Counter-Terrorist Asset-Freezing Regime

Mark Hoban Excerpts

Monday 15th November 2010 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The Government are committed to reporting quarterly on the operation of the UK’s terrorist asset-freezing regime. We believe this is essential to ensure transparency and accountability of the regime. The Terrorist Asset-Freezing etc. Bill will enshrine in law the commitment to report quarterly to Parliament.

This report covers the period July to September 2010.¹

Asset-freezing designations

In the quarter July to September 2010, the Treasury gave no new directions under the UK’s domestic terrorist asset-freezing regime.

During this quarter, the EU added seven people to EC Regulation 881/2002, implementing the UN al-Qaeda and Taliban asset-freezing regime established under UNSCR 1267.

As of 30 September 2010, a total of 205 accounts containing just under £290,000² of suspected terrorist funds were frozen in the UK.

Reviews under the Terrorism Orders

The Treasury keeps domestic asset-freezing cases under review and completed 34 reviews in this quarter. From these 34 reviews 13 persons had their designations revoked.

The Terrorism Order 2009 contains a provision that designations made under the previous Terrorism Orders 2001 and 2006 expired on 31 August 2010 and that beyond 31 August freezes can only be made or renewed under the 2009 Order. All persons subject to domestic terrorist asset-freezes in the UK are now subject to the 2009 Order and benefit from the additional safeguards set out in that order compared with the previous orders.

Licensing

Maintaining an effective licensing system is important to ensure the overall proportionality and fairness of the asset-freezing regime, whether the individuals concerned are subject to an asset-freeze in accordance with a UN or EC listing, or domestic terrorism legislation. A licensing framework is put in place for each individual on a case-by-case basis. The key objective of the licensing system is to strike an appropriate balance between minimising the risk of diversion of funds to terrorism and meeting the human rights of affected individuals and their families. Licences contain appropriate controls to protect against the risk of the diversion of funds for terrorist finance.

Eighteen licences were issued this quarter in relation to 15 persons subject to an asset-freeze under the al-Qaeda and Taliban and domestic terrorism regimes.

Of these 18 licences, 11 revoked and replaced earlier licences. There were no variations to licences this quarter.

Proceedings

In the quarter July to September 2010, no proceedings were taken for breaches of the prohibitions of the Terrorism Orders or the al-Qaeda and Taliban (Asset-Freezing) Regulations.

Developments

The Terrorist Asset-Freezing etc. Bill: The Bill has completed its passage through the House of Lords and Second Reading in the House of Commons takes place on 15 November 2010.

Kadi v. Commission: Yassin Abdullah Kadi was listed under EC Regulation 881/2002. This regulation gives effect to the UN al-Qaeda and Taliban asset-freezing regime (UNSCR1267) in the EU. Mr Kadi challenged his listing under this regulation, arguing that it breached his fundamental rights under European law.

On 30 September the European General Court upheld Mr Kadi’s challenge, annulling the EC regulation, in so far as it applied to Mr Kadi. The judgment will take effect on 10 December unless an appeal is lodged, in which case it will be stayed until the appeal has been decided.

The Kadi case concerns how EU member states implement their obligations to freeze the assets of sanctioned individuals under the UN al-Qaeda and Taliban regime. It does not concern the UK’s domestic terrorist asset-freezing regime.

¹ The detail that can be provided to the House on a quarterly basis is subject to the need to avoid the identification, directly or indirectly, of personal or operationally sensitive information.

² This figure reflects account balances at time of freezing and includes approximately $58,000 of suspected terrorist funds frozen in the UK. This has been converted using exchange rates as of 15/10/10. Future fluctuations in the exchange rate may impact on the contribution this sum makes to future totals of suspected terrorist funds frozen.