Sanctions and Anti-Money Laundering Bill [HL]

Lord Gold Excerpts

2nd reading (Hansard): House of Lords
Wednesday 1st November 2017 Lords Chamber

[Lord Gold (Con)]

My Lords, the Bill is to be welcomed. That said, I hope the Government reflect on the powerful and eloquent comments of the noble and learned Lord, Lord Judge, echoed afterwards by the noble Lord, Lord McNally.

As we have heard, the immediate necessity in relation to the Bill is the Brexit vote and our departure from the EU in 2019. I hope that anyone who doubts the need for our own sanctions law is persuaded by the sobering comments of my noble friend Lady Anelay when speaking about Sudan. Most current powers to implement sanctions flow from the European Communities Act 1972. However, when this Act is repealed and we leave the EU, we must have our own domestic powers to impose sanctions. The Bill introduces considerable flexibility, for both sanctions and licensing, and simplifies the process of imposing non-UN sanctions. At a time when terrorists appear to move with ease across borders and do the same with their assets, the Government must be in a position to move quickly and impose effective sanctions. The Bill allows that to happen.

After discussion across relevant departments co-ordinated by the Foreign and Commonwealth Office, an appropriate statutory instrument can be laid before Parliament without delay. This contrasts greatly with the present system in Europe, where proposals for sanctions emanate from the EU, then—inevitably and understandably—there must be consultation and negotiation across member states before any new EU regulations can be issued. Only after that can we proceed by way of statutory instrument here.

Although this streamlining is to be applauded, there is a risk ahead against which we will have to safeguard. There could easily be an additional compliance burden if there are divergences between the UK and the EU in substantive sanction prohibitions. To achieve efficiency and be effective we will have to find a way of working with the EU to co-ordinate our approach. This may be difficult if, as I have indicated, we are able to impose sanctions more quickly as our processes are simpler.

If these sanctions are not later supported in the EU, I can see problems of enforcement and maybe legal conflicts. The need to move quickly and efficiently is recognised by a proposed change to the evidential requirement for the imposition of a sanction. It will be sufficient to show that there exist “reasonable grounds to believe” that an individual should be added to the sanctions list and that the proposed sanction is appropriate. There will no longer be the need to demonstrate that the sanction is “necessary” to protect the public, which has proved to be a high evidential burden. This is an important change as terrorists are now causing significant damage with little money or resource as, regrettably, recent terrorist outrages in Manchester and London have demonstrated.

I want to say a little more about the flexibility that this Bill introduces for government. In addition to traditional-style sanctions such as freezing assets or imposing restrictions on investments, the Government will have the flexibility to introduce measures that take account of the ownership or control of entities or funds. The Bill also supports a flexible approach to the imposition of trade, aircraft and shipping sanctions.

In relation to money laundering, Ministers are given a wide power of investigation and can introduce regulations to prevent money laundering and terrorist funding. Ministers may require “prescribed persons”, as defined in the regulations that are to be issued, to put in place policies, controls and procedures to prevent money laundering and terrorist funding; take prescribed measures in relation to their customers; provide or disclose information; and produce and retain registers and records, including information on beneficial ownership. I would hope that these powers, sensitively thought through and applied, would be flexible enough to prevent the abuse that was so clearly set out earlier by the noble Lord, Lord Hain.

Although these powers are similar to powers already found in EU law, I hope that when finalising the regulations, Ministers will be sensitive to the administrative burden that measures of this kind impose on businesses. Many noble Lords have mentioned on other occasions some of the difficulties already being experienced by some individuals simply in opening bank accounts. By increasing the reporting and policing obligations of our institutions and possibly imposing financial and penal penalties for failure, we must be wary of the considerable inconvenience that could be caused to customers.

I end by saying that I am pleased that provision is made for regular review by Ministers of the sanctions regime to ensure that it is still warranted and fit for purpose. I am also very pleased that provision is made for those affected by any sanctions to be able to challenge them by seeking a review by the Minister—and if not satisfied, to challenge the review by applying to the High Court, the principles for applying being similar to or the same as the judicial review provisions. But I share the view of the noble Lord, Lord Pannick, that sufficient information must be forthcoming so that people affected by sanctions understand the reasons for them, ensuring that they are at least on a level playing field if they want to challenge them.