Skip to main content

Al-Qaida and Taliban (Asset-Freezing) Regulations 2010

Volume 718: debated on Thursday 25 March 2010

Considered in Grand Committee

Moved by

That the Grand Committee do report to the House that it has considered the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010.

My Lords, the regulations before the Committee seek criminal penalties for breaching the EC regulations giving effect to the United Nations asset-freezing regime against al-Qaeda and the Taliban within the European Union, and to give proper effect to that regulation in the United Kingdom. Noble Lords will be aware that the United Nations Security Council has mandated two separate terrorist asset-freezing regimes, with different applications and procedures. The first regime, chronologically, was established in 1999 by UN Security Council Resolution 1267 and applied an asset freeze against the Taliban. It was subsequently broadened by successor resolutions to apply an asset freeze against Osama bin Laden and individuals associated with al-Qaeda or the Taliban.

After the terrorist attacks on the United States in September 2001, the UN mandated a separate terrorist asset-freezing regime in UN Security Council Resolution 1373, whereby all states are required to identify and freeze the assets and resources of people who commit, or attempt to commit, or participate in or facilitate the commission of terrorist acts. There are two key differences between these two regimes. The first concerns the nature of the targets. The UN 1267 regime applies only to Osama bin Laden and those associated with al-Qaeda or the Taliban. The UN 1373 regime applies more generally to those involved in terrorism, regardless of whether they are linked to al-Qaeda or the Taliban.

The second key difference between the two regimes concerns their geographical scope and listing procedure. The UN 1267 regime is global in application. The UN holds a central list of targets, and listing and delisting decisions are made by a committee of the UN Security Council. Once individuals or entities are listed, their assets must be frozen by all states. By contrast, under UNSCR 1373, freezing decisions are taken nationally and apply nationally, although individual states are encouraged to share information about national freezes so that, where appropriate, the assets of those involved in terrorism can be frozen across national boundaries.

The regulations we are debating apply only to the UN al-Qaeda and Taliban regime—the 1267 regime. They do not apply to the UN terrorist asset-freezing regime under Resolution 1373. The reason for this is the different position of the two UN asset-freezing regimes under European law. The European Union does not provide a legal basis to fully implement our obligations under UNSCR 1373 to freeze the assets of terrorists. This is because the EC regulation for that resolution deals with asset freezes only for persons who are involved in acts across the borders of the EU. It would not allow us to freeze the assets of home-grown terrorists, which UNSCR 1373 also requires. Consequently, following the Supreme Court’s decision that Orders in Council made under the United Nations Act 1946 cannot be used to give effect to UN asset-freezing obligations, the Government are addressing our implementation of UNSCR 1373 through primary legislation.

The Terrorist Asset-Freezing (Temporary Provisions) Act was passed last month, and the Government have published a draft Terrorist Asset-Freezing Bill to provide a durable legal basis for freezing the assets of terrorists. As I said when the temporary Bill was debated in the House, the Government are committed to ensuring that there is proper scrutiny of our draft legislation. That is why we have published a public consultation document seeking the views of interested parties and the general public on our draft legislation and the Government's approach to terrorist asset freezing. I very much hope that interested parties and the public will engage with the consultation and submit responses. I am already looking into the issue raised in the House by the noble Baroness, Lady Hamwee, in connection with people feeling safe in making representations in connection with the consultation. I hope to be writing to her and to others who participated in that debate in a few days’ time with a letter of reassurance about the procedures that will be followed and the necessary protections afforded.

The legal position of the UN al-Qaeda freezing regime is different. In 2002, the EU adopted Regulation 881, which implemented the al-Qaeda regime throughout the European Union. EC Regulation 881 is directly applicable in national law, and therefore the assets of those listed under the UN al-Qaeda regime have remained frozen in the UK, through the EC regulation, despite the Supreme Court’s decision to quash the Al-Qaida and Taliban (United Nations Measures) Order 2006.

However, the quashing of the al-Qaeda order has removed the criminal penalties for breaching the EC regulation in the UK. It is therefore necessary to reinstate the enforcement provisions for EC Regulation 881 in national law, and that is what the Al-Qaida and Taliban (Asset Freezing) Regulations 2010, which we are considering today, are intended to do. Section 2(2) of the European Communities Act 1972 sets out that the appropriate legislative vehicle for doing that is a statutory instrument. However, the Government take the view that, given the points raised by the Supreme Court and the obvious public and parliamentary interest, it is right that these regulations should be subject to approval by Parliament under the affirmative procedure, and I welcome debating these regulations today.

Before I explain the detail of the regulations, I turn to the central purpose of the al-Qaeda and Taliban sanctions regime and to some of the issues that it has raised about due process. The central purpose of the al-Qaeda and Taliban sanctions regime is to stop the flow of funds to al-Qaeda and the Taliban, and those associated with them, and therefore to disrupt their operations. That is a necessary and vital task at a time when the threat from international terrorism remains severe and when British forces in Afghanistan are being killed by the Taliban and their allies. I am sure that the whole House will agree with the legitimate purpose that the UN sanctions regime is trying to achieve.

The Government remain of the view that maintaining and implementing UN-wide asset freezes against al-Qaeda and the Taliban is important to help to counter the threat that those bodies pose to international peace and security. We know that al-Qaeda and the Taliban source funds from all over the world. Therefore, the response must be global, and the best way of achieving that is to maintain a central UN list of sanctions targets. Within the UK alone, about £140,000 of funds are frozen under the UN al-Qaeda and Taliban regime, in addition to about £150,000 frozen under the terrorism orders.

Noble Lords will be aware that the Supreme Court raised concerns about individuals on the UN list not being able to challenge their listing at the UN in a court and that this consideration was central to the court’s decision to quash the al-Qaeda order. The Government are committed to continuing to improve the UN 1267 committee’s processes for listing and delisting. I am pleased to be able to say that, as a result of the UK’s work with our Security Council partners, the UN has made great strides to improve its listing and delisting procedures. Reviews of all cases must now be conducted every three years, and Security Council members are working towards reviewing all current cases on the list by the end of June this year. In December, the Security Council agreed further improvements to listing and delisting procedures, including the establishment of an ombudsman who will be able to work with Security Council members to support the review process. We believe that this is a significant step forward and are pressing for this position to become operational as soon as possible.

None the less, it is true that individuals are not able directly to challenge their listing within the UN system and there remains no independent judicial oversight of decisions taken by the UN Sanctions Committee to list individuals. It is important to note, however, that EC Regulation 881 does not automatically give effect to the UN list. Rather, the regulation establishes an EU list of targets. This means that when someone is added to the UNSCR 1267 list, their name must also be added to the EU’s list in order for the asset freeze to take effect under the EC regulation. The EU’s practice is to follow the UN’s list in adding or removing names, and the EU’s list is currently up to date in reflecting the UN list. A person who is added to the EU list may challenge the decision to list him by the EU in the EU courts. Noble Lords will be aware that such challenges have in fact been brought, most notably in the Kadi case, and a number of further challenges are currently before the EU courts.

Let me explain how the regulations we are considering today are intended to work. EC Regulation 881 implements UNSCR 1267 asset freezes in the EU by requiring that all funds and economic resources belonging to persons listed under the regulation are frozen; prohibiting funds or economic resources from being available to and/or for listed persons; prohibiting deliberate circumvention of the prohibitions and requiring persons to notify national competent authorities of any circumvention; and requiring persons to provide information that facilitates compliance and to co-operate with national authorities. It also requires each member state to determine effective, proportionate and dissuasive sanctions for breaching the regulation.

The regulations set the criminal penalties for breaches of the EC regulation. In order to set these criminal penalties and to give proper effect to the EC regulation in the UK, the al-Qaeda regulations need to set out in detail to whom the sanctions apply, the nature of the prohibitions, licensing arrangements, criminal penalties, information gathering powers and appeals mechanisms. This is because although the EC regulation sets out the requirements of the asset-freezing regime, it does not do so with the precision and authority that is needed for proper implementation under UK law, in particular regarding the creation of criminal offences. The regulations before the Committee therefore take the EC regulation as the starting point, but provide more detail with a view to creating a regime that is clear, effective and proportionate. This does no more than the minimum necessary to implement the EC regulation, and all the provisions of these regulations are necessary to enable us to fulfil our EU obligations; namely, to implement the EC regulation effectively and to provide proportionate and dissuasive penalties for breaching the provisions of that regulation.

The al-Qaeda and Taliban regulations define a designated person as someone listed in Annexe 1 of the EC regulation; define the scope of the provisions that apply as a result of the asset freeze; provide criminal penalties for breaches of the prohibitions; provide a mechanism for granting licences; and create an offence where a person knowingly or recklessly provides false information or documents to obtain a licence or acts outside the terms of that licence. They include provisions for the gathering and sharing of information; create an offence for failing to comply with Treasury requests for information; and amend the Counter-Terrorism Act 2008, so that someone affected by a Treasury decision made under the regulations—effectively a licensing decision—may apply to the court to have the decision set aside.

The scope of the prohibitions reflects our intention to make the regime proportionate and to seek to limit its impact on innocent third parties. The prohibitions mirror those set out in our draft Terrorist Asset-Freezing Bill. Thus, the regulations set out that the prohibition on making funds available for the benefit of a designated person applies only where the designated person is able to obtain a significant financial benefit, and the prohibition on making economic resources available to a designated person applies only where a person knows or has reason to suspect that the resource will be used to generate funds, goods or services.

I hope that I have explained why it is important that the UK fully meets its obligations to enforce the UN al-Qaeda and Taliban asset-freezing regime. I hope that I have also explained that although noble Lords may have concerns about the UN listing and delisting procedures, the UK has been at the forefront of action in the Security Council to improve the procedures, and that significant progress has been made. I have also explained that the European Union’s implementation of the UN 1267 regime provides designated persons with the opportunity to challenge their listing within the EU, and indeed that this right has been acted on and tested.

Finally, I have also explained the content of the Al-Qaida and Taliban (Asset-Freezing) Regulations and that in the Government’s view they represent an effective, fair and proportionate way of giving full effect to the EC regulation within the UK. I therefore commend these regulations to the Grand Committee.

My Lords, I thank the Minister for introducing these regulations. I reiterate what I said last month when we debated the emergency legislation—that these Benches support the Government in their actions to deal with threats to the UK and the rest of the world from terrorist activity. For that reason we will support these regulations today, but our support is never unconditional. From time to time, the Government have sorely tested our support by introducing measures that seem to have a civil liberties bypass. It is interesting to note that the Joint Committee on Human Rights reported today along those lines in relation to the Government’s approach to terrorist legislation. The regulations before us raise similar issues.

Late last week, the Government issued a consultation on the draft terrorist asset-freezing legislation to which the Minister has referred. This is necessary to replace the regime under the United Nations Act 1946, following the Supreme Court’s judgment. The Treasury at that stage decided to pursue a sticking-plaster approach, involving the emergency temporary Act which was passed on 10 February, followed by consultation on draft legislation. The temporary Act runs out at the end of this year, but the Treasury has only just issued the consultation and therefore has used up a month of the rather short time left to implement a permanent regime.

We did not think that the Treasury had chosen the correct route last month, and we continue to believe that. We believe that it would have been better to attempt to legislate on the full regime last month, and that there was plenty of time to do that. However, the rather dilatory way in which the Government have chosen to initiate this consultation—given that the consultation document contained little more than could have been produced overnight in February—is another sign that they have perhaps given up on governing. The regime applied to asset freezes under EU Regulation 881/2002 is covered by these regulations, but is not within the consultation on terrorist asset-freezing legislation. I asked the Minister yesterday why this was, but he did not provide an answer. He merely referred to the fact that the debate on these regulations was due to take place today.

I completely understand that the individuals whose assets are frozen will be determined at the level of the United Nations and then the EU, and I will not raise any issues today in relation to how those determinations take place. I was interested to hear what the Minister said about improving the UN’s processes, but clearly there is some way to go before people could be entirely satisfied with that. As the Minister has explained, these regulations cover the important areas of the licensing regime and offences. I do not understand why the Government would not want these to be harmonised under the Bill on which they are currently consulting. It seems to me, at the minimum, to be messy to have two legislative routes to cover what is effectively the same thing, with the only distinction being the origination of the designation process.

My concern is not so much about these regulations for the rest of 2010. We have accepted that the temporary Act will frank the existing regime for the other terrorist asset freezes until the end of the year, with consultation on a permanent replacement. It seems to me that we ought to do the same for these regulations in relation to the designations under EC Regulation 881. Will the Minister explain why these regulations are not also sunsetted for the end of 2010 and included in the replacement legislation?

I am aware that the Treasury has been crafting its terrorist asset-freezing orders in its usual minimalist way with a view to avoiding the fatal flaws in its earlier efforts, which were identified during the progress of the Ahmed case through the courts. The draft legislation basically builds on that position, but is different in some respects from these regulations. In particular, these regulations have no formal procedure for challenging the Treasury's decisions under them. While the Treasury have no say in designation, other decisions—for example, on licences and information—need proper appeal mechanisms. Why are the Government keeping this regime separate in terms of offences and such things as information powers from the rest of the terrorist asset-freezing regime?

It is by no means clear to me that Parliament will accept the draft legislation which is being consulted on as it stands. The biggest area is likely to be the need to have better routes than judicial review or judicial review lookalikes in order to challenge the Treasury. We are not convinced that the offences are correctly formulated in the new legislation. The Treasury might think that it has a final and definitive view of what should be included in asset-freezing legislation, and that consultation is a bit of a formality, but I would not like the Minister to be under any illusions about this. The Second Reading and Committee stages of the temporary Bill in February indicated that it was far from clear that there would be a consensus on a way forward on the basis of the draft legislation.

The Government have brought these regulations under the affirmative procedure, but we must not pretend that this represents a good degree of parliamentary scrutiny for what is in the regulations. The Government know that our custom is not to reject secondary legislation and that we have no opportunity to amend the regulations. I am less than clear that this represents the substantive parliamentary scrutiny that was in the minds of the Supreme Court in the Ahmed case. Furthermore, there is no way in which the Government would be obliged to bring these regulations back if Parliament takes a different view on some of the fundamentals when it considers the legislative replacement for the emergency Act.

Will the Minister agree that the consultation on the new draft legislation should cover whether the content of these regulations should be found a home within the new legislation? If he cannot agree with that, will he agree that, if any new legislation makes substantively different provisions from any which are in these regulations, the Government will return to Parliament with revised regulations to replace these?

My Lords, I hope that the envelope I have just been passed is not relevant to the debate. I thank the Minister for his explanation of the regulations and of their relationship—or non-relationship—to parallel legislation. The context in which we are debating the draft regulations includes the report of the Joint Committee on Human Rights, which calls for a review of all anti-terrorism legislation. When I made a note yesterday of the few things that I wanted to say on these draft regulations, the first thing that I wrote down was “piecemeal”. It would be more than helpful—in fact, it would be proper and appropriate—for us to look at anti-terrorism legislation across the board, rather than to apply what the noble Baroness called a sticking plaster. Dealing with this bit by bit is not satisfactory. When the bits include a statutory instrument that we cannot amend, it is even less satisfactory.

Another part of the context is the amount that is currently frozen. When we debated the emergency legislation last month, the Minister gave us a figure of about £150,000. He gave more figures today, but I did not catch whether that amount covered both regimes or whether it was a similar amount for this regime. Previously, we debated the fact that however small the amount—£150,000 is not much—one can create a lot of havoc with very few resources. I will not make too much of that.

I still find it difficult that we are not taking the 2001 Act as a starting point, extending it to cover the UK and so on. In particular, creating offences by secondary legislation makes me very uncomfortable, whatever the 1972 Act said. I agree with the noble Baroness that, if we cannot use existing legislation, we should look at the proposed permanent legislation for both regimes. When we debated the emergency legislation, we heard explanations of why the 2001 Act would not work. But this says to me that the Government should get the primary legislation up to scratch, so that we have something that is complete, scrutinisable—if that is a word—and amendable.

I thank the Minister for taking on board the point that I made yesterday about consultation on the proposed new permanent legislation. The issue occurred to me only just before going into the Chamber, and I hoped that it would not put me on the right wing of the argument if I appeared to suggest that there should be more confidentiality than was proposed. I did not mean that, but I am beginning to get a greater feel for the complexity of some of these matters than I had when I took on the home affairs brief only three months ago.

We appreciate and share the objective of restricting funds that might go to terrorist causes, or might have terrorist applications, provided that it is properly done. We will not oppose the regulations. We are where we are, and some of the issues highlighted in the cases that ended up in the Supreme Court, particularly human rights issues, remain.

At the time of the emergency legislation on 5 February, a Written Statement was made about licensing and the factors that the Government would take into account. I found that Statement very reassuring because of concerns about descriptions of the draconian effects of the orders—the word “draconian” was used by the Supreme Court. I am unclear whether that approach applies to those who will be affected by this statutory instrument. It would be helpful to have on the record the fact that that approach is formally a matter for this statutory instrument as well as for the legislation that we debated and passed last month.

Regulation 9, to which I would have tabled a probing amendment had I been able to do so, deals with the offences of “a body corporate etc”. I am interested in the “etc”. Individuals may commit an offence where their own body corporate is guilty of an offence; that is where the offence is committed with the consent or the connivance of an individual or is attributable to any neglect. The term “neglect” seems to me to be very wide and certainly wider than “consent” and “connivance” and is something that is more likely to happen than recklessness—it is further along the spectrum.

I have a degree of concern about that. One can be neglectful without intending to be and without intending the effect. The Minister may say that, if there is a trial, that will be taken into account when sentencing. Can the Minister say anything about that provision? I would also have tabled amendments rather similar to those moved by my noble friend Lord Thomas of Gresford on the length of time, the number of repeat directions, the need for findings of fact, and appeal and judicial oversight. The Minister has referred to some of those and I note what he said about the UN proceedings and an ombudsman. That is helpful.

Although the subject matter is immensely important, we on these Benches are uncomfortable about approaching the matters this way, although clearly, at this stage in the parliamentary cycle, that is what we will have to do.

My Lords, this is rather outside the ordinary territory which the noble Baroness, Lady Noakes, and I normally occupy of discussing issues relating to the economy, the banking system and finance. It is a particular delight to have the noble Baroness, Lady Hamwee, join us in this discussion to give us variety and her own particular perspectives on these issues relating to individual and personal liberty.

My Lords, I am grateful for that. The person who is most delighted is probably my noble friend Lord Newby.

It is pleasant to speak on an issue where there are no opportunities for banker bashing. I also remind noble Lords of my personal declarations of interest: I record my membership of Amnesty and Liberty. I am deeply concerned about many of the issues that lie at the heart of some of the matters that we are considering today.

On behalf of the Government, I also welcome the support that the Conservative Party and the Liberal Democrats are giving to the necessary steps that we are taking to protect the security of the country. I recognise the concerns expressed by the noble Baronesses, Lady Noakes and Lady Hamwee, but I also applaud the fact that, notwithstanding those concerns, they encourage the passing of the necessary provisions.

The noble Baroness, Lady Noakes, referred to the consultation process. I remember well the debate that we had at Second Reading in the House about the sunset provision. We produced the consultation document in March, having laid the draft legislation on 5 February. The consultation document is deliberately wide to encourage as broad as possible a range of issues to be brought forward, rather than asking narrower questions. I agree with the noble Baroness that, in view of that approach—which, of course, was the consequence of deliberation on our part—the document did not take a great deal of time to prepare. The key issue is the length of time that it takes people to prepare and consider their responses. That is why we need the time for proper scrutiny of the Bill, including through public discussion and debate about the issues to which it gives rise.

Consideration of the draft legislation can start as soon as we believe that the consultation process has completed its necessary stages. There will of course be a full debate on the proposed formal legislation. I look forward to that, because issues were certainly raised in respect of the temporary legislation which, in view of the time available, were probably not fully debated. These are issues which need to be debated with great care. We look forward to and welcome the debates that will take place as the Bill works its way through Parliament.

To pick up one or two other questions, the noble Baroness, Lady Noakes, asked yesterday why the consultation on the terrorist asset-freezing regime specifically excludes those covered by the al-Qaeda and Taliban asset-freezing regime. As I explained, the answer is simply that EC Regulation 881/2002 has direct effect in UK law. The UK is required to provide effective and proportionate penalties for breach of the EC regulation. Given the limited purpose of the Al-Qaida and Taliban (Asset-Freezing) Regulations, a consultation would not be appropriate for the al-Qaeda asset-freezing regime.

However, the Government take the view that, given the points raised by the Supreme Court and the obvious public and parliamentary interest, it is right that the regulations should be subject to approval by Parliament under the affirmative procedure, and I welcome the fact that we are debating the regulations today.

Perhaps I may come back on that. The Minister has repeated what he already said, which is that the people under this regime can be dealt with by regulations that go through only the affirmative procedure, and that the regime will be kept separate from people under other procedures. I have not heard a substantive reason why that is so. As he said, the regime is not minor; it covers offences and is a licensing regime. These are not small issues. I have not heard a substantive reason why the content is to be kept separate in legislative terms from people dealt with under the other UN resolution.

I thank the noble Baroness for adding that observation. As I have said, these regulations implement EC regulations, but her observation is important. There is limited scope for us to determine how we implement the Bill but, given that the information-gathering powers largely replicate those of the Bill, we will of course consider these regulations again in the light of the Bill’s passage.

I am aware that the point is being made—by, I think, both the Conservative and Liberal Democrat spokesmen—that the process does not, for instance, allow the tabling of amendments. The noble Baroness, Lady Hamwee, has identified an area where she would table an amendment, if only for probing purposes. I am much persuaded by the argument. I will therefore reflect carefully with officials on whether there is a process by which we can allow the orders to be subject to further parliamentary approval in a manner that would allow noble Lords to table amendments, either in the belief that they should be passed or, at least, to probe more carefully the Government’s thinking.

I will also further reflect on the noble Baroness’s observations on whether a consultative process should be linked to these regulations, as they were to the previous ones. There is a significant degree of overlap here, but we need to reflect carefully on whether there is a case for some further consultative process to inform thinking and decision-making. That is another reason why it is incumbent on the Government, having persuaded the House to allow a sunset date of the end of December, to take full and complete advantage of the time that we have secured. Parliament did not grant us that time on the basis that we would dither or drag our feet in preparing the necessary work but that we should be able to evidence that we have used the time as part of a good process to consult widely, and to permit Parliament to engage in close and detailed scrutiny of all aspects of this regulation.

I, for one, am deeply aware that there are very fine issues of balance which need to be achieved here, between protecting society against a risk that the security forces continue to tell me is high and, at the same time, being respectful of civic liberties and individual rights. Having taken note of what the noble Baronesses, Lady Noakes and Lady Hamwee, said on this point, I may write in due course with further consideration. However, I would like them both to be very clear that, to the extent that I have any future involvement in this process, it will be my wish that there should be full and proper scrutiny. I say that not, of course, in having any doubt about the outcome of the forthcoming general election, but the Prime Minister might come to the conclusion, as many people in the House already have, that there is probably somebody better able to do this job than me—proud as I am to be doing it.

The noble Baroness, Lady Hamwee, asked about the figures. Perhaps I might repeat that £140,000 of funds is frozen under the UN al-Qaeda and Taliban regime; in addition, there is £150,000 frozen under the terrorism order, so the total is just under £300,000. The noble Baroness also asked about Regulation 9 and the use of “neglect”. I am advised by officials that neglect means a lack of care that a reasonable person would show. We would expect that any prosecution would be brought only if there was clear evidence of a failure to follow proper procedures.

A question was asked about challenges to licensing decisions. Schedule 2(1) adds these regulations to the Counter-Terrorism Act 2008. The effect is to provide a procedure for applications to a court to set aside licensing decisions. I am also aware of the JCHR report on counterterrorism and human rights, which I believe was published only today. I have not had an opportunity to study it, and no doubt the Government will want to look carefully at what the JCHR has said.

As the Explanatory Memorandum makes clear, the regulations before us are compliant with the Human Rights Act. The EC regulation is already UK law. The freeze on al-Qaeda and Taliban assets is already given force through EC regulation. However, it is important that we pass these regulations to enforce the sanctions and to provide penalties for breaches of the regulations. This will ensure that we continue to meet our international obligations, and will give the UK a more effective mechanism for compliance and for enforcement of the freeze in order to prevent funds reaching al-Qaeda and the Taliban.

In closing, I emphasise again that in these times of severe threat to our national security, we must take the necessary steps to prevent terrorists raising funds and using them for terrorist purposes. A proper framework to implement EC regulation effectively, and to provide penalties for non-compliance, is essential both to help prevent terrorist financing and to meet our international obligations. I will write to the noble Baronesses, Lady Noakes and Lady Hamwee, with the answers to any detailed questions that I have not addressed in my closing speech. I commend the regulations to the Grand Committee.

Motion agreed.