Sanctions and Anti-Money Laundering Bill [HL]

Baroness Northover Excerpts

Committee: 4th sitting (Hansard): House of Lords
Tuesday 12th December 2017 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I will wait a moment while the Minister gets into his listening mode. This amendment picks up points which have already been addressed in Committee relating to the principles of parliamentary scrutiny. Your Lordships’ Constitution Committee said that,

“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”.

I know that the Minister will say: “We are doing precisely that. We are using the affirmative procedures”. This probing amendment seeks to increase the level of parliamentary scrutiny so that powers cannot be used until there is a positive vote by Parliament. It is important that we do not walk blindly into a situation whereby we give the Executive powers that cannot be amended, considered or changed. The Minister may say that the necessary scrutiny powers will be used and that they are in the Bill, but why does he not accept that we need the highest possible level of scrutiny? Therefore, I seek from him an assurance that these new powers will not be used and that draft orders will not come into force until there is a vote of Parliament at the highest level.

I certainly accept that there is a need for speed and for delegated powers, but I hope that the Minister will tell us the specific circumstances in which the existing arrangements are not sufficient, and why there needs to be a speeded-up process that does not rely on primary legislation. We have tabled other amendments that we shall discuss later in Committee but I hope that the Minister will explain exactly why he thinks these new powers are necessary without these improved levels of scrutiny. I beg to move.

[Baroness Northover (LD)]

My Lords, I support the noble Lord, Lord Collins. I wish to speak also to Amendment 75A, which stands in my name and that of my noble friend Lady Sheehan.

We clearly have an international obligation to agree UN sanctions, which, of course, we play a part in agreeing at the UN. It is when we come to sanctions that do not fall under that heading that we must be especially careful about what we leave simply in the hands of Ministers to decide. The noble Lord, Lord Collins, has made that case. Our Amendment 75A would add Clause 16 to those which must be covered by the affirmative procedure. That surely should be the least that should happen. The noble Lord will have heard the debate on Clause 16. The noble and learned Lord, Lord Judge, described this clause as “lamentable”. It gives the power to a single Minister, by regulation, to create criminal offences for conduct that contravenes laws made by secondary legislation. I am sure that we will come back to this on Report. Our Amendment 75A would place a small check on this power, and I therefore commend it to the Minister.

[Baroness Sheehan (LD)]

My Lords, I wish to speak to Amendment 75A, which is also in my name. I agree with all that the noble Lord, Lord Collins, said. The Bill allows such sweeping powers to future Ministers that we on this side of the House seek to put in place safeguards which will enable Parliament greater scrutiny over the regulations made under Clause 16—namely, that they are made by the affirmative procedure.

Clause 16 is the enforcement clause which includes not only the creation of criminal offences punishable by up to 10 years in prison but makes provision for matters in relation to those offences, including defences and evidentiary matters. The Constitution Select Committee has recommended that Clause 16 should not remain part of the Bill, stating its opinion that such regulation-making powers are constitutionally unacceptable. Indeed, we heard arguments to that effect from the noble and learned Lord, Lord Judge, and my noble friend Lady Bowles on the first day of Committee. I agree with the noble and learned Lord, Lord Judge, that this clause should not disfigure our statute book, as he said. Therefore, this amendment is purely an attempt to create a safety net should Clause 16 remain part of the Bill.

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Moved by

[Baroness Northover]

76: Clause 45, page 30, line 45, at end insert—
“( ) A statutory instrument containing regulations under section 1 that repeals, revokes or amends—(a) an Act of the Scottish Parliament,(b) a Measure or Act of the National Assembly for Wales, or(c) Northern Ireland legislation,must receive the consent of the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly, respectively.”

[Baroness Northover]

My Lords, Amendment 76 is in my name and that of my noble friend Lady Sheehan. It states that where a statutory instrument that contains regulations under Section 1 repeals, revokes or amends an Act of the Scottish Parliament, a Measure or Act of the National Assembly for Wales, or Northern Ireland legislation, that instrument must have received the consent of the Scottish Parliament, the National Assembly for Wales or the Northern Irish Assembly. I am sure that the Minister will argue that the Sewel convention provides that the Parliament of the United Kingdom,

“would not normally legislate with regard to devolved matters without the consent of the Scottish Parliament”,—[Official Report, 21/7/1998; col. 791.]

but that it does not apply to UK subordinate legislation.

Nevertheless, the new regulation-making powers in the Bill are, as we have heard throughout the Committee stage, very significant. The regulations detailed in Clause 45(5) will enable the Government to amend any Act of the Scottish Parliament and any legislation passed by the Assemblies in Wales and Northern Ireland. I am grateful to the Law Society of Scotland for flagging this up. Once again, this is a wide-ranging power that requires further justification and checks, which is why we have put this amendment forward. When the Minister replies, it would be helpful if he indicated which devolved legislation the Government would envisage amending under regulations made under Clause 1 and, for that matter and perhaps more importantly, which they would not. I beg to move.

[Baroness Sheehan]

My Lords, I support Amendment 76, to which my name is attached. It would amend Clause 45, which lays out the “Parliamentary procedure for regulations”. The amendment gives substance to the recommendation in the eighth report of the Constitution Select Committee which, at the end of paragraph 6, said:

“If it is the Government’s intention that it would, in practice, liaise with the devolved administrations prior to the exercise of this power, such a requirement could be written into the Bill”.


The Government have argued that this power reflects a reciprocity with that which enables Welsh or Scottish Ministers to amend Acts of Parliament. However, reciprocity can be said to operate only where one is comparing similar powers; this is not the case here. Welsh and Scottish legislation can authorise devolved Ministers to amend UK legislation only within devolved competence, whereas UK legislation can authorise UK Ministers to amend enactments of the devolved legislatures irrespective of devolved competence.

I believe this to be a common-sense amendment, one that seeks the consent of the devolved nations before amending any Act passed by the Scottish Parliament and any legislation passed by the Assemblies of Wales and Northern Ireland. Dare I say it, consultation with the devolved nations may save the Government from further embarrassments such as the fiasco with the DUP that we witnessed, open-mouthed, just last week.

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[Lord Ahmad of Wimbledon]

My Lords, the Bill provides powers to be used in pursuit of the UK’s foreign policy and to ensure our national security. Under the UK’s constitutional settlement, these matters are reserved to Westminster. This Bill is accordingly one that is so reserved.

The amendment would, in effect, give the devolved Administrations the right to veto legislation related to UK foreign and security policy. This is contrary to the devolution settlement between Westminster and the devolved legislatures. Devolved legislatures do not have any right to veto measures where they relate to matters of foreign and security policy, including decisions of the UN Security Council. Any such amendments can arise only as the consequence of the sanctions themselves. Their primary purposes will always be a reserved matter.

I reassure noble Lords that during the preparation of the Bill the devolved Administrations were fully consulted on this point and they have not disagreed with our assessment that the Bill is reserved. The amendment would rewrite the devolution settlement, and I am sure that was not the intention behind it.

On the observation and implementation of international obligations within the competence of the devolved Administrations, while they have the power to legislate to implement measures required as a result of international obligations entered into by the UK, that does not provide them with any right to veto UK measures for the purposes of foreign and security policy, including measures negotiated and agreed by the UK in the UN. As I have already said, we have consulted extensively with the devolved Administrations on this very point and they have not disagreed with the Government’s assessment.

[Baroness Northover]

My Lords, I thank the Minister for that response which was along the lines that I anticipated. Yet again, it is an argument for generally limiting the powers in the Bill so that the concerns that I have expressed would be lessened. I thank noble Lords for their support. In the meantime, I beg leave to withdraw the amendment.

Amendment 76 withdrawn.

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[Lord Collins of Highbury]

My Lords, in this group of amendments we are trying to address an issue that we have discussed before but in a way that improves not only accountability but responsibility. Amendment 84 states that the Secretary of State must lay a report before Parliament on the adequacy of the implementation and enforcement of current legislation on sanctions, money laundering and terrorist financing in the Crown dependencies and overseas territories. It requires also that the Secretary of State must consult on whether any further legislative changes or enforcement powers are needed in connection with these territories. Amendments 82 and 83 are also probing, designed purely to raise a debate on the adequacy of the implementation and enforcement of current legislation on sanctions, money laundering and terrorist financing in the overseas territories, the Channel Islands and the Isle of Man.

The Minister has, on previous occasions in Committee, stated that the overseas territories are separate jurisdictions with their own democratically elected Governments. They are not represented in this Parliament and so it has been only in exceptional circumstances that we have legislated for the OTs without their consent. These amendments are of course not about imposing legislation. They are about questioning whether we are meeting our responsibilities and whether we are satisfied with our collective responsibility. The one area in which the overseas territories do comply is foreign policy, and in particular UN sanctions. They do not have a choice about that; they have to meet the obligations that the United Kingdom does.

I want to focus on collective responsibility. I promised the Minister that while I was sitting here I would try to start reading the anti-corruption strategy, and it is worth reading some of it out. Tackling corruption is in the United Kingdom’s national interest. It helps to keep us safe from threats to our safety and security from organised crime, terrorism and illegal migration, and from insiders who exploit their position to access assets for malign purposes. It is our global reputation and global responsibilities that are at stake. These amendments seek to ask whether we are taking those responsibilities seriously in respect of the overseas territories, the Channel Islands and the Isle of Man.

These are not domestic issues. They are not about local finance arrangements. I did say previously in Committee that if the financial services are to thrive, they need to have public confidence. That is what has been stated and why we want to take the lead globally. We know that our reputation as an international financial centre is dependent on people having confidence in it. That responsibility is particularly important in relation to anti-money laundering and the threat from international terrorism. If illegal activities take place in respect of one form of activity, you can bet your bottom dollar that they will be taking place in respect of other activities. That is the real threat that we face.

These amendments are a reasonable request in terms of the overseas territories. They are not necessarily abrogating the other demands that we have been making but seek to ensure that in our global responsibility in the fight against international crime, we have taken all the necessary measures to ensure that we can defend not only our security but that of the overseas territories. I beg to move.

[Baroness Northover]

My Lords, Amendments 82 and 83 ensure that the Act extends to the overseas territories and Crown dependencies, as we have heard, and that regulations in the Bill may be extended to those areas. Amendment 84 makes it clear that the provisions relate not only to sanctions but to money laundering. We had an extensive discussion about this in the previous sitting. These amendments would certainly move us forward, but my question to the noble Lord, Lord Collins, is this: is this strong enough when he states that he seeks to ensure that, “applicable legal frameworks” are,

“sufficiently robust to achieve the objectives of the relevant legislation across the United Kingdom, the Crown Dependencies and the British overseas territories”?

It strikes me that we are not yet in a position where the Crown dependencies and the British Overseas Territories are in the same place as the UK.

The noble Baroness, Lady Stern, and others made a strong case in our previous sitting that it is time to move the matter forward and align the Crown dependencies and British Overseas Territories with the stronger position that we have in recent years secured in the UK. In new subsections (8)(b) and (8)(c), in Amendment 84, we would wish to see that strengthened. Certainly, it is useful to have a report, but we would wish the provisions here to be stronger on the anti-money laundering front. That said, this is clearly an improvement on the current Bill, which is permissive in regard to these areas rather than stating the changes we wish to see.

[Lord Collins of Highbury]

I just want to reassure the noble Baroness, Lady Northover, that simply tabling these amendments does not diminish our support for other necessary changes, particularly in relation to the overseas territories. We want the Minister to say why these bare minimums are not necessary. It is about moving the debate forward; it is not back-tracking. As I said in my opening remarks, we are not saying that this is somehow preferable to some of the other amendments we have moved, but it is a way of holding the Minister to account. He has to explain why he thinks the current arrangements are satisfactory, and say why such a report would not be appropriate, so that we can operate a policy in line with the strategy published yesterday.

[Baroness Northover]

I thank the noble Lord for that clarification, which is very helpful.

[Lord Beith]

My Lords, I am bound, which will be no surprise to my noble friend or to the Labour Front Bench, to express some reservation about conclusions that might be drawn from this amendment but which were perhaps not intended in the way in which it is framed. In doing so, I am speaking purely about the Crown dependencies and not about the overseas territories. My interest in the Crown dependencies is minor, and recorded in the register, but my real interest is having been involved in the production of reports which helped to set the framework for the relationship between the Crown dependencies and the United Kingdom. My thanks go particularly to my noble friend Lord McNally, when he was the Minister responsible, for implementing those reports.

It is partly a matter of tone and partly a matter of phraseology, but our relationship with the Crown dependencies recognises that these are democratic jurisdictions that are fully open to media scrutiny—not just local media, but national and international media as well. They have both legislative and administrative autonomy to a significant degree. In the case of their legislative autonomy, it is recognised by this Parliament that it is for the authorities in the Crown dependencies to pass their own legislation. However, the process by which they secure Royal Assent for it, involving the Privy Council, is one that gives Ministers a full opportunity to raise any issues they might need to raise that touch on UK Ministers’ responsibility for the international relations of Crown dependencies. That responsibility is exercised by Ministers who will look at legislation in that light.

What we discouraged at the time I was chairman of the Justice Committee is Ministers merely marking the homework of Crown dependencies, and saying, “If we were legislating in this way about dogs, or whatever, we would not phrase the legislation like this”—a wholly time-wasting and pointless exercise. But where a UK responsibility arises, as it does in the case of international treaties, for example, it is entirely appropriate that Ministers seek to ensure that there is proper compliance on the part of dependencies. Of course, the autonomy that dependencies enjoy also applies to the administration and enforcement of law; that administration is something for which they are democratically accountable and is open to any scrutiny and international criticism that media and non-governmental organisations can produce.

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[Lord Collins of Highbury]

My Lords, the purpose of this amendment is to try to reflect a lot of the debates and discussions we have had in Committee. At Second Reading many noble Lords, myself among them, said that the Bill was necessary. In the event of Brexit we need to ensure that we can meet our international obligations and treaty obligations; it is a necessary Bill in the event of Brexit and we certainly would not oppose it. I will repeat the words of the noble and learned Lord, Lord Judge—although I do not want to stop him intervening and making this point—who described the Bill as,

“a bonanza of regulations”.—[Official Report, 1/11/17; col. 1400.]

In Committee he suggested that it should be renamed the,

“Sanctions and Anti-Money Laundering (Regulation Bulk Buy) Bill”.—[Official Report, 21/11/17; col. 107.]

That sums up many of the concerns expressed by noble Lords across the Chamber.

This is and should be necessary in terms of meeting our obligations. However, we need to be able to be in a position to assess just what sort of impact leaving the European Union will have. We are giving the Executive substantial powers; we are not sure quite how those powers will be used, and I hope that the Minister will come back with proposals on a number of suggested amendments. However, in light of all the concerns that have been expressed, the Bill should be revisited—and revisited after a period of time. The time we suggest of five years is adequate to ensure that we meet our international and treaty obligations. However, we do not know—this comes back to the point I made earlier—about the “known unknowns”. The known is that we will leave the EU; the unknown is precisely what the consequences will be—what we need to do.

At Second Reading and in Committee we addressed the issue of mechanisms to ensure co-operation with our European partners and allies. The Minister has repeatedly said, “We will do this, we will be that; we’re not leaving Europe, we’re only leaving the EU”. How do we assess that? How do we know? The important element of the Bill, which is why this clause and this amendment are so important, is that the known unknowns can be properly addressed after a due period of time so that we can come back and say, “Yes, this is adequate”, or, if it is not, the Government—of whatever complexion, whoever is in power in five years’ time—will be required to revisit these issues properly in the light of all the consequences of leaving the European Union. I beg to move.

[Baroness Northover]

My Lords, I support the amendment. As the noble Lord, Lord Collins, indicated, we have heard enough during the debate on the Bill to know that much needs to change in it. The noble Lord proposes a sunset clause for the Bill—in that way it will not be on the statute books in perpetuity—and I like the notion that it breathes its last in five years and simply expires.

Meanwhile, the Government can work out their relationship with the EU—and where, in the light of that, legislation is required—and develop appropriate primary legislation both on the UK’s sanctions regime and anti-money laundering measures, which can be properly scrutinised in Parliament.

I note that the noble Lord, Lord Collins, said, “in the event that we leave the EU”. There is indeed a question mark about this and what our relationship with the EU will be if we do. So it is no wonder that drafting the Bill was a difficult challenge.

A sunset clause is a useful backstop. However, as the noble Lord, Lord Collins, and others made clear, it still leaves in place a flawed Bill that we will need to address further on Report.

[Baroness Kramer]

My Lords, it is the responsibility of this House and the other place to ensure that any legislation that leaves our hands is properly drafted, with the necessary clauses and relevant safeguards and instructions. That is our responsibility. I look at sunset clauses as an absolute last resort. They can be appropriate where legislation is, by definition, short term and deals with an event that will disappear. However, neither sanctions nor money laundering fall into that category. Therefore, although I believe we are talking about “when” not “if” we will withdraw from the EU, I would hate to see that become the rationale for legislation that we do not feel is as good as it could be in delivering the purposes of the two Houses.

I support the amendment as a backstop. However, in a sense, it is incredibly sad that we are having to contemplate such a clause because the Bill itself is so inherently flawed. The House will know from the many comments I have made that I think that there are many flaws in it. However, the most fundamental is that, through a back door, in effect—the Bill does not state this and nor have Ministers been willing to state it—it shifts significantly the balance of power between Parliament and the Executive. We have generations of history in battling to prevent that change—whether through front doors or back doors—and I hope that the Bill can be amended on Report or at Third Reading so that it no longer engineers that shift in power and will not still be an example of a Bill that requires a sunset clause because it is so inherently inappropriate.