Sanctions and Anti-Money Laundering Bill [HL]

Lord Hope of Craighead Excerpts

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

[Lord Hope of Craighead (CB)]

My Lords, first, may I say what a pleasure it is to see the noble Baroness, Lady Anelay, here this afternoon enjoying a very well-earned rest from the Front Benches? I am sure we are all looking forward very much to hearing what she has to say when she speaks immediately after me.

The imposition of sanctions is a political act which the courts, when invited to do so, will always subject to anxious scrutiny. Nobody can doubt that there may be situations where measures of the kind that must be resorted to in the interests of national security or international peace, or for furthering the prevention of terrorism, have to be put in hand. However, there is always a risk that those who are given such powers may overreach themselves. Sanctions of the kind contemplated by this Bill do not in so many words involve depriving individuals of their liberty. To that extent, the human rights considerations that arise in such cases are not engaged by the Bill. But the effects of the financial and other restraints that are provided for here are likely to be severe. That indeed is what they are designed for. Individuals who are deprived of access to any kind of economic resources may end up being confined like prisoners in their own home. In the case of financial institutions, such as banks, the effect can be disproportionate to the risk that they pose. So a Bill of this kind must be approached with great caution, lest it invests the Government with extravagant powers, with powers that are not needed, or with powers that are not surrounded by appropriate safeguards.

Part 1 of the Bill deals with sanctions regulations. The scope of the power is described in the first subsection of Clause 1. I welcome the giving of power to the appropriate Minister to make regulations for the purpose of complying with a UN obligation or any other international obligation. There are good reasons why we need to make provision for meeting the obligations which rest on us internationally, but I am more cautious about the purposes described in the second subsection, which I can refer to as the “domestic” part. They extend to furthering the prevention of terrorism in the United Kingdom, the interests of national security, the interests of international peace and security and foreign policy objectives of the Government. It is here that we need to be satisfied that it is proper that the Government should have power to impose these sanctions in additional to those they already have, and that exercise of the power will be accompanied by appropriate safeguards.

I approach the question of the powers in the international part against the background of two cases that came my way in the UK Supreme Court. One was the case of HM Treasury v Ahmed in 2010, the other was Bank Mellat v HM Treasury in 2013. The Ahmed case was about the legality of powers exercised by the Treasury by Order in Council under Section 1 of the United Nations Act 1946, to give effect in the United Kingdom to decisions of the sanctions committee of the Security Council of the UN, which is responsible for deciding whether sanctions should be imposed, against whom and with what effect. The orders had the effect of freezing the assets of several named individuals, but they were made without any kind of parliamentary scrutiny.

We took the view in the Supreme Court that the consequences of the orders were so drastic and oppressive that we had to be alert to see that this coercive action really was within the powers of the Treasury. We must remember that, even in the fact of the threat of international terrorism, the safety of the people is not the supreme law. There must come a point, we said, when the intrusion on the right to enjoyment of one’s property is so great and so overwhelming that it can be brought about only under the express authority of Parliament. So the orders, which were made without parliamentary scrutiny, were set aside.

In the case of Bank Mellat, the complaint, which was also upheld by a majority, was that directions made by the Treasury under the Counter-Terrorism Act 2008 were flawed on procedural grounds and were disproportionate. So they, too, were set aside.

It is against the background of two failed attempts to deal with the issue that I welcome the international part of Clause 1. We need to have a sound and easily understood mechanism—or, as the Minister put it, a legal framework—for meeting our international obligations, which has the full authority of Parliament. I think that this Bill, which provides for parliamentary scrutiny, achieves that. So far as these obligations are concerned, it is necessary and appropriate.

The domestic part described in the second subsection of Clause 1 is more troublesome, and it will need to be scrutinised very carefully in Committee. I acknowledge that the parliamentary procedure in Clause 45 is for any such regulations under that subsection to be subject to the affirmative procedure. That, of course, is as it should be, given what was said in the case of Ahmed. I acknowledge, too, that provision is made in Chapter 2 of Part 1 for review by an appropriate Minister and in Chapter 4 for his decisions to be reviewed by the courts on the application of those affected by the decision. We will need to look at those chapters carefully too, but in doing that we should be under no illusions about the grave effects the imposition of sanctions may have. We must assume that where these powers are given they will be used, and may be used to the full extent that Parliament permits, given the relatively low threshold—the “reasonable grounds to suspect” threshold which the Minister mentioned—that Clause 1 sets for their exercise, compared to the existing one under the Terrorist Asset-Freezing etc. Act 2010.

So there is a heavy responsibility on us to see that these powers are not excessive and that the safeguards provided are as complete and effective as they can be. That said, I welcome the provision in Clause 36 requiring the Minister to issue guidance about regulations made under Clause 1.

There is one point of detail about the provisions for court review about which I seek reassurance from the Minister. Clause 32(2) provides that:

“The appropriate person may apply to the High Court or, in Scotland, the Court of Session, for the”,


Minister’s,

“decision to be set aside”.

Does this formulation allow for appeals to the UK Supreme Court? I think this is not really in doubt as far as the High Court is concerned. But it may be suggested that this is not so for Scotland on the ground that, where an Act refers to the Court of Session without more, the matter is to be decided in that court alone and no further. I hope that appeals to the Supreme Court will be open from the Court of Session too, subject, of course, to the provisions for permission in Section 40 of the Courts Reform (Scotland) Act 2014. However, I would like the Minister to reassure me on this point, if not this afternoon then at some later stage.

Lastly, I come to Part 2 of the Bill and Clause 41, on anti-money laundering. I entirely recognise the force of the point made by the Economic Secretary to the Treasury in his Written Ministerial Statement on this subject last Thursday. He said:

“As the threats from illicit finance and terrorist financing continue to evolve, so must our understanding of the risks and our response”.


Nevertheless, the scope of the power to make provision for this purpose by regulations, when read with the extensive list of things mentioned in Schedule 2, is surprisingly wide. I agree very much with the points made so forcefully by the noble Baroness, Lady Bowles of Berkhamsted.

There is another side to this issue: reaction to the spectre of money laundering is making itself increasingly felt in our daily lives. The requirements that must be satisfied if we need access to professional services that are anything whatever to do with money are just one example. At present, they are not much more than an irritating and time-wasting nuisance, but we surely must be careful not to box ourselves in with so many rules and regulations that the burden of having to comply with them becomes intolerable.

I am not really worried about the making of increased provision for detecting and investigating money laundering, but it is in the making of increased provision for its prevention that the risk lies. That could affect anybody and everybody, as the noble Baroness said. One only has to look at the titles of the regulations that are to be the subject of the regret Motion next Tuesday to get a sense of what lies in store for us if we are not careful. One of them is called the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations. I wonder what burdensome provisions would be made by that measure—and there are two more in the package.

I do hope that the Minister can assure us that proportionality will always be at the heart of these very wide-ranging powers.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Hope of Craighead Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 29th November 2017 Lords Chamber

[Lord Falconer of Thoroton]

I intervene only to say this: I did not suggest that the motive of the Government was to do this. My experience as a Minister is that you put through legislation and many years later, after emollient assurances given in the House of Lords, those pesky lawyers look at what is possible under the Act. What I have described is possible. Let us imagine if those very same pesky lawyers said, “Well, you might have difficulty getting that through with primary legislation because of the extraordinary width of the powers, but actually we’ve found these rather clever powers in the Sanctions and Anti-Money Laundering Bill which allow you to do it without primary legislation”. That is the danger.

[Lord Hope of Craighead (CB)]

My Lords, I do not want to take anything away from the force of the points just made by the various speakers who object to the clause more fundamentally, but I want to pick up the point the noble Lord, Lord Pannick, described as minor: the wording of the clause. If the Government are minded to keep it, I suggest they might like to look at it again. Subsection (1) is very general, and the opening words of subsection (2) state that what follows is:

“Without prejudice to the generality of subsection (1)”.


The bit at the end in brackets, one assumes, does not qualify subsection (1). Is it in the right place? Is the proclamation that what follows is:

“Without prejudice to the generality of subsection (1)”,


really apposite if you are trying to restrict the scope of the powers as you seek to do in subsection (2)? It is a very interesting interaction of subsections but I suggest that it needs a little more care if the clause is to remain—I say nothing more in support of the point that the clause should not stand part of the Bill.

[Lord Collins of Highbury]

My Lords, I think this is one area where the Minister will have to be in his giving mood, because there is very strong opinion on it across the Committee. What the noble Lord, Lord Faulks, said is absolutely correct: it is a “just in case” clause. What if this happens? What if that happens? If things happen, there is a process and a procedure and the noble Lord, Lord Pannick, said it quite explicitly: bring in laws to deal with it; bring in a Bill that addresses those specific concerns. If it is an urgent situation that we had not thought of, there are processes and procedures we can adopt.

As my noble and learned friend said, there is an opportunity here for what he calls “pesky lawyers”. I am always cautious—whenever I dealt with lawyers in my life I always took the precaution never to ask a question I did not know the answer to. That is the situation here. Because you cannot think of the circumstances, but there may be circumstances, you say, “Let us put it in the Bill”. I am sorry, that is not acceptable. There is a consensus across the board on this and it is even a clause on which, as the noble Baroness, Lady Northover, said, the Constitution Committee and the Delegated Powers Committee are as one, as they are not on other clauses. So I fear this is one issue about which the Minister will have to think again.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Hope of Craighead Excerpts

Ping Pong (Hansard): House of Lords
Monday 21st May 2018 Lords Chamber

[Lord Brown of Eaton-under-Heywood (CB)]

My Lords, if it is not improper to say so, I hugely regret the decision of the Speaker in the other place not to have permitted the Government to suggest other solutions to this problem without the need to override the overseas territories’ sovereignty rights. However, we are now faced with the Commons amendment and, although I recognise how powerful the speeches of all those who have supported the amendment in the name of the noble Lord, Lord Naseby, have been, and although I am deeply sympathetic to the overseas territories for the wholly undeserved insult to which this provision now appears to expose them, for my part I hope that the amendment in the name of the noble Lord, Lord Naseby, will not be pressed. If it is, I should, regretfully, feel unable to support it. This is not an appropriate occasion for yet another vote in this House that would override the considered view of the elected Chamber—after a full debate, which I read in Hansard this morning—moreover, in circumstances in which it would be bound most mischievously to be misrepresented as a vote by a privileged, unelected body intent, no doubt in the view of some, on preserving opportunities for the continued secretion of illicit funds abroad. It would be a wholly false slur on us, but I fear that it would be placed upon us by many. I hope that this is not judged an unduly pusillanimous approach.

Assuming the new clause is agreed, one can only hope that, two and a half years hence, it will not have proved necessary to make the contemplated Order in Council and, accordingly, that we shall never learn whether the opinion of the noble Lord, Lord Pannick, on its prospects were it to be challenged by the Judicial Committee of the Privy Council, was or was not correct.

[Lord Hope of Craighead (CB)]

My Lords, I had not intended to speak in this debate. With respect to the noble and learned Lord, Lord Brown of Eaton-under-Heywood, we owe a debt to the noble Lord, Lord Naseby, for tabling his amendment, because it has given us an opportunity to set the record straight. I hope that those in the affected overseas territories will take some comfort from the points in the very powerful speeches that have been made right across this House to express the great dismay at what happened in the other place.

I emphasise the opportunity that the noble Lord has given us to express our feelings, and personally endorse entirely what was said by the noble and learned Lord, Lord Neuberger, and the noble Earl, Lord Kinnoull, who set out very fully the arguments for supporting the noble Lord, Lord Naseby—although I know he will not press his amendment to a vote. It is very important, as I am sure the Minister will agree, that we have debated this and made the House’s position absolutely plain—while regretting that we have to accept the decision of the House of Commons.

[Lord Judd (Lab)]

My Lords, first let me say how much I appreciate the tremendous amount of work undertaken by the Minister in all that he has done on this front. I know that he has shown a great deal of personal commitment—as indeed did his predecessor. That should be put on record by all of us. We have moved a long way forward.

The noble Lord, Lord Naseby, said that he would not take lessons from Oxfam and Save the Children because of their record. I declare an interest: in the 1980s and 1990s I was a director of Oxfam and I have stayed very close to that organisation all my life, and remain as close now as I ever was—perhaps closer. I want to tell the noble Lord that the dismay and disgust in Oxfam at what happened in Haiti at the beginning of the decade cannot be overstated. There is profound dismay at what some people decided to do, and at the damage it has inevitably done both to the organisation and, more importantly, to thousands of people whom the organisation is now unable to help in the way that it would have liked because resources have inevitably dwindled.

That brings me to why this debate is so important. We have been discussing the technicalities of law and the constitution, and talking about the democratic rights of people—but what we are really talking about is justice, social responsibility and the accountability of wealth and power in the world. My noble friend Lord Anderson referred to the Select Committee’s report. It is a very important report, which we should all take very seriously, but it is operating in the context of parliamentary democracy and responsibility. All this Russian and other accumulated wealth that we are talking about—let us not dodge it; we have had allusions to property wealth finding its way to some of these territories as well—is not simply the wealth of those who are handling it; it is wealth that has come from countless ordinary people throughout society. That means that we all have a responsibility to ask: what are we doing, with teeth, to make sure that people who deceive, cheat and accumulate riches wrongly and unfairly are brought to account?

That is why I say how much I appreciate the tremendous work that the Minister has been doing. He has demonstrated the importance of diplomacy and the reality of the world that we live in. It is a matter not just of stating these things, however strongly we state them, but of how you move towards achieving what you want to achieve, and I take his arguments very seriously.

In the time that remains for this debate, I ask your Lordships to remember that we are talking not about money, although that may be a way of measuring the size of the problem, but about people—people from whom this money was accumulated and the countless people across the world for whose benefit it could be used through fair systems of taxation and through policies devised to meet the needs and help the development and emancipation of those who are exploited. This is not just a technical debate. I know that it is not fashionable to say it in this House but it has to be said: it is a debate about morality, justice and fairness. We have to stop sentimentalising about our commitment to those things; we have to make sure that there are teeth and muscle in meeting that commitment.

Perhaps I may come back for a moment to the challenge thrown down by the noble Lord, Lord Naseby, about my old organisation. I invite any of your Lordships to come and meet the staff, the trustees, the volunteers and the people across the world in the organisation who are busting a gut to make sure that something that happened at the beginning of the decade and let down the whole cause can never occur again.