My Lords, I will speak to the amendments tabled in my name and in that of my noble friend Lady Kramer. First let me take a brief moment to set the context. At Second Reading the Minister, the noble Lord, Lord Ahmad, said that this Bill was,
“about powers and not policy—it is a technical Bill”—[Official Report, 1/11/17; col. 1374].
Later, when replying to the debate, stimulated by comments by my noble friend Lord McNally, he amended his comment that the Bill was technical and said that it was about principles.
I do not agree. I would say that the problem with the Bill is that there are no principles, because they have not been carried over; there are only unconstrained powers. That is even more the case in the money-laundering part of the Bill. The principles, the starting points, are not defined. In fact, current law is undermined—and, as has already been well expounded on previous days in Committee, the good intentions of the current Minister and the Opposition Front Bench are no safeguard for the future.
There is also the widening effect when EU legislation is no longer governed by the policy constraints of EU treaties or the Charter of Fundamental Rights, which has a particular place in relation to the subject matter of the Bill. In transposition, all that has gone. This leaves us with two fears to address: first, that good law might be wantonly minimised or revoked, and, secondly, that wide powers might be used oppressively or for the wrong purpose. Both those prospects take advantage of the inadequacy of statutory instruments as a way to deal with fundamental matters.
Amendment 68A, which would replace Clause 41, Amendment 69E, which is about standards and designations, Amendment 72A, which would delete Clause 44(3), and Amendment 69A, which deals with exemptions from amendment and revocation, together address the fears that I have outlined. Before getting into the detail I will explain how they fit together. Of course, at this stage they are probing and illustrative, and I know that they are not perfect.
Amendment 68A would delete Clause 41 and replace it with an anchored principle that the money laundering regulations 2017 will continue, and that if they are to be amended, it must be done by an Act of Parliament. Amendment 69E, which could have been rolled up into the same amendment but stands separately, would provide an exception to the requirement for an Act of Parliament for amendment, and would allow for regulations to follow Financial Action Task Force standards and to update the definition of high-risk countries.
I think that there is general agreement that that is needed, but within that context—my Amendment 69E is not perfect in this respect—I have to caution that following FATF standards does not necessarily take into account civil liberties, so a framework of policy is also needed for that. Clause 41 does not give any guarantees of any such framework being carried over, and that aspect needs more attention. So the two amendments that I have outlined lay the general shape as I see that it should be. There are, however, many ways in which the provisions of the Bill, and elsewhere, can render complete change or revocation to whatever shape is laid out.
Amendment 72A to Clause 44(3) would remove the prospect of shape shifting from within the Bill. It would remove the potential to change, by regulation, the definitions of terrorist financing that were themselves made in separate Acts of Parliament that did not envisage change by regulation.
Amendment 69A is there to remind us that shape shifting and revocation options exist externally of this Bill via the European Union (Withdrawal) Bill and the Legislative and Regulatory Reform Act 2006, which can, by regulation, revoke all or part of any Act or regulation in the name of efficiency. Of course, there is no escaping the fact that procedures to combat money laundering and terrorist financing must impose burdens, which to some means inefficiency. The noble and learned Lord, Lord Davidson, has already hinted at some of that. Amendment 69A would, therefore, exempt from revocation or amendment under the two Acts that I have just mentioned.
As regards the deletion of Clause 41, I, too, have had emails from NGOs and others raising concern about the lowering of standards, including one from
Global Witness suggesting that Clause 41 be narrowed to permit only enhancement of legislation. I appreciate that is what the amendment moved by the noble and learned Lord, Lord Davidson, sets out to do, and I borrowed some of the language from that to use in one of my amendments. However, the problem is that it is not only in Clause 41(1) that legislation can be done away with by regulation. It appears again, particularly in Schedule 2, where, under paragraph 20, there is carte blanche to change or revoke the money laundering regulations 2017, and one can only interpret that as some kind of intention so to do. I have already mentioned the withdrawal Bill—Clauses 7 and 17 of that Bill are prime suspects—and the “revoke anything” provision in the Legislative and Regulatory Reform Act. So we need to do more to protect against revocation of things that we do not want to see revoked.
On the other fear, of being overbearing, there is the prospect that the already wide definitions of money laundering or terrorist financing could be extended. This is where Clause 44(3) comes in, which uses Clause 1 to modify definitions of terrorist financing that appear in the four other pieces of legislation mentioned in Clause 41(3). Thus Clause 1, which we have already heard quite a lot about as regards the sanctions part of this Bill, now creeps into the anti-money laundering part. It is also worth reminding ourselves that the Delegated Powers and Regulatory Reform Committee has already said in paragraph 37 of its report that each of prevention, detection and investigation have the potential to allow the grant of significant powers affecting the rights of individuals and bodies—and that is before any tinkering with the definition of terrorist financing and before considering the removal of European protections on civil liberties.
Of course, under Clause 1, one of the objectives for change includes furthering a foreign policy objective of the United Kingdom. I pointed out on the first day of debate how UK terrorist legislation was used to freeze the assets of Landsbanki for having reckless capital adequacy and interest rate policies. This was what got them into difficulty—things that were nothing to do with terrorism. Is that the kind of thing that in future might be a foreign policy objective? In that particular instance, I know that it was cooked up in the Treasury. But what guarantees are there against all kinds of disconnected foreign policy objectives? All that flows from Clause 1 becomes relevant in the money-laundering part of the Bill.
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The four pieces of legislation in Clause 41(3) that can be amended by regulation by virtue of Clause 44(3) are: the Terrorism Act 2000; the Anti-terrorism, Crime and Security Act 2001—I think that that is of Landsbanki fame; the Terrorist Asset-Freezing etc. Act 2010 and the ISIL and al-Qaeda regulation that originated from the UN and then an EU regulation. Those primary Acts, which collectively define terrorist financing, do not—or at least did not—of themselves seem to provide for amendment by regulation. This Bill is a serious extension to allow perpetual regulatory change to Acts that, when conceived and passed, had no such provision.
Alas, I do not discount the possibility that some other Act, somewhere else, may already have snuck
through and established regulatory contamination. Will the Minister advise on whether this change by regulation is new for the Acts I have mentioned and whether the collective effect of Clauses 41(3) and 44(3) is a definitive policy choice intentionally to give new, wide, permanent power to amend sensitive Acts by regulation? For my own part I can see no Brexit reason—or speed reason—why that needs to be done for what seems to be a shaming assault on the exemplary standards of British legislation that my heart hoped existed and that was frequently boasted about to me and everybody else in Brussels.
As I said at the start, everything is worse in the money laundering part. That is because it does not have provisions requiring, for example, ministerial guidance, which appears in Clause 36 with regard to Clause 1 for the sanctions part of the Bill. It is not clear whether any of that extends to any of Clause 41, but maybe the Minister can explain whether there is a piece of Ariadne’s thread extending around that part of the labyrinth and whether it stretches as far as the imperious Clause 41(1), and what those guidelines might contain in the context of money laundering. It is no good praying aid from the fact that guidance is mentioned in the money laundering regulations 2017, because Schedule 2 positively flags that they can all be changed so the Minotaur can eat them.
Clause 41, and what links to it, fails both the fear tests that I outlined at the start. It gives extensive and unjustified powers. Clause 41(1) allows the creation of a whole new generic framework, all by itself, through regulation without policy, guidance or safeguards other than already wide definitions that are themselves changeable by regulation by interaction with other parts of the Bill. Clause 41(2) enables a whole swathe of powers that, via Schedule 2, potentially dispenses with the entire policy framework of the money laundering regulations 2017 and replaces it with something else, again without requiring any guidance or safeguards. I will return to that separately in the context of Schedule 2 not standing part of the Bill.
Clause 41(3), in cahoots with Clauses 44(3) and 1, newly allows meddling in other sensitive primary legislation via regulation, or it could be all wiped away by other provisions in and outside of the Bill. The solution is to fix what we have on the face of the Bill, and that needs not 100 clauses but just one saying that the money laundering regulations cannot be fundamentally changed or done away with without an Act of Parliament, other than for limited regulatory power to upgrade in line with international procedures—and I would add to protect civil liberties. If something so serious came along that changing our existing wide definitions of money laundering or terrorist financing was necessary, it would need to be something quite unexpected and would belong, as it has in the past, in primary legislation, not in this viper’s nest of tortuous entanglements that yields unfettered powers.
As with sanctions, legislation of this type can create collateral damage to innocent people and requires the utmost care. Due to its all-or-nothing nature, regulation is not adapted to do that. Nor does the Bill, or Clause 41, provide the stable policy environment post
Brexit that was promised. What the Government have provided, with sweet words about no policy change, is a wolf in sheep’s clothing, even if the Government did not intend to be a wolf.