The Government are strongly committed to tackling terrorist finance. Just as there should be no hiding place for those who perpetrate terrorism, so there should be no hiding place for those who finance terrorism.
Global measures to freeze the assets of those suspected of involvement in terrorism are an important tool in suppressing terrorist finance. The global framework for freezing terrorist assets was established by United Nations Security Council Resolution 1373, adopted unanimously on 28 September 2001. It is also set out in Special Recommendation III of the Financial Action Task Force the international standard setting body for anti-money laundering and counter terrorist finance.
The United Kingdom gives effect to its international obligations to freeze terrorist assets through Orders in Council under the United Nations Act 1946. The Government report quarterly to Parliament on the operation of the UK’s terrorist asset freezing regime.
Consistent with our international obligations, the Government have put in place a robust and effective terrorist asset freezing regime. As set out in today’s quarterly report to Parliament, as of the end of June 2009, a total of 237 accounts containing £607,661 of suspected terrorist funds were frozen in the UK. As our quarterly reports set out, the UK has an active approach to reviewing cases and to granting exemptions licences to ensure that the asset freezing regime operates in a fair and proportionate way that is consistent with human rights.
The Financial Action Task Force reviewed the UK’s terrorist asset freezing regime in 2007 and concluded that the UK was fully compliant with international standards, the first country to be awarded the fully compliant rating.
The Government keep the asset freezing regime under review to ensure that it remains operationally effective, fair and proportionate. Today the Treasury is laying before Parliament the Terrorism (United Nations Measures) Order 2009. This Order in Council updates the UK’s domestic framework for freezing the assets of suspected terrorists.
The overall objective of the changes is to tailor asset freezing restrictions to ensure that the prohibitions are focused more closely on areas of genuine operational concern, in particular the access to, control and use of funds by designated persons; and to strengthen and make more explicit safeguards in how the regime is operated where this can be done without compromising its effectiveness.
The main changes set out in the new Order in Council are:
Formally reflecting the Court of Appeal judgment in October last year which struck out the grounds for the Treasury to designate a person when the Treasury has reasonable grounds to suspect that they may be (as opposed to are) involved in terrorism.
The introduction of a further safeguard that designations must be necessary for public protection.
Setting a renewable 12-month time limit on designations.
Modifying the prohibitions on making funds, economic resources and financial services available for the benefit of a designation person so that they only apply if the designated person obtains, or is able to obtain, a significant financial benefit. The prohibitions on making funds, economic resources and financial services available directly to a designated person remain unchanged and are a blanket prohibition.
Modifying the prohibition on making economic resources available to a designated person by providing a defence for a person if they did not know and had no reasonable cause to suspect that economic resources which they provided to a designated person would be likely to be exchanged or used in exchange for funds, goods or services.
Modifying reporting provisions to bring obligations on money service businesses into line with other financial institutions.
Clarifying and expanding information gathering powers to ensure that the Treasury is able to request information from designated persons in all cases where this is necessary to ensure effective implementation of and compliance with the asset freeze.
Overall, these changes will improve the operation of the asset freezing regime, ensure that it remains fair and proportionate and help facilitate effective compliance by ensuring that prohibitions are more tailored and clearer in how they apply. The Terrorism (United Nations Measures) Order will come into effect on 10 August 2009.