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.