Sanctions and Anti-Money Laundering Bill [HL]

Debate between Lord Lennie and Baroness Northover

Report stage (Hansard - continued): House of Lords
Monday 15th January 2018 Lords Chamber

[Baroness Northover (LD)]

My Lords, I apologise if I caused hiccups by not moving Amendment 20. That was deliberate on my part. I did not mean to cause any hiccups, though. I thank the Minister for engaging with these issues. This is yet another example of co-operation right around the Chamber on this part of the Bill.

[Lord Lennie (Lab)]

My Lords, I am also grateful to the Minister. Clearly, he has listened a lot and has provided a lot of change from the initial version of the Bill. There is a meeting of minds—there is no question about that—but the one issue that I am not sure he addressed was about the requisite steps that persons are expected to take to address the concerns which led to the designation in the first place. I would like the Minister to comment on that, but we support the changes.

Sanctions and Anti-Money Laundering Bill [HL]

Debate between Lord Lennie and Baroness Northover

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

[Lord Lennie (Lab)]

My Lords, this is a probing amendment concerning the territorial application of sanctions regulations. The amendment will make it automatic that the sanctions imposed would apply to bodies incorporated or constituted in the Channel Islands, the Isle of Man or the British Overseas Territories. This is not because they are favourite places to hide away from tax regimes—although they are—but because they are dependent on the UK in terms of foreign and defence policy matters. For sanctions to have an effect, they have to have an international dimension. Currently determined by the UN or the EU, they require co-operation and co-ordination between and across nations. It is surely a matter of good policy to seek to put our own house in order first—which this amendment would help to do.

The Bill currently proposes that its sanction provisions “may” be applied to the Channel Islands, the Isle of Man or the British Overseas Territories by use of an Order in Council, which I understand is a Privy Council matter. I am not a member of the Privy Council and I do not know how it operates. I do not understand in detail how it works, and I am not sure whether such orders are always granted, whether there is ever a debate about them, whether they can be challenged or whether there is delay built into the process. This amendment would make it clear that, as far as sanctions are concerned, the UK will have a consistent application of the law. We would welcome the Government’s views on that.

[Baroness Northover (LD)]

My Lords, I support the amendment. It is useful to have more precise definitions within the Bill, and it seems that the amendment seeks to tighten up the subsections which relate to the Channel Islands, the Isle of Man and the British Overseas Territories, so that instead of a Minister being able by an Order in Council to add these areas, they are included in primary legislation. It makes sense to clarify that now and in primary legislation in this way to ensure that those whom the UK wishes to sanction cannot evade that sanction by association with these areas. If the UK is to leave the EU, it makes sense to tighten in this way.

The Minister will know that there is a meeting today of the Joint Ministerial Council at the Foreign Office with the overseas territories. Perhaps he could assure us that they would be content to be clearly within the same sanctions regime. I know that they will be less keen on aligning themselves with the UK on anti-money laundering measures; we will of course come to that later.

I also flag to the Minister that, in addition, the Law Society emphasises that guidance should be given on the terms in Clause 17, as well as those in Sections 2, 10, 15 and 46. It points out that in Clause 17 it is unclear whether the UK sanctions regime would apply,

“where UK currency is used, where a non-UK subsidiary of a UK company is involved, or where a UK person on the board of a non-UK company is present when a decision is taken in breach of the UK sanctions regime”.

It suggests that Clause 17 should be renamed “UK nexus” as its current subject matter does not deal sufficiently with “Extra-territorial application”.

It seems that further clarity is required on such issues. Clearly, it would be useful if stakeholders were properly consulted to assess the impact of the scope of application of the UK sanctions regime, simply to identify any unintended consequences. Clearly, intended consequences are fine. So this is a complicated area, but I hope that the Minister will take on board this advice.

Sanctions and Anti-Money Laundering Bill [HL]

Debate between Lord Lennie and Baroness Northover

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

[Baroness Northover (LD)]

My Lords, I too will speak to Amendments 1, 23 and 1A, which is in my name and that of my noble friend Lady Sheehan. As the Constitution Committee and the Delegated Powers Committee have made clear, and as we have just heard, the Bill, though described by the Minister at Second Reading as simply “technical”, proposes to give wide powers to Ministers—I see the Minister’s rueful smile; I suspect he regrets using that phrase—in the event that the UK decides to leave the EU and sanctions and money laundering arrangements have to be set in place. I was struck as he used that expression that, when he heard from the noble and learned Lords, Lord Judge and Hope, and the noble Lord, Lord Pannick, this might sum up how he now feels.

The case for Amendment 1 has already been cogently made by the noble and learned Lords and the noble Lord. I also want to quote the Delegated Powers Committee, because it is worth the Minister being aware that there is, I am sure, cross-party support for its very sombre conclusions about this first Brexit Bill we are considering in the Lords. The committee states that,

“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 … 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”.

That theme runs right the way through the reports of both the Delegated Powers Committee and the Constitution Committee. I am sure the Minister will take note of this advice and the widespread agreement with those committees across the House. I hope he will not only accept the amendment but apply the same logic through the rest of the Bill.

The noble and learned Lord, Lord Judge, made it clear that the Constitution Committee and the Delegated Powers Committee are concerned about parliamentary involvement right the way through the Bill. The Delegated Powers Committee has also noted various other areas about which it is concerned, and that is the subject of our Amendment 1A. It states:

“In our view, an appropriate Minister should only be allowed to make sanctions regulations for a purpose other than compliance with an international obligation, where there are compelling reasons for the Minister’s belief that carrying out the purpose will achieve one of the objectives listed in clause 1(2)”.


One would almost think that one did not have to state this, but it is very clear from this legislation that we do.

The committees request that we fully scrutinise this Bill and insist on full parliamentary involvement. In other areas, the Delegated Powers Committee seeks the affirmative procedure; in another, the Constitution Committee states that we should consider,

“whether the consent of the devolved legislatures should be required when this power is used to amend or repeal legislation enacted by them”.

All these issues need to be considered.

In sum, the Constitution Committee states that,

“given that the purpose of the Bill is to address the need for domestic powers to impose, amend and revoke sanctions after Brexit”—

assuming Brexit happens—

“it is important to ensure that there are sufficient safeguards and there is adequate parliamentary scrutiny to make the delegated powers constitutionally acceptable”.

That point has been made by the noble and learned Lord and the noble Lord from the Cross Benches. I am sure it will be repeated throughout the Committee stage. That is what we need to hold on to as we see this Bill through.

[Lord Lennie (Lab)]

My Lords, I say for the record and from the outset, and for the avoidance of any doubt in the mind of the Minister, that we on this side of the House recognise the importance of such a Bill coming into being. We are leaving the EU. The Government’s position is that EU jurisprudence will no longer apply and therefore the Bill becomes an imperative. That is not the same thing as saying that everything in the Bill is rosy and we support it all, and that is why we are here. We strongly support the case made by the noble and learned Lord, Lord Judge, the noble Lord, Lord Pannick, and the noble Baroness, Lady Northover.

This amendment is the starting point of the Bill: it concerns the power for a Minister to act. Should it be when the Minister considers it appropriate or should it be when it is provably necessary to do so? One is an opinion, the other an evidential absolute. Does it weaken the Government’s position? No, it makes it more robust to have “necessary” replacing “appropriate”. Will it inhibit the Government? No, it will make for greater certainty as other clauses in the Bill are debated. Does it strengthen the Bill? We believe that it does: it will become more bullet-proof and less able to be challenged.

On Friday, as the noble Lord, Lord Pannick, said, the Delegated Powers Committee considered this and concluded:

“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”.


That is where this amendment ends. Does the Minister accept this? Will he reflect on this and come back on this point?

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[Baroness Northover]

I echo what my noble friend said and I commend the amendments to noble Lords, especially the Minister. He has been arguing that he needs wide scope in the Bill to ensure that those who might seek to evade sanctions can be brought within their scope. This is an area where we seek to help him to draw that wider scope based on what the world has discovered about the ingenuity of those who use bogus companies to, for example, evade sanctions. I hope he will look kindly on these amendments.

[Lord Lennie]

My Lords, to echo what has been said, the amendment would strengthen the Minister’s hand to act and seeks to address the problem of companies registered in this country with no connection to, business with or purpose in this country other than to evade detection and supply arms to those we regard as rather evil. There is a great difficulty with detection. I am not underestimating problems, particularly evidential ones, but I suspect that the wider the hand of the Minister in this regard, the greater the power of success. There has been some progress in this area recently under other Acts, such as the Bribery Act, but our chance of success in closing down what is simply a hosting arrangement would be greatly enhanced by the amendment.

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[Lord Lennie]

My Lords, I shall also speak to Amendment 26. Amendment 25 would replace “may” with “must”, which would make it consistent with other places in the Bill. Amendment 26 is the real substance and raises a new requirement to notify a designated person once relevant sanction regulations have been made. If a sanction is made, thereafter the individual will have to be notified that it has been made against them. They must also be given a reason for the sanction having been made, under procedural fairness. The legislation contains rights of appeal and review, but how can you appeal or review something you do not know about, or do so if you do not know the reasons for it? That seems a justification for this amendment. What actions are necessary to address the concerns which have led to their designation? On that basis, we invite the Minister to consider whether this is an appropriate amendment to be accepted into the Bill.

[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.

--- Later in debate ---

[Baroness Northover]

I shall speak also to Amendment 45 in my name and that of my noble friend Lady Sheehan. I also support Amendment 44 in the name of the noble Lord, Lord Collins.

Once again, we are concerned that regulations confer wide powers—in this case of entry and disclosure. Clearly, regulations should not authorise the disclosure of information that is subject to legal professional privilege, and the noble Lord, Lord Collins, will no doubt address that in a moment.

We are seeking the deletion of Clause 15(1)(d) and (e), which confer wide powers of entry and to authorise or restrict the disclosure of information. We want to give the Minister an opportunity to place protections around these areas, as we have in other instances. We are also concerned that under Clause 15(3)(b) an “appropriate authority” could be,

“such other person as may be prescribed”.

It is difficult to think of anything wider than that description. Therefore, once again, we flag enormous concern about wide powers—especially those put in regulations. I beg to move.

[Lord Lennie]

My Lords, I will speak to Amendment 44 in this group, which seeks to add the words printed in the Marshalled List to the end of Clause 15 to give protection to the relationship between client and lawyer. It may be thought that that goes without saying, but it does not seem to as far as this Bill is concerned. Legal professional privilege is key to the rule of law and the administration of justice. To omit it from this legislation would seem to be a mistake. It permits information to be communicated between a lawyer and a client without fear of it becoming known to a third party without the clear permission of the client, except in rare cases where LPP is used to protect communications from a client in a case of illegality.