Sanctions and Anti-Money Laundering Bill [HL]

Lord Judge Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 21st November 2017 Lords Chamber

Moved by

[Lord Judge]

1: Clause 1, page 1, line 8, leave out “appropriate” and insert “necessary”

[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.

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[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.

Amendment 1 withdrawn.

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Moved by

[Lord Judge]

10: Clause 2, page 3, line 11, leave out sub-paragraphs (ii) and (iii)

[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.

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[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.

Amendment 10 withdrawn.

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Moved by

[Lord Judge]

24: Clause 9, page 9, line 32, leave out paragraph (b)

[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.

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[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.

Amendment 24 withdrawn.

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[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.

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Moved by

[Lord Judge]

27: Clause 10, page 10, line 10, after “appropriate” insert “and proportionate”

[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.

[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.

Amendment 27 withdrawn.

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[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?

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[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.

[Lord Judge]

My Lords—

[Baroness Northover]

My Lords, it is this noble Lord doing that.