Financial Restrictions (Iran) Order 2009

Seventeen applications were received; two further applications have been received since. It is not possible, as I was saying, to place a value on these transactions. The noble Baroness also asked about subsidiaries of Bank Mellat and IRISL. The powers under which the direction was made address specific risks to the UK national interest posed by activities carried out by the Government or persons resident or incorporated in a third country. Subsidiaries are separate legal entities, not subject to the requirements of the direction. We are confident that the direction, as far as it applies to Bank Mellat and IRISL, will be sufficient in itself to achieve the objective that we have in seeking these orders. The noble Baroness asked about the impact on business volumes and values. As I said, the majority of British financial institutions have already terminated their business activities, that particularly being the case with any UK institution having substantial business activities in the United States of America. We therefore expect the aggregate impact on the UK financial services sector to be quite modest. However, some firms will be more affected than others, which is why we are working closely with those firms to ensure an orderly wind-down of their existing business. We will publish updated impact analysis to include estimated volumes and values when the position is clearer. The noble Baroness also asked about enforcement. The indication that I have given of the quantum of activities likely to be covered by the order would be consistent with the relatively modest costs that the FSA and HMRC believe are necessary for supervision and enforcement. It is important to recognise that these are estimates. If, during the course of their work, the FSA and HMRC form the view that they are required to be more engaged and searching and the issues that surface are more complex, I have no doubt that they would devote more resources to the task—that is to say, they will not be resource-constrained in their ability to monitor and enforce these orders. The order will last for one year. If the Government wish to come back to Parliament with a request for a renewal or a new order, that will no doubt be supported by a much fuller report to Parliament on the experience of the existing order. It is difficult to contemplate the precise form and content of that statement, as it will depend on the experience during the 12-month period. However, it will be entirely reasonable and proper for Parliament to expect as full as possible an explanation at that time of the experience to date, as would be consistent with national security interests. The noble Lord, Lord Newby, asked about the engagement of UK bodies outside the financial services sector with Bank Mellat and IRISL. That is a perfectly reasonable question, but the scope of this legislation is very specific and focused on financial institutions. Noble Lords can rest assured that the appropriate bodies in the UK are monitoring closely our engagement with those two organisations. No doubt, the order as proposed will lead others to reflect on whether Bank Mellat and IRISL are organisations with which they would wish to continue to conduct business. Importantly, we need to continue to work hard to ensure that other jurisdictions are as determined as the UK is in this respect. I am thinking here of IRISL in the field of reinsurance and insurance, when clearly it would not achieve our ultimate purpose if the business currently transacted through P&I institutions in the UK simply rotated to P&I institutions or insurers elsewhere. Hence, there has to be an element of significant international co-operation. That takes me to address the specific questions raised by the noble Lord, Lord Newby, in connection with the European Union. These orders are a specific response to a threat to the UK. We will discuss the issue with our EU partners and will support those member states that wish to take similar action. It is clear from the evidence that, inasmuch as we can argue that these two organisations represent a threat to UK national interests, they similarly represent a threat to the national interests of other EU states. Motion agreed.