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Delegated Legislation (Counter-terrorism)

Volume 497: debated on Monday 12 October 2009

The Government have today laid before the House a statutory instrument under the Counter-terrorism Act 2008 containing a direction requiring the UK financial services sector to cease all business with the Iranian Bank Mellat and the Islamic Republic of Iran Shipping Lines. This means that from today, financial and credit institutions will no longer be able to enter into new transactions or business relationships with these entities nor to continue with existing transactions or business relationships unless they are licensed by HM Treasury. Consistent with the commitment provided to the House during the passage of the Act, I would like to set out the reasons behind our decision.

The Treasury is satisfied, as required by the Act, that activity in Iran that facilitates the development or production of nuclear weapons poses a significant risk to the national interests of the UK. Iran continues to fail to meet its international obligations. Most notably, its nuclear programme presents an immediate challenge to the global non-proliferation regime. The International Atomic Energy Agency (IAEA—the UN body charged with monitoring Iran’s activities and ensuring that no nuclear material is being diverted to non-civilian applications) is being refused the access it seeks by Iran, which also declines to answer questions put to it by the agency’s staff about alleged studies suggesting a military aspect to Iran’s programme. As a result, the IAEA director general has stated that he is unable to verify Iran’s nuclear programme is for exclusively peaceful purposes.

Iran’s ongoing improvement of its ballistic missile capabilities also continues to cause international concern. Its failure to answer questions from the IAEA about possible military dimensions to its nuclear programme increase concerns that its ballistic missile programme represents a potential nuclear delivery system.

The UK has for many years been clear that we would prefer a more productive relationship with Iran, and for Iran to take its place as a responsible member of the international community. We continue to work through the E3+3 and urge Iran to accept our, and US, offers of engagement in order to achieve a diplomatic resolution of the nuclear issue. The Government welcome the talks recently held between the E3+3 and Iran.

However, Iran continues to pursue its proliferation sensitive nuclear and ballistic missile activities in defiance of five UN Security Council Resolutions.

We cannot and will not ignore specific activities undertaken by Iranian companies which we know to be facilitating activity identified by the UN as being of concern, particularly where such activities have the potential to affect the UK’s interests.

On the particular entities in question, vessels of the Islamic Republic of Iran Shipping Lines (IRISL) have transported goods for both Iran’s ballistic missile and nuclear programmes.

Similarly, Bank Mellat has provided banking services to a UN listed organisation connected to Iran’s proliferation sensitive activities, and been involved in transactions related to financing Iran’s nuclear and ballistic missile programme.

The direction to cease business will therefore reduce the risk of the UK financial sector being used, unknowingly or otherwise, to facilitate Iran’s proliferation sensitive activities.