committee recommends,
“this important limitation on ministers’ powers”.
It states:
“Clause 11 raises constitutional concerns”.
Then, on page 5, the committee says that it is,
“concerned about the breadth of the power conferred”,
and,
“deeply concerned that the power in … may be used”.
This is not an emotional reaction by the Constitution Committee; it is simply an examination of the reality of the legislation and a short summary of where it leads us.
In that context, I will make a short point in relation to the proposed amendment: throughout the Bill, should we not proceed on the basis that the greater the apparent imperative to proceed by unconstrained regulation, the greater the corresponding imperative to provide for the fullest possible parliamentary scrutiny, always achieved by careful primary legislation?
Clauses 1 and 7 go to the heart of the Bill. In the remarkable context that I endeavoured to summarise a few minutes ago, I hope to identify the purpose of the amendment. It is utterly simple: I hope it will make these two clauses more attractive. The relevant word in these clauses is “appropriate”. I think we can assume that no Minister would try to make regulations that he or she did not think were appropriate; I think we can also agree that any regulations made consequent on the Act should be an exercise in what is appropriate. However, in this context in the Bill, “appropriate” is far too vague, easily dependent on ministerial discretion and subjective.
If we are to allow powers such as these to be exercised by regulation, the exercise should always be both appropriate and necessary. If it is necessary, it will almost always be simultaneously appropriate; however, if it is only appropriate, it will not always be necessary. Hence the amendment: by strengthening the language of a single word, we will impose a greater responsibility on the Minister—not our present Minister but the Minister to come and Ministers to follow for years yet—and he or she will be less likely to make an ill-judged, mistaken decision about the exercise of these extravagant powers, when simultaneously the opportunity to correct errors is significantly diminished. I beg to move.
Lord Pannick (CB)
My Lords, I want to add some footnotes to the powerful speech of the noble and learned Lord, Lord Judge. As your Lordships know, this is the first substantive Bill to be brought forward in this House to address the consequences of Brexit. As the Minister explained at Second Reading, domestic powers are needed to impose sanctions to replace the powers currently enjoyed under EU law. In relation to these amendments, it is important to say—as is repeatedly pointed out—that there is a disturbing irony when a Brexit that is said to be justified by a desire to restore to Parliament powers currently enjoyed in Brussels results in Ministers seeking to confer extensive powers on themselves.
That is a topic to which the House will no doubt return when the European Union (Withdrawal) Bill reaches us, but for today, these amendments seek to identify the unjustifiable breadth of the powers that Ministers seek to confer on themselves in the context of the Bill. I pose this question to the Minister: why should the Committee be satisfied that Ministers should take powers that are unnecessary? That is the question. It is not sufficient that the powers are appropriate; they need to be necessary, because a Minister in this context should not have a power that is unnecessary.
The noble and learned Lord mentioned the report of the Constitution Committee. I also draw attention to the report on the Bill published last Friday by the Delegated Powers and Regulatory Reform Committee. I draw the Committee’s attention to paragraph 18, which I will quote because it is so powerful. It says:
“As drafted, clause 1(1) allows the Minister to make sanctions regulations where the Minister considers that doing so is ‘appropriate’ to achieve one of the purposes listed in that clause. In the light of the width and significance of the powers, we take the view that the Minister should only have power to make sanctions regulations if doing so is considered ‘necessary’ to achieve the purpose for which they are made”.
I hope the Minister will reflect on that advice from that committee, as well as that of the Constitution Committee.
I expect the Minister will respond by seeking to placate the Committee—he is very good at that sort of thing—with reassurances about the Government’s benign intentions in this context. If I may get my retaliation in first, the answer to that contention is given again by the Delegated Powers and Regulatory Reform Committee. It is in its report published on 28 September this year on the European Union (Withdrawal) Bill, but it is a general point. At paragraph 10, the report says that the committee judges,
“powers on how they might be used and not just on how the Government indicate that they intend to use them”.
That must be right. That is the approach we should adopt in this Committee.
The noble Lord is, if I may say so, the acceptable face of ministerialism, but who knows the identity of the Minister who will perform this role in a year’s time or five years’ time? I say respectfully to those on the Government Benches that they ought to bear in mind that it may not be a Minister from their party performing this role in a year or five years’ time. It is important to adopt a non-partisan approach to this issue. It is not good enough that the Minister has benign intentions, as I know he has; we have to look at the extent of the powers being given. I strongly support the noble and learned Lord’s amendments.
Baroness Northover (LD)
My Lords, I too will speak to Amendments 1, 23 and 1A, which is in my name and that of my noble friend Lady Sheehan. As the Constitution Committee and the Delegated Powers Committee have made clear, and as we have just heard, the Bill, though described by the Minister at Second Reading as simply “technical”, proposes to give wide powers to Ministers—I see the Minister’s rueful smile; I suspect he regrets using that phrase—in the event that the UK decides to leave the EU and sanctions and money laundering arrangements have to be set in place. I was struck as he used that expression that, when he heard from the noble and learned Lords, Lord Judge and Hope, and the noble Lord, Lord Pannick, this might sum up how he now feels.
The case for Amendment 1 has already been cogently made by the noble and learned Lords and the noble Lord. I also want to quote the Delegated Powers Committee, because it is worth the Minister being aware that there is, I am sure, cross-party support for its very sombre conclusions about this first Brexit Bill we are considering in the Lords. The committee states that,
“clause 1(1) allows the Minister to make sanctions regulations where the Minister considers that doing so is ‘appropriate’ to achieve one of the purposes listed in that clause … we take the view that the Minister should only have power to make sanctions regulations if doing so is considered ‘necessary’ to achieve the purpose for which they are made”.
That theme runs right the way through the reports of both the Delegated Powers Committee and the Constitution Committee. I am sure the Minister will take note of this advice and the widespread agreement with those committees across the House. I hope he will not only accept the amendment but apply the same logic through the rest of the Bill.
The noble and learned Lord, Lord Judge, made it clear that the Constitution Committee and the Delegated Powers Committee are concerned about parliamentary involvement right the way through the Bill. The Delegated Powers Committee has also noted various other areas about which it is concerned, and that is the subject of our Amendment 1A. It states:
“In our view, an appropriate Minister should only be allowed to make sanctions regulations for a purpose other than compliance with an international obligation, where there are compelling reasons for the Minister’s belief that carrying out the purpose will achieve one of the objectives listed in clause 1(2)”.
One would almost think that one did not have to state this, but it is very clear from this legislation that we do.
The committees request that we fully scrutinise this Bill and insist on full parliamentary involvement. In other areas, the Delegated Powers Committee seeks the affirmative procedure; in another, the Constitution Committee states that we should consider,
“whether the consent of the devolved legislatures should be required when this power is used to amend or repeal legislation enacted by them”.
All these issues need to be considered.
In sum, the Constitution Committee states that,
“given that the purpose of the Bill is to address the need for domestic powers to impose, amend and revoke sanctions after Brexit”—
assuming Brexit happens—
“it is important to ensure that there are sufficient safeguards and there is adequate parliamentary scrutiny to make the delegated powers constitutionally acceptable”.
That point has been made by the noble and learned Lord and the noble Lord from the Cross Benches. I am sure it will be repeated throughout the Committee stage. That is what we need to hold on to as we see this Bill through.
Lord Lennie (Lab)
My Lords, I say for the record and from the outset, and for the avoidance of any doubt in the mind of the Minister, that we on this side of the House recognise the importance of such a Bill coming into being. We are leaving the EU. The Government’s position is that EU jurisprudence will no longer apply and therefore the Bill becomes an imperative. That is not the same thing as saying that everything in the Bill is rosy and we support it all, and that is why we are here. We strongly support the case made by the noble and learned Lord, Lord Judge, the noble Lord, Lord Pannick, and the noble Baroness, Lady Northover.
This amendment is the starting point of the Bill: it concerns the power for a Minister to act. Should it be when the Minister considers it appropriate or should it be when it is provably necessary to do so? One is an opinion, the other an evidential absolute. Does it weaken the Government’s position? No, it makes it more robust to have “necessary” replacing “appropriate”. Will it inhibit the Government? No, it will make for greater certainty as other clauses in the Bill are debated. Does it strengthen the Bill? We believe that it does: it will become more bullet-proof and less able to be challenged.
On Friday, as the noble Lord, Lord Pannick, said, the Delegated Powers Committee considered this and concluded:
“In the light of the width and significance of the powers, we take the view that the Minister should only have power to make sanctions regulations if doing so is considered ‘necessary’ to achieve the purpose”.
That is where this amendment ends. Does the Minister accept this? Will he reflect on this and come back on this point?
Lord Faulks (Con)
My Lords, the noble Lord, Lord Lennie, was very quick off the mark: the noble Lord, Lord McNally, and I wanted to make brief interventions. It seems that the case made for these amendments is a pretty strong one, but of course I will listen with great interest to what the Minister has to say. It might be said, I suppose, that the amendment put forward by the noble Baroness, Lady Northover, is more or less understood by the other two amendments. I simply say to the Minister that it might be helpful if he could give some example, prospectively, of where a Minister might think this action “appropriate” but not “necessary”. That would help to clarify the Committee’s thinking.
Lord McNally (LD)
My Lords, I agree that the noble Lord, Lord Lennie, was a bit quick off the mark. Just have a glance behind you occasionally—you might find that somebody wants to come in.
I was rather diffident about putting my name to such illustriously signed amendments. My noble friend Lady Northover spoke about the noble Lord, Lord Pannick, and the noble and learned Lord, Lord Judge. I am not sure that I would trust the country solicitors “Judge and Pannick” or “Pannick and Judge”; I am not sure whether it is best to panic after you have judged or judge before you panic. Nevertheless, any sensible Minister who sees those names on an amendment thinks very hard about it. Of course, as the noble Lord, Lord Lennie, said, this will be a very necessary Bill if the Government succeed in their Brexit aims, but that does not mean that every Bill that comes before us has to be given a nod through because of the pressures of the Government’s own making. There is a real danger.
I can almost imagine the discussions in the Cabinet Office: “How on earth do we get this shedload of legislation through?”. Then somebody says, “The only way you can do it, Ministers, is by lots of Henry VIII clauses and lots of powers by secondary legislation”. “Okay, we will do it that way.” The irony of that, as I have said before from these Benches, is that an exercise that was intended to return sovereignty to this Parliament is becoming an exercise in returning power on an unprecedented scale to the Executive. I fear that, unless the Government come up with some new and ingenious proposals for dealing with this flood of legislation short of these broad powers, they will run into trouble time and again.
Of course, we want to get the bad guys, and there is always a temptation, especially if you are the Minister, to go for the Eliot Ness solution—how do we kick down the door and get at the bad guys?—but we cannot ignore a report such as that referred to by the noble and learned Lord, Lord Judge. Go through every page of it. There is reference to the Henry VIII powers, but then:
“We do not consider it appropriate for ministers to have powers … We are concerned about the breadth of the power … We are deeply concerned that the power in clause 16”,
et cetera. It goes on right through the report. This is a really serious warning to Ministers and to Parliament from a very well-respected committee.
Of course, Whitehall does not have a pure record on this. Even in the days when we were simply transferring European law into our own law, there was a well-established practice in Whitehall to do a bit of gold-plating on the way and dig in a few regulations that people had wanted to get anyway. We have to resist this gold-plating. As I say, when someone such as the noble Lord, Lord Pannick, talks about “unjustifiable breadth”, and someone such as the noble and learned Lord, Lord Judge, talks about “a bonanza of regulations” and “extravagant powers”, it is not only the Committee that would be wise to take note; the Minister should as well.
Lord Brown of Eaton-under-Heywood (CB)
My Lords, I had been waiting for the noble Lord, Lord McNally, to speak, so have come in rather later than perhaps I should have. The arguments advanced by the noble Lord, Lord Pannick, and the noble and learned Lord, Lord Judge, are compelling. I would throw one other word into the mix: “expedience”. Under the Bill as drafted, it might be thought appropriate because it is expedient to make a provision, but that is not good enough here. These powers are so draconian that nothing short of necessity alone could justify their exercise. Therefore, I echo what the noble Lord, Lord Faulks, said: unless the Minister can give a convincing illustration of a regulation which is justifiably expedient but short of necessity, we cannot possibly allow the Bill to go forward in its present form.
Baroness Sheehan (LD)
My Lords, my name is attached to Amendment 1A. I wish to reinforce what has been said by my noble friend Lady Northover. The regulations that the Minister will have powers to impose through Clause 1 will have far-reaching consequences on “designated persons”, “prescribed persons” and “involved persons”, as affected individuals or entities are variously referred to throughout the Bill. Therefore, it is only right that the power to create a regulation should entail a more onerous thought process than consideration by the “appropriate Minister”. I agree that “compelling reasons” would be a more fitting foundation for making such momentous decisions.
The Minister of State, Foreign and Commonwealth Office (Lord Ahmad of Wimbledon) (Con)
My Lords, first, I thank all noble Lords who have spoken in the debate. A small point was made about what I said in my opening remarks at Second Reading about the Bill being technical. Maybe I should defend that by saying that every Bill is technical in some way and perhaps that was what I was alluding to. But I thank the noble Lord, Lord McNally, for whom I have great affection, for highlighting that point, and we live and learn through our experiences at the Dispatch Box and in the House.
As I said at Second Reading, this is a Bill that we need to get right—a point that was acknowledged by all noble Lords who have spoken. I stated that right from the outset, as I do again today, at the start of Committee. That is why I will put on record my immense thanks to noble Lords from all sides of the House who have engaged very constructively on this important Bill. I assure noble Lords that that will continue to be the case as the Bill progresses through your Lordships’ House. I thank all noble Lords—in particular the noble Lord, Lord Lennie—for recognising why we require this legislation.
After we leave the European Union we will need the Bill to ensure that we can continue to impose, amend and lift sanctions, and change our anti-money laundering framework. As noble Lords know, sanctions form part of the range of foreign policy tools that we can use in response to threats such as terrorism to the UK and UK interests. The Government fully recognise that sanctions are not to be used lightly—I assure noble Lords of that fact—and impose significant restrictions on individuals and entities. They should be imposed only after careful consideration of the political context, the desired impact and, of course, the potential risks. The Government also believe strongly that sanctions are a tool for changing unacceptable or threatening behaviour. They should not be used punitively as a substitute for criminal justice measures. A good recent example of the value of sanctions is the way that they encouraged Iran to accept constraints on its nuclear programme.
Baroness Kramer (LD)
Perhaps I may ask the Minister a question to address a lack of clarity. A moment ago, he basically said that one of the checks would be that either or both Houses of Parliament could vote against the SI brought forward by the affirmative procedure. The last time I was in this House and we on these Benches sought to do so with an SI, the consequence was a review on removing the powers of the House of Lords to act under such circumstances. Indeed, I have frequently heard language suggesting that to vote against an SI is a complete overreach of powers. Is this a change in the Government’s position? Is there any way in which this could be enshrined? It is rather fundamental to the discussions we will have not just today but on future occasions.
Lord Ahmad of Wimbledon
As the noble Baroness will know, I have stated the position as it is. Of course it is within the powers of both Houses to vote against—that is the whole point of having statutory instruments that are presented to both Houses. This is not just about the House of Lords; I mentioned the House of Commons as well.
Baroness Kramer
Can I just confirm that the Government’s response to any such move would be exactly as we saw before? That is an important piece of information for this House to know. I believe that that is what the Minister has just confirmed.
Lord Ahmad of Wimbledon
I have stated that the position is as it is now. I know the noble Baroness is seeking to develop arguments that we have had on a previous occasion, but what I have stated is the position as it exists. The noble Baroness talked about it being enshrined in law. Currently, that is how affirmative instruments and statutory instruments work. I am sure she is fully cognisant of that fact.
The noble Lord, Lord Lennie, said that the amendment would not inhibit the Government in any way. But as I was saying—to give further explanation and clarity, if I may—changing “appropriate” to “necessary” would effectively force the Government to use sanctions only as a last resort. Let me assure noble Lords that by saying that I do not mean that sanctions are never our first option. It is important that the Government of the day have some flexibility in deciding when and how sanctions should be deployed. We would not want to find ourselves in a situation where we could not use sanctions in the early stages of a crisis and instead had to allow it to escalate until the necessity of sanctions could be demonstrated.
Moreover, sanctions work best when agreed multilaterally. To be required to demonstrate that other options have been exhausted and sanctions are therefore necessary would leave the UK more constrained than our allies and international partners in our ability to agree and deploy sanctions. It would be a high bar to meet, especially in cases where we may wish to impose sanctions as part of a multilateral agreement with allies in areas where there is no direct risk to UK citizens or direct impact on UK interests. Too high a bar could prevent the UK acting in these areas. This could not only reduce the ability of the UK to continue to play a central role in international affairs but reduce the effectiveness of the sanctions measures themselves. For example, financial sanctions against Russia—
Lord Pannick
I am puzzled by this point. The amendment is concerned, under Clause 1(1), with the circumstances in which regulations may be made, but it does not affect the broad discretion embodied in Clause 1(2), which defines purposes. Clause 1(2) states:
“A purpose is within this subsection if the appropriate Minister … considers”—
so it is a matter entirely for the Minister—
“that carrying out that purpose would”,
for example,
“further a foreign policy objective of the government of the United Kingdom”.
So, as I understand it, my noble and learned friend Lord Judge’s amendment would in no way inhibit the complete discretion of the Minister to decide matters of purpose and to decide what is or is not in the foreign policy objectives of the Government; for example, that sanctions should be imposed, in general terms. All the amendment does is to say that the Minister has to be satisfied that it is necessary to impose these regulations once the foreign policy objective has been determined—and it is to be determined by the Government. With great respect, I do not understand the point that the Minister is making.
Lord Ahmad of Wimbledon
The point I was making was about the implication in the current wording of “appropriate”. This is not an open invitation for a Minister to impose sanctions, and the appropriateness of imposing sanctions is qualified in the context in which they must be applied. That was why I referred to the specific section that I did.
I think I have made the point already that the concern would remain. Several noble Lords have referred to the Constitution Committee and the Delegated Powers Committee. We have received those reports as well, and I assure noble Lords that I am not dismissing them. We are reflecting very carefully on the representations made by both committees because it is important that we respond carefully and after detailed consideration of what is being put forward. As I said right at the start of my remarks, I will reflect very carefully and will very much bear in mind the voices and experience of those who have tabled these amendments. We certainly remain of the thinking that the current wording, with the balances and the qualifications in the context of the legislation as presented, means that this is not an open invitation for a Minister to apply a sanction. However, in the context of the two reports, I will of course look again at the basis on which perhaps we can look to qualify, and provide greater certainty in respect of, the language used.
Amendment 1A, tabled by the noble Baronesses, Lady Sheehan and Lady Northover, would require there to be a “compelling” reason why sanctions are appropriate for the purposes set out under subsection (2), which relates to non-UN sanctions. I agree with the sentiment behind this amendment and note that it reflects a specific recommendation of the Delegated Powers Committee. However, adding the requirement for a “compelling” reason might also give rise to some of the difficulties I have already highlighted in respect of the previous amendment.
As I said, we think that in matters of foreign affairs and security policy the Government should have discretion about when it is appropriate to act. This amendment would effectively remove some of that discretion. We also believe that it could restrict our ability to work with international partners to ensure that sanctions are effective. In some cases, sanctions may be more compelling for our international partners than for the UK, but it would undermine the effect of sanctions if we were not able to participate or agree to them being applied multilaterally. I am sure that all noble Lords will recognise that perspective. If the UK was unable to act, this could in turn undermine the UK’s relationships with our international partners.
Amendment 23 deals with a similar issue, but in relation to UN sanctions only. I think there is agreement on all sides of the Committee that it is appropriate that the UK can continue to comply with its international obligations, so I doubt there is much between us on this issue. We think “necessary” would in many cases be acceptable in that place in the Bill. However, we also think it is important that where the UN provides some flexibility about how to implement obligations, the Government should have the flexibility to decide how best to do so. The word “appropriate” provides that flexibility.
It should be noted that the power here is broadly consistent with the equivalent provision in Section 1 of the United Nations Act 1946, which enables Ministers to,
“make such provision as appears to”,
them,
“necessary or expedient for enabling”,
measures in UN Security Council resolutions “to be effectively applied”. It should also be noted that the word “appropriate” does not enable Ministers to do whatever they want. The noble and learned Lord, Lord Hope, referred to the Ahmed case, which I know he knows well. That demonstrated that the courts will take a robust approach to scrutinising the exercise of the Executive’s powers.
I have already alluded to the fact that we have received the reports of both the Constitution Committee and the Delegated Powers Committee. I put it on record that we will consider both committees’ recommendations very carefully. I have also listened carefully to the contributions during the course of this short debate, and I am sure we will explore the issues further as we scrutinise the Bill in Committee.
It says here, “I hope I have been able to convince noble Lords”, but, from looking around the Chamber, I think that would be a rather hopeful word to use at this juncture. Perhaps I have provided noble Lords with a degree of reassurance with some of the explanations that I have given about the context in which the sanctions would apply, but I respect and understand that there would be a need for continued parliamentary scrutiny and for ensuring, as I am sure all noble Lords appreciate, that the UK continues to comply with international law and maintains a leading role in international affairs after the UK’s exit from the EU.
As I said, we will continue to consider very carefully the recommendations of the two committees, and I am sure we will return to this issue in discussion with noble Lords. Again, there are important issues of discussion here. Both in the course of the Committee stage of the Bill and in the meetings that we are having beyond the Chamber, I am sure we will reach a means of moving forward constructively on this basis. The ultimate purpose and objectives of the sanctions regime are something that I know all noble Lords respect. Based on that, I hope the noble Lords will be minded at this juncture to withdraw the amendment.
Lord Thomas of Gresford (LD)
My Lords, I am pleased to hear the Minister confirm that this House has the power to vote down statutory instruments. Indeed, if the Government continued to pursue policy goals through secondary legislation, that procedure would become much more widely used than it has been in the past without the suggestion that the British constitution was being undermined.
The Minister has said that these powers have been taken in the pursuit of Foreign Office goals. A memorandum from the Foreign and Commonwealth Office, dated 19 October last, was sent to the Delegated Powers and Regulatory Reform Committee. Paragraph 52 says, under the heading “Justification for taking the powers”:
“The Government therefore considers it necessary and appropriate to provide framework powers that enable detailed sanctions regimes to be set out in secondary legislation”.
If the justification for taking the powers must be necessary and appropriate, why is the same test not to be applied to the exercise of those powers?
Lord Ahmad of Wimbledon
I thank the noble Lord for his late but important contribution. As I said to the noble Baroness, Lady Kramer, I was stating the position as is, regarding the context in which both Houses of Parliament can vote on statutory instruments. In the case of your Lordships’ House, it is clearly laid out in the Companion as well. Let us also put this into context: if a sanctions regime were being proposed and it were voted down in both Houses, the sanction itself would fall and would not apply. The context is not something that can be ignored. In the context of the second question, the noble Lord—
Baroness Kramer
May I ask for a clarification? The Minister just said the context could not be ignored. Is his conclusion that it is inappropriate for a statutory instrument related to sanctions ever to be voted down by either House? Is that the conclusion that we are to draw from his comment?
Lord Ahmad of Wimbledon
Perhaps I can read into what the noble Baroness seeks on this occasion. This is not an issue about both Houses or affirmative instruments. The position I have given is not the Government’s position; it is the position as it stands now. If she needs further elaboration, I respectfully refer her to the House of Lords Companion.
To return to the noble Lord’s final question, if I may, I will write on the specific issue that he raised for the purpose of clarity for all Members of your Lordships’ House.
Lord Thomas of Gresford
The noble Lord said that my intervention was late. This is Committee, and the advantage of Committee is that Members may reply to the Minister after he has made his contribution.
Lord Ahmad of Wimbledon
As ever, as I said, we live and learn. The noble Lord is of course right in this context: during Committee, any noble Lord can speak and intervene as appropriate.
Lord Judge
If I am allowed to speak, the reality is that neither House rejects subordinate legislation, even if it includes a provision which everybody thinks is lousy, because if you try to do that, the whole instrument falls, and there may be 77 regulations within it with which you agree. Our processes do not in reality admit of proper challenge to secondary legislation. But that is a battle for another occasion, perhaps when we come to Henry VIII.
I respectfully suggest to the Minister that the word “necessary” does not mean the same as “last resort”. If, when deciding whether to exercise these powers, he believed that he was acting in order to implement a treaty obligation or in accordance with a necessary stage in our foreign policy, that would be amply covered by the word “necessary”.
I was going to say that I will allow the Minister to reflect—that is very generous of me; the Minister is allowed as much time as he likes. What I meant was that when he has had time to reflect, I shall reflect on his reflections and return to the issue on Report. I beg leave to withdraw the amendment.
Baroness Northover
Baroness Northover
I shall speak also to Amendments 3 and 4 in my name and the other amendments in the group. Amendment 2 once again addresses the wide and poorly defined powers in the Bill. The amendment, which is also in the name of my noble friend Lady Sheehan, would delete Clause 1(2)(d). It is to seek clarification from the Minister how a purpose which includes to,
“further a foreign policy objective of the government of the United Kingdom”,
might be applied. This is something to which the noble Lord, Lord Pannick, and my noble friend Lord Thomas just referred. Remember that we need to read the Bill in the light of it being, as the noble and learned Lord, Lord Judge, said, a bulk buy of regulations.
For example, the Government of the United Kingdom have had a number of foreign policy objectives with which one would not want disagreement to result in sanctions. Thus, for example, might someone risk being sanctioned because they opposed the invasion of Iraq or objected to selling arms to some dubious regime? That might be ridiculed as of course not intended here, but we need to probe the unintended consequences, given the wide scope of the Bill. Given that we know that the Human Rights Act cannot be counted on for protection, as this Government have at times wished to repeal it, and that members of the party opposite have also made it clear that they do not wish to be bound by the European Convention on Human Rights, despite the UK playing a leading role in drafting it, what protection can the Minister offer?
In addressing Amendments 2 and 4 in my name, and that of my noble friend Lady Sheehan, I pay tribute to the work of Amnesty International in briefing us, and for its work around the world. This returns us to seeking to improve the Bill, as we normally do in this House—and the concern here is to include human rights breaches in the definition of purpose in this clause and ensure that the Government have the means to prevent the violation of sanctions regulations. I note that the noble Lord, Lord Collins, has further proposals in this regard. I make it clear that we also feel that they would strengthen the Bill—for example, the amendments that would ensure that sanctions were in compliance with international humanitarian and human rights law and would provide for a humanitarian impact assessment before sanctions were introduced so that their impact can be properly gauged. I am well aware, as a former DfID Minister, of the impact on NGOs working in Syria, for example, in the restrictions on them due to the sanctions regime that was in place.
I look forward to hearing what the Minister says, and I beg to move.
Baroness Sheehan
My Lords, I rise to speak to Amendment 3 which, as my noble friend Lady Northover said, adds to the list of purposes for making regulations under Clause 1 to include human rights breaches, as well as prevention of acts contravening the international law on armed conflict and prevention of internal repression in any country. That those purposes are not mentioned is a grave omission and cannot be encompassed in subsection (2)(d), which says that the purpose would,
“further a foreign policy objective of the government of the United Kingdom”.
To give our amendments the force that we as a civilised country intend, they must be spelled out in the Bill. That is the basic thrust of my argument as to why I hope that the Minister will give serious consideration to Amendment 3.
However, on a more technical note, can the Minister give consideration to the fact that there is an unexplained gap between this Bill and the Export Control Act 2002? That Act has a specific section called “Relevant Consequences”, which sets the conditions whereby the Government can act. Clause 1 of the Bill and the relevant consequences of the 2002 Act are aligned with the exception of human rights and international humanitarian law provisions, which are in the 2002 Act but do not feature in the Bill before us. That is a serious omission; trade sanctions and, specifically, arms embargos, are largely triggered because of the humanitarian concerns over the provision of weapons in these cases, and the very serious and grave violations of international humanitarian law that arise as a consequence. The amendments would give powers to the Government to impose sanctions on these grounds and ensure direct consistency on the two Acts when dealing with issues around trade and arms embargos.
Amendment 4, also in my name, would add the provision,
“prevent the violation of sanctions regulations made under this Act”.
That addition may seem unnecessary, but it would give consistency with the corresponding sanctions mechanisms agreed at UN and EU level and would require the Government to take action to prevent breaches of sanctions.
I have another passing point. On the front page of the House of Lords Library briefing to the Bill, a sentence reads:
“The Government agrees that there is a mutual interest in continued collaboration with European partners in this area, and has suggested that the UK and EU could cooperate on sanctions listings and align policy in future where appropriate”.
I have not spotted many government concessions in the Bill to demonstrate the importance of aligning sanctions regimes with those of international partners, so this small amendment would go a little way to meeting the Government’s own stated position of working collaboratively going forward, should Brexit take place.
Lord Faulks
My Lords, I regard this amendment with considerable interest and look forward to hearing what the Minister says about it. The noble Baroness, Lady Northover, said that one of the reasons for inserting the words,
“the prevention of acts breaching human rights”,
was because the Government might in due course consider repealing the Human Rights Act or even departing from the convention. The Minister may confirm that it has always been the Government’s policy to protect human rights through a huge number of treaty obligations, whatever might be the position vis-à-vis the European convention. I am a little concerned that these amendments appear to constrain foreign policy objectives, which necessarily have to vary from time to time according to the particular objective that is sought. For the most part, they will comprehend and include the matters included in the amendment but it would be unwise to constrain foreign policy through these sorts of amendments.
Lord Collins of Highbury (Lab)
I did not want to tempt myself to get up too soon. I appreciate what the noble Lord has just said but I was struck by what the noble and learned Lord, Lord Judge, said—namely, that when using these powers the Government should proceed only with the fullest scrutiny. The amendments in this group, particularly those in my name and that of my noble friend, are designed not to limit the Government’s powers but to ensure that we scrutinise the Government’s actions. We want clarity on our commitment to humanitarian law and that we are implementing the international treaties to which we are signed up.
I am sure that the Minister will again ask whether these amendments are necessary, as he did on the first group of amendments. It could be argued that they are not. However, I argue that it is important that we state our beliefs in fundamental values, particularly human rights, democracy, the rule of law and good governance. A number of our allies and friends do not comply with those principles and we should be seen to be doing so. That is why we have tabled these amendments. We do not seek to limit but rather to empower Parliament and others to be able properly to scrutinise the powers that are used and measure them against the principles set out.
Amendment 7 asserts that when these powers are used the appropriate Minister must set out how sanctions are consistent with the UK’s objectives. Again, this is to enable effective scrutiny. The problem with executive powers is that often Governments simply assert them; they do not allow for proper scrutiny to measure their actions against the principles we set out. I hope that the Minister will put up a cogent argument. If he simply says, as the noble Lord did, that these amendments might be restrictive and are not necessary, I ask him to look carefully at Amendment 7 and ask what mechanisms can help improve scrutiny of the exercise of these powers and how we ensure that we can scrutinise them.
We heard in the previous debate that everything is going to be hunky dory because the House of Commons and the House of Lords will have a vote on statutory instruments, but we know that is a case of take it or leave it. As the noble and learned Lord, Lord Judge, said, you can agree with 90% of something but how do you measure the other 10%? I want the reasoning to be set out more fully, not just in terms of having a vote on statutory instruments. I hope noble Lords will understand that we do not seek to include these words simply to make us feel better and that we are not doing so unnecessarily. We seek to include them to aid proper scrutiny of the powers exercised by the Executive.
Lord Judd (Lab)
Before my noble friend sits down, does he agree that one of the reasons that British standing in the world is diminishing is that there is the growing feeling that we use all the right words about human rights and the rule of law but are pretty slow to add muscle to ensure that something is done? I believe the time has come when our credibility rests on making sure that we not only make the right statements in principle but have the arrangements in place for proper scrutiny and ensuring that action is taken.
I pick up the liberal position. Speaking as a former defence Minister, overseas development Minister and Foreign Office Minister, I have in my more senior years come to the firm conclusion that sooner or later we have to change our ruling culture on the export of arms. Arms have become lethal, highly dangerous and destabilising. As you get older, you can become a bit more irresponsible in the best sense in terms of holding inconvenient beliefs. I believe that the only people to whom you should export arms are those with whom you are in a close, specified alliance—NATO, for example —or where there is an identifiable, specific reason for doing so to increase stability in a particular place. Anything else is a liability, given all the problems with end-use. I do not doubt the current Minister’s commitment to human rights but we need to be able to demonstrate that this is not just a case of wishful thinking but an issue about which we are serious.
Lord Collins of Highbury
I thank my noble friend for his intervention and wholeheartedly agree that actions speak louder than words. However, at this stage, we are discussing how we can ensure the effective scrutiny of these powers. What are we measuring them against? That is important. Earlier, noble Lords said that we could not just rely on the words used. We all admire the Minister’s good intentions but this issue concerns the future. I place on record that the next Labour Government will put human rights centre stage in all their actions. We will certainly take up my noble friend’s point but that is not what we debating. I do not want to make an election manifesto call just yet but I want the Minister to consider the mechanisms that can be included in the Bill to enable us properly to measure the use of executive power.
Lord Ahmad of Wimbledon
My Lords, in response to the noble Lord, Lord Collins, I was allowing for any noble Lords to speak, but of course we will continue to debate these issues. To pick up on the point made by the noble Lord, Lord Judd, to whom I listened carefully, it is fair to say that sometimes we can be critical within the Chamber, whoever is in power or in opposition. One thing I have seen in my short time as a Foreign Office Minister but also as a Minister for Human Rights, whether at the UN, in Geneva or travelling around the world—irrespective of which Government of whatever colour has led our great country—is that not only do we see respect for human rights as being at the heart and centre of what we do but many around the world respect the UK for it and hold it up as a beacon. I assure the Committee that the Government do not take their human rights responsibilities lightly. My noble friend Lord Faulks alluded to the fact that not just here but in other places, in different parts of legislation, we ensure adherence to that. In this regard I am proud that, whether at the Human Rights Council, as we have recently seen, through various universal periodical reviews that are taking place with countries, or on quite specific issues, whether human rights on freedom of religion or belief, the protection of LGBT communities, or on gender equality and ensuring that women’s rights are represented, throughout my life the UK has been a bastion and a beacon for human rights. That should and will remain a cornerstone of British foreign policy in years to come.
I thank noble Lords for their amendments. It is right that we again emphasise that we should look carefully at the purposes for which sanction regulations may be created. It may be helpful if I say something about the purposes set out in Clause 1(2). These are designed to cover situations and purposes where the UK is not implementing a UN or other international obligation. The list of purposes has been designed to ensure that we can continue to implement sanctions for the full range of purposes for which we use them now as part of the European Union. The EU is able to adopt sanctions for any purposes of its common foreign and security policy. The reference to “foreign policy objectives” in Clause 1(2) seeks to provide the same type of scope when the UK has left the European Union. This is why the amendment tabled by the noble Baronesses, Lady Northover and Lady Sheehan, would, as my noble friend Lord Faulks highlighted, potentially restrict our options. It seeks to remove the ability to impose sanctions to,
“further a foreign policy objective of”,
the UK.
I appreciate and accept that Amendments 3, 4, 5 and 6 aim to define UK national security and foreign policy objectives in more specific terms. I have little difficulty with the language as such. However, we may risk missing important objectives of UK national and foreign policy that might justify the use of sanctions in the future. For example, this may limit our ability to act with our international partners in the future to tackle serious threats to the national interest.
Noble Lords may recall that in 2015 the Government published a national security strategy, which provides a clear overview of Her Majesty’s Government’s objectives in the national security sphere. The practice has been to update this strategy every five years, as this can act as an indication of some of the purposes of sanctions as set out in the Bill. I assure noble Lords that the Government will not have unlimited discretion. As I set out in the previous debate, the Bill contains a number of checks and balances on the Government’s action, including scrutiny by Parliament and court challenges.
On the additional purposes that have been suggested, I note that these reflect our current practice. For example, preventing grave breaches of human rights and international humanitarian law are already among the purposes of UN sanctions against the Democratic Republic of the Congo and EU sanctions against Iran. I am satisfied that we would continue to impose such sanctions based on the purposes of the Bill as drafted, and that is certainly our intention.
Baroness Northover
My Lords, I am grateful to everyone who has contributed to this mini debate. In some ways, I was surprisingly unreassured by what the Minister said; I was expecting to be much more reassured than I am. I was struck by the difference in his language. He mentioned that the EU uses sanctions for “foreign and security policy”, but the Bill talks only about “foreign policy”, which is a much more restricted meaning. He mentioned Iran, but it was the nuclear programme and the threat of it that led to sanctions, which is about security rather than foreign policy per se.
Lord Ahmad of Wimbledon
I suggest to the noble Baroness that foreign policy and security are the primary responsibility of any Government. Of course, security is a key feature of foreign policy, and I also referred to the Government’s national security strategy.
Baroness Northover
Indeed, security, and not just foreign policy, is a first aim of the whole of government. However, I find myself concerned about the language here and about the scope in the Bill for using this provision. I shall certainly think about this but, in the meantime, I beg leave to withdraw.
Lord Collins of Highbury
“( ) Regulations under this section must be accompanied by the publication of a humanitarian impact assessment, and such an assessment must be conducted—(a) according to the methodology set out in Chapter 5 of the UN Inter-Agency Standing Committee’s Sanctions Assessment Handbook: Assessing the Humanitarian Implications of Sanctions, published in 2004,(b) in advance of the relevant sanctions regulations being made,(c) again within six months of the date on which the relevant sanctions regulations come into force, and(d) at any time thereafter when the relevant sanctions regulations are subject to any substantial revisions or alterations.”
Lord Collins of Highbury
The purpose of this amendment is to reflect on the discussions that we have had with many NGOs actively engaged in humanitarian support. I had not fully appreciated the difficult circumstances that can arise when they operate in countries affected by sanctions. This is not just a technical matter; people’s lives are put at risk and the ability to travel across certain countries can be impeded. Therefore, it is very important that the impact of any proposed sanction is fully understood by the NGOs.
We also fully support the amendment in the names of the noble Baronesses, Lady Northover and Lady Sheehan, which would ensure the provision of impact assessments. We are very keen to ensure the provision of impact assessments to cut down the time between sanctions coming into effect and licences being granted. I have no doubt that the Minister will say that there is a process and that the Government are dealing with the NGOs’ concerns, but this is a mechanism that can better help the planning and implementation of their humanitarian projects. I beg to move.
Baroness Northover
My Lords, I shall speak to Amendment 9, which stands in my name and that of my noble friend Lady Sheehan, and I support the amendment in the names of the noble Lords, Lord Collins and Lord Lennie.
The Minister made clear at Second Reading and in our discussions—I welcome this—that he is open to the possibility of trying to ensure that NGOs working in humanitarian disaster areas and very challenging situations have greater assistance in doing their work when sanctions get in their way. As I just mentioned, I recall from my work as a DfID Minister that sanctions could have a significant impact on the work of NGOs when they sought to assist in Syria.
As the noble Lord, Lord, Collins, pointed out, it is essential that we review current and future sanctions so that we can identify any disproportionate impacts. I know that was the case in Syria, where there were different arrangements for our NGOs compared with those for American NGOs, for example. We need to be able to assess the impact of sanctions and make adjustments accordingly. Therefore, our Amendment 9 speaks of consultation with stakeholders, who are obviously in a very good position to inform the Government of any unintended consequences, so that those consequences can be addressed.
Our amendment is a probing one. As I said, the Minister has said that he is open to ensuring that licences for NGOs are more fit for purpose than has been the case in the past. We are seeking to move the Minister further along that line so that that is not just a possibility but is put in a more concrete form and more specifically, so that we can see the changes that the noble Lord, Lord Collins, and I have outlined.
Baroness Sheehan
My Lords, Amendment 9 is broad enough to cover a range of activities—not just humanitarian assistance but peacebuilding, reconstruction and development assistance. It would also enable a range of stakeholders—for example, banks, businesses that supply goods or services in sanctioned countries and other experts—to be included in any discussions.
Consultation is very important as it will reduce unintended consequences for diplomats, aid workers and others. For example, a British diplomat was prevented from getting a mortgage because his bank found out that he lived in Sudan. Sanctions that are badly applied or inappropriate can give banks and international companies a reason to be risk-averse, reducing the availability of services to poor and vulnerable people or countries. For example, in 2011 Standard Chartered Bank received a large fine for breaching Iranian sanctions. That led to all banks becoming more risk-averse to the point where they now overimplement the sanction where the value of the market is not worth the risk. Therefore, even if the activity they are carrying out is excluded, they will often choose to avoid the market altogether. Another example is Somalia, where Barclays closed the accounts of small money transfer companies used by the Somali diaspora to send money home. We all know how important these remittances are these days. Perhaps with consultation those problems could be avoided.
It is very important that any potential impact of a new sanctions regime is properly understood and documented. As well as the other factors that I have mentioned, this would also reduce the lag time between sanctions coming into effect and licences or exemptions being provided to mitigate their impact.
Lord Hylton (CB)
My Lords, I follow on very much from what the noble Baroness, Lady Sheehan, has just said. I am old enough to remember the sanctions against Southern Rhodesia. More recently, there were atrocious humanitarian consequences when sanctions were imposed against Saddam Hussein’s regime in Iraq. I think Sudan and South Sudan were mentioned. If they were not, I do so now. There are also the current sanctions against Syria. Therefore, these amendments are very practical; they are not just theoretical. On those grounds, I urge the Government to take them very seriously.
Lord McNally
My Lords, en passant, the noble Lord, Lord Hylton, mentioned sanctions against Southern Rhodesia. As I am sure that at some stage a comment will be made about these Benches being overrepresented, it is worth remembering that one of the five times when this House defied the Government of the day was in relation to sanctions against Southern Rhodesia. On that occasion, a grotesquely overrepresented Conservative Party in the House of Lords voted down those sanctions. It is always useful to have a historical perspective on these matters.
I want to speak to these amendments because, like the noble Lord, Lord Collins, I attended the briefing by NGOs. It was quite surprising and shocking to find that unintended consequences were putting lives in peril. People who are in these countries for humanitarian reasons—and doing a terrific job—might suddenly find themselves hit by sanctions for using an airline connected to a regime under sanctions, even though it was the safest airline to use. Lots of other examples were given to us. Therefore, I hope the Minister will take up the invitation of the noble Lord, Lord Collins, and explain to the House whether he is aware of these unintended consequences that hit the NGOs and, if he is, how he intends to mitigate the impact of sanctions on individuals and organisations who are in these places not to bust sanctions but to carry out humanitarian work.
Lord Ahmad of Wimbledon
My Lords, I thank all noble Lords who have spoken on this group of amendments. The noble Lord, Lord McNally, talked about Rhodesia, and historical context is one of the great values of your Lordships’ House—it always puts things into context.
The specific issue of banks and sanctions against Iraq in 1991 came up. As someone who spent 20 years in that sector and started his career at that time, I remember being acutely aware of those who were opposing the Saddam Hussein regime. It was perhaps used to having more liberal purses and was suddenly subjected to stringent rules based on those that were being applied in-country. Noble Lords have spoken quite rightly about the unintended consequences that lie behind sanctions. However, there are necessary occasions for them in the banking sector. As we have seen, certain banks in certain parts of the world will take a de-risking attitude, which then prevents essential services being performed. However, I will turn to the issue in front of us.
Amendments 8 and 9 make substantially the same points so I will address them together, if I may. First, let me stress again on record that I fully understand the reasoning behind these amendments. As the noble Baroness, Lady Northover, said, we have spoken about this during Second Reading and outside your Lordships’ Chamber.
It is important that, in imposing and maintaining sanctions, the Government do so with a clear understanding of what the impacts may be, and that there is a focus on minimising potential humanitarian impacts and other unintended consequences. I assure noble Lords that the Government work closely with humanitarian actors and NGOs and take their concerns into account when designing and implementing sanctions.
Last year, it was the United Kingdom that secured amendments to the EU’s Syria sanctions regime to provide an exemption for fuel purchases made in Syria by humanitarian organisations, which is exactly what the noble Lord, Lord Collins, talked about. Noble Lords may also be aware that, in October, after listening to NGOs, Her Majesty’s Treasury’s Office of Financial Sanctions Implementation published specific guidance for the charitable sector on sanctions compliance.
I assure noble Lords that the Bill provides the Government with relevant powers, such as issuing licences to help mitigate any potential impact on the operations of humanitarian organisations. EU case law currently restricts our ability to issue so-called general licences for the humanitarian sector, but the Bill would give us greater flexibility after our exit from the EU. When making and amending future sanctions regulations, the Government would incorporate humanitarian exemptions where appropriate, and these would be subject to parliamentary scrutiny.
As the amendment makes clear, there are already methodologies for assessing the humanitarian impact of sanctions, which are agreed internationally. These would continue to be applied. To require a humanitarian impact assessment to be published at the domestic level each time sanctions were imposed is something that I remain to be convinced about. It would duplicate the work already done at an international level before sanctions are agreed. It also carries the risk of causing delay, potentially undermining the effectiveness of sanctions.
The amendment tabled by the noble Baronesses, Lady Northover and Lady Sheehan, would require the impact assessment to be worked up in consultation with stakeholders each time. I fear that that might risk tipping off potential sanctions targets, who could then take evasive action. Again, this could undermine the effectiveness of sanctions.
I assure noble Lords that we will continue to work closely with our NGO partners. The noble Lord, Lord McNally, asked how we were taking that further. We are already working closely with colleagues in DfID on working with NGOs on how we can take the matter forward. The noble Lords, Lord Collins and Lord McNally, and the noble Baroness, Lady Northover, talked also about the NGOs themselves. I think it might be appropriate if, during the course of Committee and before Report, I make myself available to meet the NGOs to see how we may be able to further tighten up the language in this regard. I hope that following what I have presented to the House about the measures already in place, the noble Lord will be minded to withdraw his amendment.
Lord Collins of Highbury
I thank the noble Lord for his response and very much welcome his commitment to meet NGOs so that we can discuss their concerns before we come back to this at Report. In the light of those comments, I beg leave to withdraw the amendment.
Lord Judge
Lord Judge
My Lords, this amendment and the others in my name in the group arise in the context of the imposition of financial sanctions, and so on, on designated individuals. The process of designation is subject to regulation and is another part of the bulky regulation power that is being sought. I simply want to highlight how Amendments 10, 11, 12, 13, 14, 16, 17 and 81 relate to Clause 2(1)(b)(ii) and (iii),
“persons connected with a prescribed country, or … a prescribed description of persons connected with a prescribed country”.
My argument in this debate is that we do not need this to be dealt with by regulation; we can deal with it by way of primary legislation.
I have no difficulty with making specific identified individuals subject to the sanctions regime when that is justified, including where the individual is identified in the context of the United Nations having information to give us or in accordance with our treaty obligations. My concern arises because of the way in which the Minister is empowered to prescribe a country and include in the sanctions regime anyone—here is the magic word—“connected” with it. I respectfully argue that “connected” in this context is a weasel word: it is very wide and all-embracing.
My mother was Maltese and my father was English. I was born in Malta in the middle of the war, the hospital being bombed as my poor mother gave birth to me. I accept and am proud to claim my connection with Malta—I would not mind being included on a connection list such as that. My children are one-quarter Maltese but have never lived there, and my grandchildren are one-eighth Maltese but have never lived there. Is this a connection for the purposes of this legislation? Which one? Is it the blood or the residence? For how many generations does such a connection endure? For how long must residence be? Is it for so many years or for a certain proportion of an individual’s life? How recent must it be? In business, is it one transaction or many; one huge transaction or a lot of small transactions of little value?
What I am driving at is that, in the end, the Minister will choose by regulation to define what this connection shall be. Surely this should be done by primary legislation, with parliamentary scrutiny of the definition which the Minister decides that he wishes to ask Parliament to consider. I should add that a specific designated person does not have to be a British citizen, so given the regulation-making power in Clause 2(1)(b)(i), which we are not challenging, for identifying specific individuals whose conduct brings them within the sanctions regime, such persons are not going to escape from this. We have no objection to provisions that would not prevent a foreigner with such habits falling within the definition.
I turn now to Clause 50(4), which we suggest should no longer be part of this Bill. It is a classic regulation:
“Regulations under section 1 may make provision as to the connection that is required between—
(a) a person, or a person of a prescribed description, and
(b) a country,
in order for the person to be regarded as ‘connected with’ that country for the purposes of any provision of the regulations”.
Surely we do not need to wait for regulations at some future unspecified date and surely it is open to the Government to decide what definition should now be applied; in other words, to prepare the regulations now, but, rather than proceed by way of regulation, proceed by primary legislation and deal with the matter in that way. I beg to move.
Lord McNally
My Lords, I have added my name to these amendments, again with all due humility. I speak not as a distinguished and learned lawyer like the noble and learned Lord, Lord Judge, but as a parliamentarian now of some years. One can say this only so many times: in the face of the difficulties and sometimes tempting siren words of officials saying how simple this is all going to be, I warn again that the noble and learned Lord is giving the right advice to the Government. Primary legislation is always a bind for Ministers because it is almost always much more complex—but we are talking about the sovereignty of Parliament. The more crisp and focused we can make legislation by taking out wide-ranging powers based on subjective judgments, the better the legislation will be, and I suspect the less trouble the Minister will have.
Lord Judge
If noble Lords will allow me, I forgot to draw attention to what the Constitution Committee had to say about this clause at paragraph 18, where it expresses concern about the,
“breadth of the power conferred on ministers”.
I thank noble Lords for letting me have a second go.
Baroness Sheehan
I will speak to Amendments 19, 22 and 30 tabled in my name and that of my noble friend Lady Northover. Amendments 19 and 22 are probing amendments in relation to disqualified aircraft and shipping sanctions to learn what,
“persons connected with a prescribed country”,
means in both cases. As it stands, the phrasing will cause a great deal of uncertainty about who is connected with a prescribed country. I was born in Pakistan. If Pakistan falls foul of a sanctions regime, I would be uncertain as to what my status might be. The description is too wide and will cause much confusion that will not benefit anyone. It could well stop vulnerable people who may be in danger of violence from getting to safety.
Lord Lennie
My Lords, I reassure the noble and learned Lord, Lord Judge, that his grandchildren will probably be safe for some years because I do not think that sanctions on Malta are likely. However, were they ever to be so, his grandchildren would be at some risk. That is the point he is making in the amendment.
I do not know whether it is by intention, but the provision is very wide-ranging indeed in its application. Such a catch-all approach can be helpful in some circumstances. While it can gather in all that needs to be gathered in for sanction, it is extremely rough justice for those who are unknowingly, unwittingly and unfairly caught by it. I shall complete the quotation from the Constitution Committee report referred to by the noble and learned Lord, Lord Judge. The report stated:
“The House may wish to consider whether it is appropriate for ministers to enjoy such a broad power, which is not confined to persons who have committed acts of misconduct or who have a personal responsibility for the policy of a repressive state or who have a particular status in that state”.
It would be everyone connected with that state—even the grandchildren of the noble and learned Lord. We support the amendment.
Lord Ahmad of Wimbledon
My Lords, these amendments seek to remove the ability of the Government to create sectoral financial sanctions measures by removing the power to apply certain sanction measures to, as we have heard,
“persons connected with a prescribed country”.
Amendments 10 to 14, 16 and 17 would make this change in Clause 2 while Amendment 19 speaks to Clause 5, Amendment 22 to Clause 6 and Amendment 81 to Clause 50. Amendment 30 to Clause 10 would make a slightly different change in that it would restrict the Government from being able to designate a person on the basis of their involvement with other designated persons. However, the amendments all have a common theme as they deal with the application of sanctions to persons other than those directly designated.
The Government are clear that sectoral financial sanctions remain a vital foreign policy and national security tool to enable us to meet our UN obligations. It is worth emphasising that we already implement these sanctions under both the United Nations and the European Union regimes. For example, sanctions against North Korea restrict that country’s access to certain financial markets in order to restrict its ability to generate funds for its nuclear and ballistic missile programmes. To do this and to make it work, we have had to impose sanctions on groups of persons—or in extreme cases, on all people—connected in a specified way with the prescribed country. This ensures that the sanctions measures are robust and effective.
We accept that this creates the potential for far-reaching sanctions that bite upon people who themselves have done no wrong, but it remains the case that it is a necessary part of some sanctions regimes. The more broadly sanctions can be drawn, the greater the impact they will have. I accept that it is a sad but necessary side-effect that at times this can affect persons who may not be directly involved with the activities of the target regime. For example, the current restrictions on the transfer of funds to and from North Korea—noble Lords will be aware that there have previously been restrictions on the transfer of funds to and from Iran—will affect people who do not directly support Kim Jong-un’s regime.
The UK, EU and Strasbourg courts have all considered and accepted that the harsh effects on individuals are justified due to the importance of sanctions and the need for them to have broad and deep effects. It was summarised by the European Court of Justice, which stated that,
“any measure imposing sanctions has, by definition, consequences which affect the right to property and the freedom to pursue a trade or business, thereby causing harm to persons who are in no way responsible for the situation which led to the adoption of the sanctions. Moreover, the importance of the aims pursued by the regulation at issue is such as to justify negative consequences, even of a substantial nature, for some operators”.
This was the Bosphorus case decided in 1996 in relation to sanctions that were placed on the former Federal Republic of Yugoslavia. It has been a settled principle of law for more than 20 years.
If the amendments were accepted, we would be unable to impose these measures. In some cases, they are mandated by resolutions of the UN Security Council, such as the obligations imposed in 2013 to cease business with North Korean banks and financial institutions. We would then be in breach of international law. Another example of a sanctions regime that we would be unable to maintain is the Ukraine sovereignty regime, which aims to restrict Russia from accessing certain financial services. Similar to the North Korea examples I have already given, we would be unable to maintain those financial sanctions if we were unable to impose sanctions on persons connected with Russia, or with persons of a certain description connected with Russia, such as state-owned banks. The clauses must remain if we are to be able to meet our international obligations and work with allies to use sanctions as an effective foreign policy and national security tool.
Clause 10 currently permits us to determine that a person is an “involved person” on the basis of their relationships with other “involved persons”. The noble and learned Lord, Lord Judge, raised this issue; I hope I can briefly explain the significance of it. A person can be designated only when the appropriate Minister has sufficient evidence to have reasonable grounds to suspect that they are involved in the activities targeted by sanctions. For example, if a senior member of a regime is controlling a public body that is developing weapons of mass destruction, they are involved in that activity and can be classified as an “involved person”. Assuming that the appropriate Minister deems it appropriate—and proportionate—to designate them, they can do so.
Clause 10 also enables a person to be an “involved person” if they are owned or controlled by, or acting on behalf of, an “involved person”—for example, as an agent. It goes further and enables a person to be an “involved person” on the basis of their association with other involved people. The key point is that this is often required of us by our international obligations. It is common for a UNSCR to require states to designate not just those involved in a particular activity, but those acting on their behalf or at their direction. Accordingly, we must be able to do that to meet our UN obligations, but it also has three other advantages. First, it enables us to apply sanctions more widely to affect the people around those directly involved, which would further restrict the regime’s ability to act and place further pressure on the regime to change its ways. Secondly, it allows us to designate those people who enable these activities by providing funds and financial services to the regime without direct involvement in the targeted activities. Thirdly, it enables us to apply sanctions across a whole group who share the same aims but are using different methods to achieve them. For example, it would enable us to designate all members of a terrorist group: not only those who are engaging directly in terrorist activity, but those providing funds and logistical support.
A current example of that would be the EU designation of Bashar al-Assad under the EU’s Syria sanctions regime, which has frozen the assets of Assad in the EU —including the UK—and banned him from entering the EU. However, people associated with him are also designated: leading businesspersons operating in Syria; members of the Syrian armed forces of the rank of colonel, or the equivalent or higher, in post after May 2011; members of the Syrian security and intelligence services in post after May 2011; and members of the regime-affiliated militias. Removing the ability to designate these as “associated persons”, as proposed in Amendment 30, would remove the ability to designate those who have a significant role in threats to peace and security.
The noble and learned Lord, Lord Judge, gave a personal example of being connected and made the pertinent point of the definition being very wide: it encompasses many people, even those whose connections are arguably tenuous. As I have already explained, it is necessary to ensure that sanctions are broad and effective. To say that somebody is connected because of a remote family relationship is tenuous. I doubt it would be lawful or stand up to scrutiny in a court, nor would it advance the purpose of the sanctions. However, it is almost impossible to foresee what type of connections will be required in future sanctions regimes, but I do not believe that this one, in terms of the detailed nature of what the noble and learned Lord expressed, would apply.
I have heard and listened very carefully to the concerns, but at the same time I have stated that there are good reasons for casting these powers in the way we have. There will be real difficulties in applying sanctions if they are too restricted. We believe that we have the balance right. With the practical examples I have given, and my interpretation of the Bosphorus case—especially when we bear in mind that power can be exercised only when proportionate and compliant with human rights; any other use would be forbidden by Section 6 of the Human Rights Act 1998—I hope that the noble and learned Lord will be minded to withdraw the amendment.
Lord Judge
My Lords, I shall withdraw the amendment for now; I may come back to it on Report. However, I do not want the Minister to misunderstand the purpose of my amendment. He has produced a very convincing argument for the need for sanctions to be available and used, and there are compelling cases where they have been used out of absolute necessity. The amendments we are proposing are nothing to do with that. The amendment we are driving at is that, in reality, there is no reason why the word “connection” cannot be defined now, as opposed to leaving it for few months down the road until a Minister gets round to making a definition. I look forward to his reflections on that, and I will reflect on it too.
Baroness Sheehan
“( ) striking off from the register of companies a designated person, or a person (other than an individual) owned or controlled by a designated person;( ) closing down a designated person, or a person (other than an individual) owned or controlled by a designated person.”
Baroness Sheehan
My Lords, I will also speak to Amendments 46 and 78.
There is a lack of specific instruction that the Government can dissolve or close down companies in cases of violations or sanctions regulations made under the Bill. The amendments would rectify that omission. It must be made clear that the Government have the power to prevent trading or any other business activity by company structures. That is key to ensuring, for example, that action against shell companies brokering arms is captured in the Bill.
Consider a recent case: S-Profit Ltd v South Sudan. The UK-registered shell company, set up by a Ukrainian, was used to broker arms, in violation of sanctions, in a deal worth $44 million. A company can be set up in the UK in a matter of hours for just £12. HMRC has acknowledged—there are numerous other examples—that it cannot prosecute such brass-plate and shell companies under existing law where the burden of proof is criminal standards of evidence. That is impossible to get because such companies have a limited physical presence in the UK and little hard evidence can be gathered.
That case, highlighted by Amnesty International, starkly illustrates the current loophole and legal vacuum that allows companies posing as reputable UK corporate entities to supply arms to some of the most dangerous places and actors in the world. The lower burden of proof suggested in the Bill before us—a reasonable knowledge test—would give the means to use sanction powers to take action against such shell companies and crack down on illicit arms brokering. The amendments would give enforcers powers to wind up such companies and disqualify their directors.
Furthermore, reasonable knowledge is the threshold used in existing sanctions regimes in both the EU and UN. That is why it has been replicated in the UK, so that we can have legal powers to mirror and enforce our international obligations in this area. However, there must be at least a due process mechanism to allow a right of reply, or an appeal process to challenge decisions and overturn them. This amendment would add additional tools to improve controls over the arms trade and arms-brokering activities, which would be welcome.
I will speak briefly to Amendment 78. Currently, companies can be wound up by the Insolvency Service relatively easily for corporate abuses such as non-reporting, but they can also be wound up on the ground of public interest under Section 124A of the Insolvency Act 1986. However, the sanctions regime and these powers are not used together. It would make sense for brass-plate companies known to the Government to be in breach of sanctions to be wound up using these powers. Now that BEIS’s criminal enforcement team has been transferred into the Insolvency Service it also has the ability to prosecute. It would therefore make sense for the two to be linked for enforcement purposes. This amendment would have that effect.
Baroness Northover
I echo what my noble friend said and I commend the amendments to noble Lords, especially the Minister. He has been arguing that he needs wide scope in the Bill to ensure that those who might seek to evade sanctions can be brought within their scope. This is an area where we seek to help him to draw that wider scope based on what the world has discovered about the ingenuity of those who use bogus companies to, for example, evade sanctions. I hope he will look kindly on these amendments.
Lord Lennie
My Lords, to echo what has been said, the amendment would strengthen the Minister’s hand to act and seeks to address the problem of companies registered in this country with no connection to, business with or purpose in this country other than to evade detection and supply arms to those we regard as rather evil. There is a great difficulty with detection. I am not underestimating problems, particularly evidential ones, but I suspect that the wider the hand of the Minister in this regard, the greater the power of success. There has been some progress in this area recently under other Acts, such as the Bribery Act, but our chance of success in closing down what is simply a hosting arrangement would be greatly enhanced by the amendment.
Lord Ahmad of Wimbledon
My Lords, I am grateful for noble Lords seeking to strengthen the hand of the Minister at the Dispatch Box. I made specific note of that. I understand the reasons for wanting to go down the route of closing down designated companies and companies belonging to a designated person. However, the proposal contained in Amendments 15 and 46, and the supporting proposals in Amendments 78, 79 and 80, raise some concerns and illustrate why it may not be appropriate to accept them.
I remind noble Lords that the Bill aims to put in place the necessary powers to replicate the sanctions regimes that we currently implement as a member state of the European Union and, of course, those we are obligated to implement internationally through the UN. These amendments would go over and above the regimes and the type of sanction that the EU has put in place. It is essentially a new type of sanction and, as such, I urge a degree of caution in approaching this.
Clause 2 is about freezing assets of designated persons and preventing access to the UK’s financial markets. It is not about causing companies to cease to exist. Sanctions are intended to be temporary. That is why we have various reviews of sanction regimes set up and why they are reviewed periodically: their whole essence is to ensure that the target has changed behaviour in the desired manner. Once this change in behaviour has been achieved, sanctions may well be lifted. We do not intend to impose permanent measures that cannot be reversed. I suggest that shutting down a company is pretty irreversible.
This would be a unique power that does not exist at the United Nations or with EU sanctions. Sanctions have always been and will continue to be most effective when implemented multilaterally and with maximum consistency. Before implementing a new type of sanction, we would usually discuss with our partners whether it is effective and whether there is any appetite for it to be taken forward multilaterally. Only in very rare cases would we unilaterally introduce a new type of sanction that has effect within the UK’s jurisdiction only. Unilateral sanctions provisions such as this could also have an uncertain effect and could create difficulties for industry in general.
Dissolving a corporate entity is a permanent measure with far-reaching effects. It would also have an impact on the human rights of the people involved. Dissolving a company owned by a designated person would remove their property. Doing so without compensation would leave the Government open to a potential action for damages by a person alleging breach of their human right to ownership of their property. It is also uncertain where the property owned by the company would go and what effect this would have on the property rights of anybody involved. Accordingly, to do so may be in breach of the human rights convention.
When a company is designated under financial sanctions they will not be able to trade—that is clear—with any person connected to the UK or to any other countries that have joined us in the multilateral sanctions. We therefore feel that these measures are sufficient to ensure that the effects of the financial sanctions are maximised.
The noble Baroness, Lady Sheehan, gave a specific example about actions we can take against shell companies that, in her words, may be involved in illicit arms trading. If the arms trade is a breach of trade sanctions we will of course prosecute these companies and their directors for criminal offences using powers in the Bill and the export control order 2000, which she referred to previously.
Given my explanation, the importance of the intent, the fact that we would be creating a totally new type of sanction here and in the context of this not being something that either the UN or the EU currently designate, I hope the noble Baroness will be minded to withdraw the amendment.
Baroness Sheehan
I thank the Minister for his reply. He said quite a lot about how we may diverge from the EU, but as I thought Brexit was about diverging from the EU and taking back control, I thought he might have welcomed the powers these amendments would confer on him.
Lord Ahmad of Wimbledon
Am I to take it that the Liberal Benches are now suggesting that that is exactly what the Government should be doing?
Baroness Sheehan
I am suggesting that the Liberal Benches might wish to take advantage of what the Government have been proposing when it suits our ends. This is such an important issue. We are presented with an opportunity in the Bill to do something about the illicit arms trade and arms brokering. It is a real stain on the UK that so much of that trade is facilitated here. Although I will withdraw the amendment for now, I reserve the right to come back to this issue at a later stage.
Baroness Northover
Baroness Northover
My Lords, I extremely glad that the Minister wishes to align so closely with the EU. I can think of very simple ways he might achieve that. In the meantime, in moving Amendment 18 I will speak to Amendments 20 and 21 in my name and that of my noble friend Lady Sheehan. I am sure the Minister will be relieved to know that we are returning to our main theme: whether the scope of the Bill is too wide in giving him extra powers. Our concerns here are about unintended consequences of the sanctions, so I am afraid we are seeking to restrict the Minister again.
If these bans on aircraft and ships prove detrimental to those fleeing persecution, what exceptions might there be? We understand why the Government would wish to have such sanctions, but we are once again scrutinising for wide powers with unintended consequences. Clearly, we would not wish to include traffickers in any exception, but one can envisage, for example, a plane leaving North Korea and seeking asylum for all those on board or, more commonly, those commandeering a boat wishing to escape a terrible regime. What is emerging from the Minister’s account is that the Bill is drawn widely to allow sanctions in unusual and ingenious cases. We need to see what the protections might be where wide powers are sought.
Lord Collins of Highbury
My Lords, I do not have much more to add. Obviously, the amendments in this group are probing. I hope the Minister can respond in terms of what the current arrangements are in respect of the circumstances outlined in the amendments and how they may not be necessary. As the noble Baroness said, it is important that we consider all the unintended consequences, as well as our objective of imposing sanctions that are effective.
Lord Ahmad of Wimbledon
My Lords, I thank the noble Baroness for raising this important issue. As we discussed earlier, the Government take seriously the impact that sanctions can have on the civilian population of a country and acknowledge the important work of NGOs and other humanitarian organisations in difficult situations.
The amendments would exempt ships or aeroplanes from sanctions if they are being used to transport refugees. While I agree with the principle of the amendments, which I know are well intentioned and seek to assist those who require international protection, in my opinion this is not the right way to achieve the desired effect.
I cited earlier the example of NGOs operating in Syria, where exemptions were granted on fuel access. We need to ensure that NGOs can operate in countries that are subject to sanctions by providing licences and exceptions. The Bill makes it easier—it is not just about having wide powers—by allowing government to draft exceptions and grant general licences aimed specifically at assisting humanitarian activities, including those assisting refugees or displaced persons, which is the intent behind the noble Baroness’s amendment. Of course, these are currently not permitted by EU law.
There are good reasons why broad prohibitions are applied to a country with licences, then used to provide targeted exceptions. That is the right way to move forward on this. If we were to provide a general exception for ships and aeroplanes in these circumstances, it could be subject to abuse and would be impossible to enforce. In extremis, it could help organisations circumvent sanctions. It would also be very difficult to apply in practice. If a person on a ship or aircraft claimed to be a refugee, such a circumstance would seem to engage the exemption proposed by the amendment. However, if it was later determined by the proper authorities and the courts that they were not a refugee, the ship or aircraft would have breached sanctions, as well as that person having circumvented immigration controls.
In many cases, it is impossible to tell whether a person is a refugee until after their claim has been examined and determined. I totally understand the intent behind the amendment, but I am sure the noble Baroness can also understand the difficulty it would pose in respect of a person on a ship or aircraft making such a claim.
I assure the noble Baroness and the Committee that the system of licences and exceptions currently in the Bill offers the best way to maintain the integrity of sanctions while ensuring that NGOs can provide humanitarian support to refugees and displaced persons. I committed during a previous debate to join the noble Baroness and the noble Lord, Lord Collins, in meeting NGOs perhaps to strengthen the narrative behind the exceptions—on how they work and how the current rules would be applied—but I am still minded to ask the noble Baroness to withdraw her amendment. I feel that looking to strengthen the communication and availability of current processes to NGOs, as well as their knowledge of them, would be a better way forward.
Lord Hylton
My Lords, following on from what the Minister has just said, perhaps I may be allowed to put a drafting point to the noble Baroness, Lady Northover. Her amendments state, “recognised as a refugee”. Might it not be better to say, “claiming to be a refugee”? That is because the process of obtaining recognition can often take a very long time and, in certain circumstances, it is just not obtainable. I would favour a wider wording.
Baroness Northover
I thank the noble Lord for his suggestion. This was my thought when reading the Bill —it did not come at the request of any of the NGOs, so they might be slightly surprised that discussion of this is included in what we are covering, which indeed came from them.
I was thinking not about the general exceptions that the Minister talked about, or of NGOs’ work, but about the example of a group fleeing Syria. What protection would they have if there was a sanctions regime that would otherwise have included the means by which they escaped from that regime? That is what I was probing for. Perhaps the Minister could go away and consider a more thorough answer on how that is dealt with. I would appreciate that. In the meantime, I beg leave to withdraw the amendment.
Baroness Northover
My Lords, I found reading this Bill enormously instructive. I am no lawyer, but I nevertheless found myself wondering at many points about the possible unintended consequences of what was in it. Clause 8, along with various other clauses, seemed to me rather full of such potential unintended consequences, so I want to know from the Minister what protections are being put around the mass of regulations to which the noble and learned Lord, Lord Judge, referred in the first group of amendments. Here the Bill specifies,
“persons designated under any power contained in the regulations”,
which we know are very widely drawn. That causes me concern. It goes on to talk about,
“any organisation and any association or combination of persons”.
It struck me as I read this provision that it was enormously widely drawn. If we are seeking to check the abuse of power, how does this wide definition fit in?
I also support the amendments of the noble Lords, Lord Collins and Lord Lennie, in this group. They have rightly picked up on the point that regulation “must” make provision in certain areas, as opposed to simply “may”, which again is very widely drawn. I am seeking from the Minister an explanation of what protections there are in relation to Clause 8.
Baroness Sheehan
I have only a short sentence to say on this. Clause 8, on “Designated persons” is so widely drawn that it occurs to me that in a prescribed country anyone who is not a designated person will doubtless be a refugee.
Lord Lennie
Amendments 33 and 34 concern Clause 10. Where Clause 10(6) says:
“The regulations may make provision, for the purposes of the regulations, as to the meaning of a person’s”,
we want to replace the word “may” with “must”. We also want to add a final subsection to the end of the clause, as follows:
“( ) The regulations must make provision for the notification of persons designated under subsection (3)(b) to (d), and such notifications must state, to the fullest possible extent consistent with the purpose of the regulations … which person or persons the designation has been made in connection with, and … the nature of the connection identified for the purposes of the designation”.
It is a question, if you are going to designate, of identifying who the person is associated with and what are the reasons for associating with them.
The regulations must make provision for the notification of persons designated on the grounds of indirect involvement in prohibited activities, including the requirement to inform such persons of the specific nature of any activities or other persons they have been designated in connection with. I am not sure how they are to know unless they are advised as to what it is and who it is they have been designated for associating with.
Lord Ahmad of Wimbledon
My Lords, I thank all noble Lords who have spoken in this very brief debate thus far. This clause introduces the power to include designated persons under sanctions regulations and defines the meaning of this term as used in the Bill. It sets out the designated persons, which can include individuals, companies and other entities which have a legal personality, as well as groups and associations. The noble Baroness, Lady Sheehan, said that it is so wide that anyone in a particular country who was not designated would be a refugee. That is not the case. In conflict situations—Syria is a prime example—there are members of the opposition, for example. When I was qualifying the status of those who may or may not be “influenced by” or “under the control or direction of”, in a previous debate, that point was made quite clear. The clause will ensure that Governments can, for example, designate particular organisations, and terrorist organisations come to mind in this respect.
The decision to designate an individual or organisation would be made by an appropriate Minister and the Minister would be informed by strategic, tactical and evidentiary advice; so the evidence would need to be there. A decision to designate would also be made where a designation advanced the purposes of a specific sanctions regime, taking into account the political picture and the evidence available. This approach is consistent with EU practice and the practices of our key sanctions partners-for example, the United States and Canada, where the power to designate rests with the Executive. It is for the Executive to use the powers then provided by Parliament as the situation demands.
I fully accept the point that there is a need for appropriate safeguards, and the Bill gives designated persons the right to ask for an administrative reassessment and then bring a challenge in the courts. It also requires annual political and triennial evidentiary reviews. These are, of course, in addition to the Government’s day-to-day accountability to Parliament.
Amendment 33 in the names of the noble Lords, Lord Collins and Lord Lennie, would make it necessary to set out what was meant by being,
“owned or controlled directly or indirectly”,
by another person and of being “associated with” another person. I agree that there should be restrictions on designation powers. That is why the Bill allows designation only where there are reasonable grounds to suspect that a person is involved with or connected to an activity set out in the regulations, and that it is appropriate to designate them on that basis. I hope that, with the explanation I have given, the noble Baroness will feel able to withdraw her opposition to Clause 8 standing part of the Bill.
Baroness Northover
My Lords, I thank noble Lords for their contributions. This clause does indeed seem to be challenging, and I look forward to the noble and learned Lord, Lord Judge, perhaps coming up with some overarching set of protections for the whole Bill which would apply to this as well. The Minister mentioned reviews: we will be coming to reviews later in the Bill, and there are questions around those, so that is not tremendously reassuring. He also mentioned answerability to Parliament. That has the problems that my noble friend Lady Kramer referred to earlier in our initial debates.
Lord Judge
Lord Judge
My Lords, I am beginning to have the awful feeling that I am punching jelly. There are so many regulations. As we go through this line by line—or nearly line by line—it re-emphasises how much we are looking at a regulation Bill. It is the bulk buy again. So we will have the same argument, but let us go about it.
I am looking at deleting Clause 9(2)(b) and Clause 11 not standing part of the Bill, and essentially my argument is the same. We are dealing with issues through regulation which should be dealt with in primary legislation. I shall not repeat what I said about Clause 9, because I can take it in in Clause 11. This is designation by description rather than by name. This is, as we discussed earlier, connection plus. It is, if I may say so, and I think I am right about this, a much wider power than the existing powers available to us under our own current regulations, based as they are on EU law—that is to say, the 1972 Act.
This provides me with the opportunity to underline what I said at the very beginning of this debate-that we are not, in truth, just replacing like with like, just preserving the existing position. We are, in fact, extending it here without any explanation as to why the current arrangements are not working properly. In EU law an express name is needed, so why is an express name not needed here? If we have not needed provisions such as this before, we surely do not need them now. Besides which, the language is vague. It is the parties that have to apply the sanctions that need to know what they are doing in this context. To use the example that the noble Lord, Lord Pannick, gave at Second Reading, how is the bank to know that the person it is dealing with falls within the description the Minister has given?
I tried to illustrate the absurdity of the situation in relation to “connected” by reference to my grandchildren, but what on earth will the regulations say? A tall man? A woman with a foreign accent? Somebody with a funny name, such as Igor? Or even someone who looks like a terrorist? Surely we can do better than this, and surely we can do better than this in primary legislation, not just issuing power—letting the Minister have the powers that will follow under the regulation system to do whatever the Minister thinks appropriate, without the safeguards that we would have if this were being dealt with by primary legislation.
I am not a voice crying in the wilderness. The Constitution Committee says:
“Clause 11 raises constitutional concerns”.
That is something of a battle cry. It is not something that can be brushed aside, and it invites the Committee to consider whether the Minister should have the power to designate by description as well as by name. Here I am not quoting from the Constitution Committee: why do we need it? If the EU, with all 28 of us—still—does not need description, why do we need it now? The Constitution Committee goes on to say:
“We further invite the House to consider whether, if ministers are to have the power to designate by description, the Bill should include additional safeguards”,
and then a description is given.
There is nothing more to say about this. We can go round the houses but the issue is there, stark and simple. I beg to move.
Lord McNally
My Lords, I am pleased to see the Chief Whip in his place because we are getting to a point now where it is quite unfair for the Minister—and a whole succession of Ministers, I suspect, over the next few months—to come to this House, and to Parliament in general, to sell the unsellable. The Chief Whip should report back to the Cabinet that it has to come up with a better idea for handling this legislation. My noble friend Lady Northover said that surely with the noble and learned Lord, Lord Judge, in the Committee, he will come up with some brilliant overarching principle—such is the confidence we have in our former Lords Chief Justice.
I was on the Cunningham committee when it was the Labour Government who were getting impatient with the way that this House and Parliament in general could slow down the progress of a great and reforming Government. It was clear then that the principle that the House of Lords has the right to say no is very important—it may well be tested in the months ahead. But we have also acknowledged that ours is mainly a revising and advisory House, so we have to get the right machinery to handle that. What the noble and learned Lord, Lord Judge, said, from his experience, has to be taken into account.
The present way of doing this just will not work. We have to look at some of the suggestions made by the Cunningham committee for progressing legislation. One was a Joint Committee of both Houses—as with the Congress and the Senate—to resolve difficulties. Another was to allow amendments to certain pieces of secondary legislation. There are ideas around and there are fertile minds that could address this. But if we are going to continue to have Bills with massive amounts of secondary legislation, with massive discretionary powers given to Ministers, and Henry VIII clauses scattered through them, we will have a constitutional car crash. It is the responsibility of the Chief Whip to go and tell No. 10 that that is the truth.
Lord Falconer of Thoroton (Lab)
My Lords, I apologise for intervening in the debate at this late stage. I support what the noble and learned Lord, Lord Judge, has said. Reading the Bill, it would appear, despite what the Minister has said, that it would allow regulations to be passed which would allow a Minister to designate any group of people that the Minister considered, by designating them, would further a foreign policy objective of the United Kingdom. For example, if a Minister thought it would further the foreign policy of the United Kingdom to treat everybody from one particular country as a designated person, the Bill would give that Minister the power to do that.
I am absolutely sure that that is not what the Government intend by this, because I have heard the Minister say this evening that the purpose of the Bill is only to allow the Government—the Executive—to join in with sanctions that are imposed by another international organisation, such as the United Nations. It is not intended to give the wide powers that I have just identified. Can the Minister confirm that I am right that it is not intended to give such wide powers? Assuming that I am right, I sound a very loud clarion warning that whatever Ministers say, in either the Commons or the Lords, ultimately the Executive always reaches for the Act of Parliament and sees what the Act of Parliament allows. While I completely respect the good intentions of this Minister—indeed, of the Executive—in relation to this, the only answer, constitutionally, is to limit the powers to precisely what the Government intend. Anything wider, in the months and years to come, could be used by another Government when it was never intended for that to be the case.
Lord Lennie
My Lords, we are having a bit of a Groundhog Day. Following on from the noble and learned Lords, Lord Judge and Lord Falconer, where did this idea come from? Where has this authority been dreamed up? It clearly risks overzealous action or a meaningless designation. If it is seen to designate the citizens of an entire nation, it is entirely meaningless. That is a real fear and possibility.
If a person is to be designated, they should be designated by name. I think that is common cause. There may be an occasional circumstance when it is simply not possible to identify or get hold of their name through all kinds of investigative methods, but it would be a rarity-it will not be the generality of the application of this law. The difficulty with enforcement for the banks—the noble and learned Lord, Lord Judge, mentioned this—is real and serious and has been referred to before. The Government should identify the source and purpose of this and then rewrite the Bill in line with what is intended rather than what the unintended consequence would be.
Lord Ahmad of Wimbledon
My Lords, I thank the noble and learned Lord for moving his amendment. I know that he has spoken before about the powers that are being given to Ministers in this respect. The amendment seeks to remove the ability of the Government to make designations by description which cover groups of people. It would mean that we could designate individual persons only when we knew their names.
Picking up a point made by the noble and learned Lord, Lord Falconer—I hear what he said—I assure the Committee that we will always seek to designate by name wherever possible. We anticipate that the power to designate by description will be rarely used, for reasons that I will set out shortly. But, as I hope to explain to the Committee, it remains a useful tool for the imposition of sanctions. The noble Lord, Lord Lennie, commented just now that some exceptions might apply. That is exactly the kind of exception for which we want to ensure these powers will allow us to apply sanctions.
It is important that this proposal is seen in its proper context. Sectoral sanctions—those aimed at groups or sectors rather than individuals—remain a vital foreign policy and national security tool. The ability to designate by description also enables us to refer to lists of designated persons produced by others, such as the United Nations. To have a single list to look at will reduce the administrative burden upon business. It will also enable us to target particular entities within a given sector: for example, state-owned banks operating in a particular market. Finally, it will enable us to target groups of persons, such as members of a terrorist group—for example, the Hezbollah military wing.
In some cases—they may be few but there will be exceptions—we will not be able to identify all members of a group by name. But it remains important that those members are subjected to sanctions, to prevent them using their funds and assets to commit terrorist crimes. We are also cognisant of the difficulties that this might cause to banks; the noble and learned Lord, Lord Judge, raised this issue. We accept that a designation by description will be harder for them to implement, but I hope that I can offer a few reasons why this power should be retained despite the difficulties that have been highlighted.
First, as I have said, we will always seek to designate by name where we can and this power will be used very rarely. Secondly, when we use this power we will provide as much information as possible to assist institutions, such as banks and other businesses, to carry out their obligations under the sanctions. Thirdly, it may sometimes be necessary to impose these types of sanctions to cover groups of persons where, as I have said, not all the names of members are not known. Fourthly, banks and businesses carry out their own customer assessments and are well placed to carry out their obligations under sanctions. They also have their own compliance procedures, which enable them to identify persons subject to sanctions and can be used to assist them to identify members of a group. For example, if we designate a group of persons acting in a geographical area, the compliance systems can then be used to pick up economic activity in that area and trigger a deeper investigation into the relevant account holders.
If this amendment were to be accepted, we would be unable to impose these kinds of measures in the cases that I have illustrated. This provision needs to remain to ensure that sanctions can be used as an effective tool for not just foreign policy but, importantly, national security. Noble Lords have alluded to the difficulties, which I fully acknowledge, but I hope that I have offered some degree of reassurance in the context of how they might be overcome.
The noble and learned Lord, Lord Judge, also mentioned the phrase “connected to” and designation by description in primary legislation. The issue remains that the connections and descriptions can be context-specific. For example, what is applied under counterterrorism sanctions may not be applied under Russian sanctions, hence the proposal to include these definitions as regulations. That said, he also referred again to the reports by the two committees. As I alluded to earlier, we are reflecting on the specific points that they have raised, including the one that the noble and learned Lord raised in the context of this debate. I will return to those points and reflect—
Lord Patten (Con)
I apologise for not having entered into the debate at an earlier stage but I have been reflecting on what the noble and learned Lord, Lord Falconer, said about the importance of legislation being specific. I also reflect on the fact that, working in the financial services as I do, I often see names but we are never quite sure who is behind the names. It may therefore be necessary to have a secondary back-up power to address the groups of unspecified people who one thinks are behind those whose names are specified. Much in the spirit of the noble and learned Lord, I suggest to my noble friend that he may wish to reflect on whether there is some way of specifying in the Bill that these are reserved powers, to be used under particular circumstances. That might well reassure those who feel that they are too overarching.
Lord Ahmad of Wimbledon
I thank my noble friend for his intervention. He speaks from experience and, as someone who spent 20 years in the financial services sector, I am acutely aware of the challenges presented by the issue of designations. I will of course take his suggestion and reflect upon it. To address particularly the point raised by the noble and learned Lord, Lord Falconer, this would be the exception. It would not be the norm but would be to cover situations that do occur and have occurred. I have sought in my response to illustrate the circumstances in which that would occur and, based on that, I hope that at this time the noble and learned Lord will be minded to withdraw his amendment.
Lord Thomas of Gresford
Can the Minister explain what the point is of having sanctions if you do not know who they are against? I am looking again at the memorandum to which I referred earlier, which says in paragraph 44:
“Designated persons attract individual sanctions, including asset freezes. Designations are an effective way of coercing or constraining individuals who are directly involved or closely associated with the activity or behaviour targeted by the sanctions. The Government would intend to publish the names of designated persons on a list on its website, and would also notify those persons, where possible, in accordance with clause 1. There are currently around 2000 designated persons under existing sanctions regimes implemented by the UK”.
If that is the purpose of it—to coerce or constrain individuals when you do not know who they are—how can these sanctions be effective in any way?
Lord Ahmad of Wimbledon
I suggest to the noble Lord that if there is a person who is not named but is connected to a group on which that sanction is being observed, that would stop them carrying out particular actions. It would ensure that that sanction was effective.
Lord Judge
My Lords, it really is not beyond the wit of parliamentary draftsmen to produce primary legislation that says, “Designated by name unless it is impracticable to do so” or “Save exceptionally”. That is not difficult, neither is it difficult for parliamentary counsel to produce for us a Bill which says, “Designated by identifying a group or body”. It is not a problem. I make a fuss about this because we are coming to Clause 16, which will enable a Minister to create offences punishable with 10 years’ imprisonment and define the defences. It will be open to the Minister to say in the regulations: “This is an absolute offence. You, the bank, have dealt with somebody for whom we gave a description. It did not quite fit but you dealt with him”. If we have an absolute offence created, I do not suppose that the bank will go to prison for 10 years. But the whole of this legislation goes together; the Bill needs to be seen in its overall context. I do not think that I should pursue it any further at this stage and I beg leave to withdraw the amendment.
Lord Lennie
Lord Lennie
My Lords, I shall also speak to Amendment 26. Amendment 25 would replace “may” with “must”, which would make it consistent with other places in the Bill. Amendment 26 is the real substance and raises a new requirement to notify a designated person once relevant sanction regulations have been made. If a sanction is made, thereafter the individual will have to be notified that it has been made against them. They must also be given a reason for the sanction having been made, under procedural fairness. The legislation contains rights of appeal and review, but how can you appeal or review something you do not know about, or do so if you do not know the reasons for it? That seems a justification for this amendment. What actions are necessary to address the concerns which have led to their designation? On that basis, we invite the Minister to consider whether this is an appropriate amendment to be accepted into the Bill.
Baroness Northover
I shall speak to one amendment in this group, Amendment 61. I support the noble Lords, Lord Collins and Lord Lennie, on the various protections they have outlined in their other amendments. Amendment 61 is extremely simple. It puts forward the proposition that a Minister should provide reasons for complying or refusing to comply with a request for removal from the EU sanctions list. This is very straightforward, not very much to ask and a very reasonable proposition.
Lord Judge
I shall speak to Amendment 60, which is in this group. It is simply a question of elementary procedural fairness. It is really no more than that and no less than that. It may not be wise to tell an individual before he is designated that he is going to be designated because, obviously, if that were to happen the designation would come too late and the assets would be hidden or dissipated, but procedural fairness is a basic principle of the common law. If you are arrested, you must be informed of the reasons for your arrest. If you are made subject to sanctions of the kind envisaged in this Bill, they affect your livelihood and your ability to support your family and to live an ordinary life so that you are, in the words of my noble and learned friend Lord Hope at Second Reading, in effect a prisoner in your own home. If you are in any way going to be subjected to the coercive powers of the state, you should be told why those coercive powers are being exercised against you and they should be justified. This Bill is bung full of massive coercive powers. In these circumstances, the amendment that my noble friend Lord Pannick and I propose is absolutely self-evident, but without it, or without some concession to this group of amendments, we will end up with having done some insidious damage to an essential constitutional principle, and we should not be doing it. I highlight paragraph 29 of the Constitution Committee’s report, but I do not suppose noble Lords want me to read it.
Lord Falconer of Thoroton
What does my noble and learned friend envisage the position to be where the main sort of sanction used is where one is trying to implement sanctions, for example, agreed to in the United Nations? What then does the British Minister do in relation to evidence in relation to why the person is being covered?
Lord Judge
Your name goes on the sanctions list before you are told, so as to avoid the dissipation of your assets, but afterwards you are told that you are now designated, these are the consequences, this is why it is happening, this is what you must not do, this is what you must do and—what is more—you had better know that it is X who has given us this information or that we think you are Igor Judge, but actually there is another Igor Judge who lives in, shall we say, Russia and it is him we are after. That way, you can very rapidly get your review looked at and justice done to you.
Lord Ahmad of Wimbledon
My Lords, I agree with the underlying principle of these amendments, which aim to ensure that designated persons are told the reasons why they have been designated and given sight of the evidence on which this designation is based as soon as is practically possible. I reassure noble Lords that I do not believe that these amendments are necessary. As is the case currently, the Government fully intend to inform all designated parties after their designation either directly in writing or, if we do not have an address for them, through the government website. This notification will set out clearly why they have been designated and the clear and transparent channels through which they can challenge their designation via a request for a reassessment of their designation or a legal challenge in the courts. While we intend to inform designated persons of the reason for their designation, as we have heard from the noble and learned Lord, Amendment 60 rightly highlights that some evidence may not be suitable for disclosure for national security reasons. In these cases, we would provide a summary of the information.
In short, this amendment would simply codify standards to which the Government are already committed and would in any case be expected to meet by the courts. The courts have already made several findings on the need for disclosure of reasons and evidence in cases of designations, which we think would continue to apply, and the Bill makes no effort to disturb these standards.
However, I have listened very carefully to this short but important debate and in the light of the powerful points put forward and the Constitution Committee’s comments, which the noble and learned Lord did not read out, I will consider further and come back to the House.
Lord Lennie
In the light of those helpful comments, I beg leave to withdraw the amendment.
Lord Judge
Lord Judge
My Lords, this is just about the use of a word—it always is. It is a word that the Minister was kind enough to say he would be using and expected to be used if ever these powers were used. The word is “proportionate”. The decisions should include an element of proportionality as a feature, so why do we not just have it straight in the Bill so that it becomes part of the statute of the realm? I draw attention to paragraph 14 of the report from the Constitution Committee.
Lord Collins of Highbury
Maybe I should read out the Constitution Committee’s report, as it might be helpful for the record. We have to acknowledge, like the noble and learned Lord, Lord Judge, that at Second Reading the Minister said that where human rights were affected, a Minister would always need to comply with the European Convention on Human Rights and Strasbourg case law, which will include an assessment of proportionality. The Constitution Committee said it was grateful for those words, but it is such an important limitation on ministerial powers that it should be expressly stated in the Bill. I know the Minister will say, “I am considering the report of the Constitution Committee and the Delegated Powers Committee”, but I hope that by the time he and his colleagues have read those reports, they will be able to come back and agree to the insertion of this very long but important word.
Baroness Northover
From these Benches, I concur. I look forward to hearing what the Minister is planning to do in light of the reports from the Constitution Committee and the Delegated Powers Committee.
Lord Ahmad of Wimbledon
My Lords, I agree with the spirit behind the amendments. Targeted sanctions inevitably involve significant impacts on the people affected by them. That reflects the purpose of sanctions, which are about changing behaviour. I shall repeat, as was mentioned by the noble and learned Lord, Lord Judge, and the noble Lord, Lord Collins, what I said at Second Reading: I reassure noble Lords that where relevant rights under the European Convention on Human Rights are engaged, we consider that proportionality and the impact on the individual will be part of the decision-making. Under Section 6 of the Human Rights Act 1998, the appropriate Minister must act in compliance with those convention rights as informed by the Strasbourg case law. We consider that that includes satisfying themselves that the designation is proportionate.
In the response to our consultation published in August, we made clear that our approach to sanctions would be compatible with UK and international law and we would continue to ensure that the UK’s obligations under the European Convention on Human Rights, particularly Article 6(8) and Article 1 of Protocol 1, are upheld when imposing and maintaining human rights and maintaining designation. However, as a result of the Human Rights Act 1998, the requirement to act proportionately applies across a wide range of legislation regardless of whether it is stated explicitly in the legislation. It is also relevant that the Bill contains a range of protections to ensure that designations are used appropriately.
In cases where the UK has chosen to act in an area where the UN is not acting, the affirmative procedure will apply, ensuring that Parliament has a vote. This will provide an opportunity for Parliament also to consider whether the designation powers being taken by the Government are appropriate. Parliament will also have the opportunity to consider the exceptions and licensing arrangements that will apply to a regime, which can allow, for example, the release of frozen funds to meet basic expenses or travel to be authorised for humanitarian reasons. The Bill further provides for an annual review of each sanctions regime against the purpose that it was put in place to achieve, which will involve looking at the current global picture. The Bill also provides opportunities for reassessments and court challenges.
I state all that because it is important for the record. I hope I have been able to provide noble Lords with reassurance. Nevertheless, while this debate has been extremely short, it is a pertinent one based on a word. I will therefore consider with my officials what further reassurances we can give and, as the noble Lord, Lord Collins, said, reflect on the committee reports. For now, though, I am minded to ask the noble and learned Lord to withdraw his amendment.
Lord Judge
On the basis that the Minister is going to reflect, I beg leave to withdraw the amendment.
Baroness Northover
Baroness Northover
My Lords, this is part of the running theme of the Bill. Once again, we wish to know why Ministers need the wide powers that they appear to have through regulations. I do not need to repeat the arguments that were so well put earlier, but I flag the wide powers here once more. I beg to move.
Lord Ahmad of Wimbledon
My Lords, I shall speak to both amendments in this group, because although referring to different areas—UN lists and International Maritime Organization numbers—I believe that they have some similarities.
For sanctions to be effective, we believe that it is important that the Government act quickly and that the targets of sanctions are easily identifiable. This enables those who are affected by sanctions, including businesses, quickly to work out what they need to do to comply with whatever restrictive measures are put in place.
When a Minister is specifying a ship, they must be confident that they have identified the correct one. There are a variety of ways in which a ship can be identified—using the ship’s name, tonnage, or the country whose flag it flies. I am sure that noble Lords accept that all those details are important. However, they are also changeable. The most reliable way to identify a vessel is by referring to its International Maritime Organization number, which remains with the vessel throughout its lifetime. This is the method used by the UN to specify ships and one that the Government recommend.
The names of those who are on UN lists can be subject to regular changes. As an example, the UN list relating to North Korea has changed five times in the past year. The ability to refer to a UN list, without having to change regulations each time the UN list is amended, would not only be less bureaucratic but would result in less risk of mistakes. I hope that I have underlined the importance of referring to the UN and IMO lists when designating people and specifying ships and that, in the light of that, having provided that clarification, the noble Baroness will be minded to withdraw her amendment.
Baroness Northover
“( ) provide for the procedure to be followed for an application for an exception or licence.”
Baroness Northover
My Lords, I shall speak also to Amendments 42 and 50 in my name and that of my noble friend Lady Sheehan. I also support the amendments in the names of the noble Lords, Lord Collins and Lord Lennie.
We return here to exceptions. The Law Society of Scotland has pointed out to us that there is no provision for regulations to provide for the application procedure for an exception or licence, so that is contained in Amendment 39. We feel that it is useful to have provision for exceptions and licences, and therefore that we need to provide for an application procedure for them. Amendment 42 seeks to make the policy on exceptions clearer, so that they can be granted for humanitarian, development, reconstruction and peacebuilding agencies, as my noble friend Lady Sheehan outlined earlier. Again, we think that it is useful to have those exceptions and, as we discussed earlier, sanctions are having an impact on NGOs. I welcome the proposal by the Minister to meet the NGOs and hope that, therefore, we can take this group of amendments forward in those discussions as well.
Amendment 50 would insert a new subsection in relation to what the Crown Prosecution Service might publish by way of guidance, so that it is clearer where sanctions might have been breached and where somebody might be prosecuted. One thing that we have been hearing is that one uncertainty for NGOs, banks and other suppliers is the lack of clarity on when NGOs or companies will be prosecuted for sanctions breaches. This amendment seeks to clarify that, to assist in that area, too—and, again, I hope that that is something that we can address when the Minister meets the NGOs. I beg to move.
The Earl of Dundee (Con)
My Lords, I support Amendment 42, proposed by the noble Baronesses, Lady Northover and Lady Sheehan, as I do the other proposed amendments in this grouping, including those from the noble Lords, Lord Lennie and Lord Collins of Highbury.
Following what the noble Baroness has just said, I should like to connect four points: first, the case for the Government to provide a licensing system for humanitarian activity; secondly, the desirability that the Government should report back regularly on the humanitarian effects of sanctions; thirdly, the urgent necessity of interim measures to assist NGOs to deal with banking restrictions; and fourthly, the need to implement the recommendations of the current United Nations/Swiss report on international co-operation.
On the case for a licensing regime, as we know, banks are considerably held back by government prohibitions. As a result, the flow of funds for important work is often blocked—for example, in Syria. To redress that anomaly, can my noble friend the Minister say what steps the Government will take to provide a licensing system for essential civilian and humanitarian activity?
Then there are lessons to be learned from Iraq and Somalia, where, as an unintended consequence, broad-based sanctions have impacted adversely on the civilian population, demonstrating the need for frequent scrutiny and review. Therefore, what plans do the Government have to report to Parliament at regular intervals on the effect of sanctions—in particular, where humanitarian work has been impeded?
On interim measures, which ones does my noble friend favour to enable safe, transparent, dependable banking and payment channels? As soon as possible, how will the Government advance a regime of exceptions, to prevent the current blocking of humanitarian work? Such interim measures should reduce restrictions on NGOs functioning in sanctioned countries and surrounding territories.
Just now, fundraising and vital aid are being held up by lack of banking facilities. NGOs active in the Levant, even those registered with the Charity Commissioners, find it difficult to open a bank account in the United Kingdom, and in some instances find it not possible at all. A case in point is Sawa, the first Lebanese NGO to help Syrian refugees when they arrived in the Beqaa valley in 2011. For its achievements in Lebanon and elsewhere, this NGO is much respected; it is the winner of the Global Pluralism Award 2017. However, Sawa is still unable to open a bank account in the UK. Consequently, it cannot receive funds which are urgently required, as well as ready and waiting, in the United Kingdom.
On international co-operation, UK Finance has written a parliamentary briefing paper calling for a new international approach towards humanitarian licensing. Correctly, it asserts that relevant changes in the UK will take proper effect only if also supported and structured elsewhere. A report commissioned by the United Nations along with the Swiss Government advocates setting up viable, transparent safe banking and payment corridors. Not least, that expedient would improve the flow of permissible funds into Syria. I know my noble friend would wish the UK to take a lead in assisting this process. Therefore, what plans do the Government have for backing up the recommendations of the UN and the Swiss authorities’ report so that these proposals can then be taken forward?
Lord Collins of Highbury
My Lords, I support all the amendments in this group and address particularly Amendments 40, 41 and 51 and the requirement for a fast-track process. Like the noble Baroness, Lady Northover, I welcome the Minister’s commitment to meet the NGOs before the next stage of the Bill. It is important to understand that their anxiety is not due to the Minister’s lack of commitment, his intentions or the policy of the Office of Financial Sanctions Implementation, which has a stated policy of processing licence applications for humanitarian purposes as quickly as possible. However, the NGOs and all the amendments in this group seek to create more certainty because, as the noble Earl mentioned, delays occur and when sanctions are biting hard we are unable to get assistance where it is needed. Humanitarian crises can emerge extremely suddenly and we are most concerned about how the new regime will deal with them. As the noble Earl said, there are plenty of examples of the costs of slow-moving sanctions policy—for example, in Somalia in 2011, where uncertainty about the sanctions regime slowed down the NGOs’ response to the famine in that country. I certainly support the proposal of the noble Baroness, Lady Northover, for a general licensing exemption. I hope the Minister will come back with some very concrete reassurances after meeting the NGOs, so that there will not simply be his kind words but a declaration in the Bill to ensure that uncertainty is removed.
Lord Ahmad of Wimbledon
My Lords, Amendment 39 seeks to enable the procedure by which individuals or entities could apply for licences and exceptions to be included in the regulations. Amendment 40 would require the Government to establish a fast-track process for dealing with requests in respect of exceptions and licences for humanitarian purposes, as the noble Lord, Lord Collins, just highlighted.
I would like to make it clear that the consultation on the White Paper raised the need for clear guidance and swift and robust licensing processes. I assure my noble friend Lord Dundee that the Government are committed to a positive reply on both issues. I hope the Committee will be reassured that, given the number of departments involved and the many different derogations, exemptions and grounds for licensing that exist, the relevant application procedures in each sanctions regulation are all contained in guidance. This guidance is publicly accessible to all via various departmental websites. To reproduce them in the regulations themselves would certainly create a substantial administrative burden and greatly lengthen the instruments, so we do not think it is necessary to do that.
On Amendment 40, the variety and complexity of exemptions and licensing arrangements in place means it could also be difficult to establish a single fast-track process that would be straightforward to operate. The Government believe that the criteria for considering the prioritisation for granting licences and exemptions should remain as flexible as possible. We have already committed to dealing with licences as swiftly as possible and we will of course prioritise urgent requests. The fact that a licence is required for humanitarian reasons is something that we already factor into, and will continue to factor into, the time we take to respond to the request. However, I am sure that noble Lords will also acknowledge that humanitarian licences are not the only ones that might require an urgent response. For example, a legal fees licence might be needed to enable an imminent court deadline to be met. To have a fast-track procedure confined to humanitarian licences alone might put these at additional risk by giving priority to a humanitarian needs licence that is not urgent over another request that is. For all these reasons, we do not consider that new requirements need to be added to the sanctions regulations.
I appreciate the sentiment behind Amendment 41, which proposes that a consultation be undertaken for an overarching framework for exceptions and licences. The White Paper consultation on exceptions and licences highlighted the need for good systems and clear guidance when applying exceptions and licensing. We have taken on board the comments of all respondents and replied to them and, as we said in our reply, we intend to design the post-Brexit licensing framework based on these representations. We also intend to consult industry from now until the day we leave the European Union and thereafter, to ensure that the framework allows us to be flexible and has the minimum possible effect on industry while having the maximum effect on the intended targets.
It is also true that an overarching framework for licences might not allow us to take advantage of the flexibility that we currently have for each regime. For example, the licensing grounds for a proliferation regime should be different from those of a misappropriation regime. Different types of sanctions also require different approaches. We currently have centres of expertise on the different types of sanctions, and any move to an overarching framework might put these at risk.
Finally, the Committee will be aware that the moment of leaving the EU is approaching. In that time, after the Bill is enacted, we will need to design the replacement UK regimes. To undertake a consultation exercise on top of that will make it harder to prepare in time. Given that the purpose of this amendment is to ensure good licensing and clear guidance, I hope I have been able to reassure the Committee that we are committed to both.
On the humanitarian exceptions, I have great sympathy with the intention behind Amendment 42; humanitarian, development, reconstruction and peacebuilding agencies need to continue the important work they conduct, often in very difficult circumstances, without fear of unintentionally falling in breach of sanctions. The Government should have the necessary discretion to enable this. The intended effect of this amendment is to make it explicit in the Bill that the types of exceptions that can be granted include,
“humanitarian, development, reconstruction and peace-building agencies”.
However, the addition is unnecessary, as Clause 14(2) as currently drafted allows the Government to create exceptions and issue licenses for activities that are not explicitly listed in Clause 14(2). It is the Government’s intention to use this drafting to create exceptions for a wide range of activities. Humanitarian activities are currently included under existing exceptions and licensing provisions in the sanctions regimes in place, and I assure noble Lords that we intend to continue to include them. Clause 14(6) is an additional clarification of purposes for which exceptions can be created, not an exclusive list. For this reason, accepting the amendment would have no effect on the powers, as they are already contained there and therefore unnecessary.
Clause 14(2)(b) also gives a power to issue general licences. This goes further than the position we currently have under EU law, giving the Government the ability to put in place licensing arrangements for humanitarian purposes, which would enable multiple parties to undertake specified activity without the need for a specific tailored licence. Given that this provision is unnecessary as we already have this power, I hope noble Lords will not press the amendment.
I entirely agree with the intent—although the drafting may need to be looked at—of Amendments 50 and 51, which we understand require the Government to provide guidance about enforcement procedures for sanctions breaches. The need for clear and accessible guidance was highlighted throughout the Government’s consultation on the White Paper. In our response, we said:
“We recognise the call for clear and consistent guidance. Accordingly, the bill would provide for the government to issue guidance on the content and implementation of sanctions. The government is committed to ensuring that this guidance would be of a high standard”.
I am happy to say that the Government have delivered on that promise and have included a provision in the Bill—Clause 36—requiring Ministers to issue guidance about any prohibitions and requirements imposed by sanctions regulations. There will be a mandatory requirement to provide comprehensive guidance for all those affected by sanctions implementation. One strand of the guidance requirement set out in Bill—in Clause 36(2)(b)—explicitly specifies that the guidance may cover,
“the enforcement of the prohibitions and requirements”.
In line with this, we intend to continue to publish guidance on sanctions enforcement.
Clause 36, which we will debate at a later stage, provides for a more comprehensive duty than that specified in the amendment. It has been drafted to allow guidance to be given to all persons in the UK and it enables consultation with sources of expertise as appropriate. For example, we do not expect that the CPS will need to feed into any guidance about how civil monetary penalties are issued in respect of breaches of financial sanctions.
My noble friend Lord Dundee asked specific questions about help for NGOs. I am not sure whether he was in your Lordships’ House when I discussed that matter with the noble Lord, Lord Collins, and the noble Baroness, Lady Northover. We will be meeting NGOs before the next stage of the Bill to discuss how we can better understand and address some of their concerns, but we will continue to issue clear guidance to them. I also assure my noble friend that we will provide speedy and efficient responses to requests for licences. As I have already indicated, under the Bill we can issue general licences, which offer more comfort to banks—which I believe my noble friend specifically mentioned—and give them a greater appetite to assist in these areas.
With that somewhat detailed explanation of where we currently stand on Clause 36, I hope the noble Baroness will be minded to withdraw her amendment.
Baroness Northover
My Lords, I thank everybody, especially the noble Earl, Lord Dundee, for contributing at this late stage of the evening. I welcome that. I agree with the noble Lord, Lord Collins, about the need for certainty in the Bill. I noted what the Minister said. It reflects the complexity of Brexit and the energy that it is taking up, even in this area, and I therefore look forward to the meeting with NGOs that he has promised. In the meantime, I beg leave to withdraw the amendment.
Baroness Northover
Baroness Northover
I shall speak also to Amendment 45 in my name and that of my noble friend Lady Sheehan. I also support Amendment 44 in the name of the noble Lord, Lord Collins.
Once again, we are concerned that regulations confer wide powers—in this case of entry and disclosure. Clearly, regulations should not authorise the disclosure of information that is subject to legal professional privilege, and the noble Lord, Lord Collins, will no doubt address that in a moment.
We are seeking the deletion of Clause 15(1)(d) and (e), which confer wide powers of entry and to authorise or restrict the disclosure of information. We want to give the Minister an opportunity to place protections around these areas, as we have in other instances. We are also concerned that under Clause 15(3)(b) an “appropriate authority” could be,
“such other person as may be prescribed”.
It is difficult to think of anything wider than that description. Therefore, once again, we flag enormous concern about wide powers—especially those put in regulations. I beg to move.
Lord Lennie
My Lords, I will speak to Amendment 44 in this group, which seeks to add the words printed in the Marshalled List to the end of Clause 15 to give protection to the relationship between client and lawyer. It may be thought that that goes without saying, but it does not seem to as far as this Bill is concerned. Legal professional privilege is key to the rule of law and the administration of justice. To omit it from this legislation would seem to be a mistake. It permits information to be communicated between a lawyer and a client without fear of it becoming known to a third party without the clear permission of the client, except in rare cases where LPP is used to protect communications from a client in a case of illegality.
Lord Ahmad of Wimbledon
My Lords, the provision for sharing information is vital to ensure that a sanctions regime works in practice. For example, the provision of information by the private sector is essential in monitoring the financial transactions of sanctioned persons. We need this information to ensure effective implementation and compliance with our obligations under the various sanctions regimes, and to ensure robust enforcement when the law is broken.
The information powers contained in the Bill will ensure that sanctions regimes continue to work effectively by requiring people to report relevant information and by authorising the sharing of information. It may be helpful for me to specify those powers. They provide the basis for the Government to monitor compliance with the regulations; to investigate and obtain evidence if they believe that the regulations have been contravened or circumvented; and to share information with third parties to enable co-operation on the development of sanctions and enforcement efforts.
There is already a duty in EU law on all persons in the UK to supply information to the relevant competent authorities. We currently make failure to comply with this duty an offence only in relation to “relevant institutions” in the regulated financial services sector and “relevant businesses or professions”. We could, if we chose, apply this duty more widely. Clause 15 has been drafted widely to enable the duty to be placed on, and the offence of not supplying information on financial sanctions breaches to apply to, all persons in the UK. The extension of this offence to cover everyone who obtains such information in the course of their business would equalise the scope of the offence with the scope of the related duty. This will give the Government the ability to compel production of information to aid the investigation of reported breaches and ensure there is effective redress for not complying with legal obligations. The regulations will safeguard how the information is used, stored and shared. This will be consistent with the Government’s data protection, commercial and banking confidentiality obligations.
These powers provide the basis for the Government to continue monitoring compliance with the regulations and to obtain evidence if they believe that the regulations have been contravened or circumvented. They will also enable the Government to share information with partners to aid their enforcement efforts.
The deletion of two key paragraphs as suggested in Amendment 43 would have a serious impact on the enforcement of UK sanctions. Let me illustrate how. First, powers of entry set out in paragraph (d) are essential for compliance inspectors to check that the terms of general licences have been upheld and that there has been no circumvention of sanctions. These powers are in line with those in the Export Control Order 2008, which were reviewed in 2014 and considered necessary for ensuring compliance with the terms of licences. Without them, authorities would be unable to check that exporters were complying with the terms and conditions of their licences if they were unco-operative.
Secondly, deleting paragraph (e) would completely remove our ability to authorise the sharing of information relating to designated persons. This is essential both for law enforcement purposes and for liaising with international bodies and our foreign partners on compliance and enforcement in individual sanctions cases. It would also have unwanted effects as we would be unable to communicate information to designated persons, them affected by sanctions and the wider UK. We maintain that the powers in paragraphs (d) and (e) ensure continuity with the existing legislation. Both will continue to be needed for sanctions when we leave the EU.
Amendment 44 seeks to ensure that legal professional privilege, or in Scotland the obligation of confidentiality, is upheld. I would like to say first and without any reservation that of course we do, and intend to continue to, respect legal professional privilege, a point made by the noble Lord. This is the position we currently take in all sanctions regulations and we intend to continue to do so. As the Bill does not explicitly authorise the Government to make regulations that remove this privilege, we do not think we would be able to do so if we so desired. Any such cavalier use of the power would surely be struck down by the courts. I hope that I have reassured noble Lords of the Government’s intentions towards legal professional privilege and that any departures from it can and undoubtedly will be the subject of a judicial decision.
Finally, I turn to Amendment 45. I think I understand the intent of this amendment. It is to ensure that persons who do not have ministerial accountability cannot request information from sanctioned persons or use that information. However, the amendment unnecessarily limits the Government’s ability to request information which is vital for ensuring that sanctions can be enforced and implemented in a robust manner. It will increase the workload of Ministers significantly and unnecessarily if they are required to approve every single information request relating to sanctions. It would also cause difficulty where the Minister is not the appropriate authority. For example, shipping and aircraft sanctions will be implemented by bodies outside Whitehall such as the Civil Aviation Authority, harbour authorities, and the Registrar General of Shipping and Seamen. Depriving them of the ability to seek and use information will make it harder to implement sanctions and will only assist those who avoid or breach them. This clause allows us to work with industry to ensure that sanctions are effective and that we have all the necessary information and evidence available.
The restriction on who can use the information requested would create difficulties in the use of powers to impose civil monetary penalties for breaches of financial sanctions given to HM Treasury in the Policing and Crime Act 2017. In that law, the relevant Minister is required to personally review penalty decisions imposed by the Treasury; the Minister’s view is independent of Treasury officials. The amendment would place the Minister in the investigatory and decision-making process, and then the review process. This would not be appropriate and would give rise to challenge on appeal on process grounds.
I understand the concerns that the Committee might have about these powers being more widely available, as the noble Baroness mentioned, but I hope I have reassured the Committee that we believe that they are necessary for the effective implementation of sanctions. Moreover, I hope the Committee will also be reassured by the fact that the appropriate Minister cannot make regulations delegating powers which are incompatible with the basic and fundamental rights of people in the UK. Indeed, as noble Lords will know, Section 6 of the Human Rights Act 1998 forbids it. I hope that, with this detailed explanation, the noble Baroness is reassured and will withdraw her amendment.
Baroness Northover
I thank the Minister and others. He will know that the deletion of clauses is, as is usual in this place, a challenge to the Minister to come up with something that is more consistent with amendable primary legislation. That is what we are seeking here, along with more specific detail. I have already made reference to the fact that it is difficult to see that the Human Rights Act is necessarily the protection the Minister thinks it might be, but in the meantime, I beg leave to withdraw the amendment.
Baroness Northover
Baroness Northover
I rise to move Amendment 47 and speak to the other relevant ones in the group.
We are seeking to delete sections that allow the creation of offences by regulation. I am sure that we will return to this as we go through the Bill. The Delegated Powers Committee notes the very wide powers and very high penalties that are capable of being set for criminal offences under the regulations. I know that other noble Lords will contribute and I look forward keenly to hearing what the noble and learned Lord, Lord Judge, has to say. We are enormously concerned about this provision. I beg to move.
The Deputy Chairman of Committees (Lord Haskel)
I have to inform the Committee that if this amendment is agreed, I cannot call Amendment 48 because of pre-emption.
Lord Judge
My Lords, I rise to address the whole issue of Clause 16 and Amendments 70 and 71, relating to paragraphs 15 and 18 of Schedule 2. Time is getting on. I have been very brief in my previous three efforts during the debate. I will not take much longer, but I have carefully measured what I will say.
These provisions are lamentable and should not disfigure our statute book. It used to be an invariable principle that criminal offences could be created only by statute. For example, we had a little history lesson earlier, going back to the reign of King Henry VIII, with his famous Henry VIII clauses. Even his subservient Parliament did not give him power to create criminal offences without a statute. The principle has been broken over the years. It is open to the Minister to say that this sort of legislation has happened before and precedents have been set; he may very well do so. Bad precedents should be overruled, not least in this House.
What is pernicious about this legislation? It is secondary legislation that will give power to a single Minister, by regulation, to create criminal offences for conduct that contravenes not statute, but laws made by secondary legislation. It is secondary legislation on secondary legislation, at the end of which, in Clause 16, there may be a 10-year sentence. The mind boggles. Has this been thought through? It does not stop there; that is only the start. The legislation will also simultaneously enable the same Minister who created the criminal offence to redefine the rules of evidence, as they apply to the offence he has created—talk about being judge in your own court—and the Minister creating the offence will be given power, by regulation, to provide for defences as he sees fit, if he sees fit.
That is an astonishing combination of powers. Put in this way, regulations will govern a newly created offence or offences and say, “This is an offence of strict liability. What if the bank that got it wrong when it decided that it would lend money to somebody, failing to appreciate that he was designated, didn’t know? Too bad. This is an absolute offence”. That could be included. They could also say, or a Minister could decide, that those sorts of offences are so precious to our allies and our foreign obligations—let us not overlook terrorism, which is in the Bill—that we had better say that the burden of proof should be on the defendant to prove that he was not a terrorist or breaking the sanctions. That is assuming that there will be a defence at all. Without going into every detail of the rules of evidence, the regulations may provide that all or any of the laws of evidence, which are designed to protect the defendant from an unsafe conviction, may be abrogated by ministerial decree. I assume, as I did at Second Reading, that we will be allowed a trial, but at the end of the trial, if there is conviction for an absolute offence, 10 years’ imprisonment is available.
I hope the Committee shares my view that this is shocking. It is not the way we should create criminal offences and administer criminal justice. It gives too much power to one individual. With great respect, I am not thinking of this Minister or the shadow Minister. We are legislating for 10 or 20 years. Do we want to give this power to anybody who may come to power? Do we want to give these kinds of powers to any Government that we may get? I reckon not. This is too much power in the hands of the Executive. If we let this through it will be a precedent for which Ministers for the next 50 years will sit on this side of the House and say, “But it’s happened before. It’s a precedent”. What sort of a country will we be?
Lord Norton of Louth (Con)
My Lords, I shall be brief. I endorse what the noble and learned Lord, Lord Judge, said. Like me, he is a member of the Constitution Committee, which has reported on this Bill and raised the concerns that he has just outlined. There are particular problems with Clause 16(3) and (4). This amendment would remove them, but by itself it would not be sufficient to address the concerns he has indicated.
The Constitution Committee has made the point before that it is unacceptable for offences to be created by regulation, as we conclude. On that point and the point the noble and learned Lord made about evidence, we consider that such regulation-making powers are constitutionally unacceptable and should not remain part of the Bill. It is important that we do not mess about with the particular provisions of the clause, rather that it is taken away and the Government come back with something that is constitutionally acceptable. As the noble and learned Lord mentioned, this is going on the statute book. It will be there for as long as Parliament allows it to remain and it would therefore be in the gift of future Ministers. That, as he indicated, is not acceptable.
Baroness Bowles of Berkhamsted (LD)
My Lords, I shall speak to the whole of this group of amendments. I gave notice of my intention to oppose Clause 16 standing part of the Bill. From the debate we have had it is quite clear that there is a little bit of an earthquake going on throughout the whole of the Bill. In a sense, its epicentre, as has been rightly explained by the noble and learned Lord, Lord Judge, comes to a climax with the criminal sanctions. Deleting the criminal sanctions parts would not provide a solution because they build on all the other wrongs, if I may call them that, that exist in the other clauses—throughout the sanctions part debated today and the powers contained in Schedule 2, which we will debate. We may eliminate those criminal sanctions, but we would still have an awful lot of other powers that will still do an awful lot of wrong. The fact that the criminal sanctions are laid on top of them is what makes it so egregious.
I move on to the transposition of the fourth money laundering directive and the issue of precedents. It has been said that there are precedents for creating criminal offences by statutory instrument and that in the past as well as now constitutional committees and delegated powers committees of this House have objected. In the earlier debate, the noble and learned Lord, Lord Judge, explained that those criminal offences might be buried among many other regulations. I have a good example here; it is a pretty thick one. It is the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017—that is, the fourth money laundering directive. I think that there are 116 pages of dense type there, together with the schedules, and 109 other articles—sorry, we are not in Europe any more, or we will not be, or we may not be, or maybe we are. There are 109 other regulations contained within that. One of those is new—we have just dealt with it again recently—but in terms of the precedent, they derive from things that happened in the Proceeds of Crime Act. They reflect what has happened to the primary offence of money laundering, on to the secondary or derived offences where banks or other financial institutions have failed to have the right procedures in place. So there are kinds of precedents, even though I do not agree with the way that it has been done.
If we turn to what we have both in Clause 16 and Schedule 2, we see that there are no limitations at all. There are very open powers—they are even more open in Schedule 2 than in the sanctions part of the Bill. There may have been a failed attempt to create a framework for those criminal offences by referencing alongside them that the Minister will look to the matters of defences and evidence, but that has created other problems. As was again elaborated by the noble and learned Lord, Lord Judge, how can we tell that those will not be the right kinds of provisions? What do we know about the future?
The noble and learned Lord, Lord Falconer, said earlier that, ultimately, the only thing that matters is what is in the Act; it does not matter what the Minister’s intentions are, even if he says what they are—it is the words of the Act. We do use legislation for purposes that were not intended. In 2008, at the height of the financial crisis, the UK used anti-terrorism legislation to freeze £4 billion of assets of Landsbanki. It caused us a great loss of reputation in some circles, which is not to say I endorse what Landsbanki was up to. When the Anti-terrorism, Crime and Security Act 2001 was going through Parliament, I do not think anybody said, “We’re going to use this to freeze the assets of banks because they were a bit too laissez-faire in their financial regulation”. Something that was done for one purpose was used seven years later for another. Who is to say that there are not many other examples—I am sure if I dig I can find them—or that we may not get examples like that in the future? One cannot have new offences that are unpredictable as to how the rule of law, the defence and due process will operate. One has to have those safeguards, and this Bill does not do any of that.
I refer to what the Minister said in the debate on Clause 2 on whether one should wind up a company or disqualify directors. This was in the context of a company that would have been breaching sanctions and doing things such as arms trading. The Minister said that those amendments would not do because all the Bill aims to do is to replicate sanctions and the amendments went over and above that—the sanctions provisions that are already in existence, he meant—and we do not want to go further than other countries on sanctions and do what the UN and the EU are not doing. I can tell noble Lords that they do not do unlimited, undefined, potentially abolish-the-defence type of criminal sanctions. Actually, they do not have the powers to do that, but I doubt that they would do it anyway.
Another thing that the Minister said was that the sanctions need to be reversible. I fear that there is nothing very reversible about 10 years in prison. There is something seriously wrong here: it needs a lot more structure around it if they are even going to make the case that we can have sanctions, for instance, if they are going to follow, or punishment for sanctions, if they are new ones. The circumstances that give rise to requiring sanctions might be unpredictable, but the general nature of the sanctions that are imposed are not. You stop people trading or stop people having access to financial services: you can certainly put a framework around those. No effort whatever has been made, yet if you turn to something such as the fourth money laundering directive—and, indeed, the very regulations that have just been made to transpose it—all those safeguards are already there. There is absolutely no reason why they should not be replicated in the Bill.
Lord Thomas of Gresford
My Lords, I emphasise everything that has been said up to now about how unacceptable Clause 16 is. If someone is a designated person, sanctions are imposed upon him and he wilfully and deliberately breaks those sanctions, there is perhaps room for criminal offences which can be defined and can carry sentences of up to 10 years’ imprisonment. However, these regulations are concerned not with that so much as with trying to create a system of regulation of banks and providers of financial services to encourage them to report and to follow what is required in order to prevent money laundering or the busting of sanctions. These are banks and institutions which are not acting wilfully and deliberately and so are not criminal in that sense.
It might be proportionate in those cases—this is what has happened with other regulations—to have a small criminal sanction for a breach of the particular regulation which requires that you report on a client. That is one thing, but here there seems to be a confusion; the two types of criminality are put together. The serious criminality of breaching the sanctions is looked at in the same way as a failure to report what a client may be doing which could amount to a breach of sanctions. It is wrong that that should be subject to serious criminal sanctions of the nature described in the Bill.
What really offends me about it, however, is that the Minister has power to stipulate where the burden of proof should lie: for example, whether hearsay evidence could be introduced or whether a particular defence can or cannot be run—“It shall not be a defence to do” whatever it may say. That is the sort of thing you see in statutes from time to time. It is not Parliament deciding that; it is the Minister. He creates his criminal offence and then makes it almost impossible for a person to defend themselves.
It is one thing to face a charge where you know that the burden of proof is on the prosecution—and there are strict rules of evidence which apply across the board in criminal cases. It is something else if a Minister has power to create his own form of criminal law. That is really what this is all about. It is wholly unacceptable and must be defeated.
Lord Collins of Highbury
My Lords, I do not want to repeat the comments that have been made. The one thing that I would make clear to the Minister is that he has a wide range of opinion against him on this, not least the Law Society’s own briefing, which raised huge concerns about this clause. The Constitution Committee has been very clear. The Delegated Powers Committee has also raised concerns, even though it says that the Foreign & Commonwealth Office has made “a compelling case” in relation to this.
The noble Baroness, Lady Bowles, referred to the argument that it is impossible or too difficult to create a framework. The Delegated Powers Committee said that,
“the FCO’s reasons provide a compelling case for allowing the creation of criminal offences in sanctions regulations … Trying to set out the offences in primary legislation would risk producing offences and penalties that are defective or disproportionate or both”.
We have heard in the debate that it cannot be beyond the powers of the Minister to come up with a much better answer to this difficulty than the one currently being offered by his department. Even though the Delegated Powers Committee says that there is a compelling case, it thinks that parliamentary scrutiny should be enhanced if these powers are conceded. So I hope that the Minister will give deep thought to this and come back at some stage with a much better and more acceptable option.
Lord Ahmad of Wimbledon
My Lords, obviously I have noted the opinions that have been expressed, as the noble Lord, Lord Collins, said. I see that your Lordships’ Committee is concerned about the new criminal offences. To be clear: these types of offences already exist. People who breach financial, trade, immigration and transport-related sanctions can be convicted for those breaches in the criminal courts. We will continue to legislate on this basis so that breaches of sanctions can continue to be an offence.
We have set safeguards. We have set a cap of 10 years on maximum sentences for breaches of trade sanctions, which is consistent with the Export Control Act; for breaches of financial sanctions the cap is set at seven years, which is consistent with recent changes introduced by the Policing and Crime Act 2017. Coming back to the point made by the noble Lord, Lord Thomas, about differentiation between the types of offence, we have lower sentences in respect of information provisions and money laundering regulations.
I hear what noble Lords have said. The purpose behind the sanctions is to replicate the existing legal frameworks for enforcement across the various forms of UK sanctions that will be created by the Bill. For all types of sanctions, Clause 16 includes provision for creating offences and dealing with offences, including defences and the treatment of evidence. It also provides for powers and duties to be vested in persons who assist in the enforcement of any prohibitions. For example, for trade sanctions, Clause 16 enables regulations to apply any provision of the Customs and Excise Management Act 1979, which provides a full suite of powers for the enforcement of these measures. The clause also enables civil monetary penalties, introduced in the 2017 Act, to continue to be issued for breaches of financial sanctions. It does not extend these to other types of sanctions. It also enables regulations made under the Bill to replicate the current position on maximum terms of imprisonment. I have already referred to that. It contains further powers for deferred prosecution agreements and serious crime prevention orders for all measures in the Bill.
Clause 16 also makes a provision that would enable the UK to extend the existing offence of failing to supply information on financial sanctions breaches. As noble Lords know, there is an existing duty on everyone to supply such information, which will be transposed by the Bill. However, the associated criminal offence for not doing so applies only to relevant institutions in the regulated financial services sector and relevant businesses or professions. The Bill enables the UK to equalise the scope of that duty and offence, as I said earlier, by making it a general offence applicable to everyone.
I assure the Committee that I am listening carefully to the representations being made, in particular those made by the noble and learned Lord, Lord Judge. However, we believe that the sanctions enforcement provisions, including criminal and civil penalties, remain proportionate to the scale and nature of sanctions breaches and that they will continue to act as a deterrent. That is the ultimate objective. Although I am sure I will not get a ringing endorsement for—or agreement with—everything I have said, I hope I have outlined where the Government are coming from in drafting Clause 16. Based on my explanation, I hope the noble and learned Lord will be minded to withdraw his amendment.
Baroness Northover
The Minister will have heard the voices, including those from behind him on his own Benches. The noble and learned Lord, Lord Judge, was right to get up because I knew my best bet was to introduce the amendment briefly and pass it across to him. The Minister will have heard him, too. Something tells me that we will return to this on Report and that various things will happen in between but, in the meantime, I beg leave to withdraw the amendment.