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.