Sanctions and Anti-Money Laundering Bill [ Lords ] (Third sitting)

(Limited Text - Ministerial Extracts only)

Thursday 1st March 2018 Public Bill Committees

[Alex Chalk]

My overriding concern is that I do not like the drafting because it is inconsistent. Although I am very sympathetic to the Magnitsky principle, for which the hon. Lady and my right hon. Friend the Member for Newbury have powerfully advocated—I look forward to what the Minister has to say about that—this drafting has gone not just a bit awry but quite seriously awry. Creating confusion and inconsistencies between the two key pieces of legislation will mean that lawyers have a field day and that the victims are not be protected. For those reasons, we need to look at this again, get it right and ensure that what ends up on the statute book is truly fit for purpose.

[The Minister for Europe and the Americas (Sir Alan Duncan)]

We genuinely appreciate that this issue is of significant concern to right hon. and hon. Members, as the hon. Member for Bishop Auckland and hon. Members on both sides of the House who spoke on Second Reading made clear. I acknowledge the long-standing and heartfelt commitment to this important cause that my right hon. Friend the Member for Newbury has demonstrated. We do not want to do anything other than take seriously what Members from both sides of the House are arguing.

Let me go into some of the details and suggest how we might proceed. Amendments 1 and 2 relate to including in the Bill gross human rights abuses as a basis on which sanctions may be imposed. As Lord Ahmad made clear in the other place, the list of purposes currently in the Bill ensures we can continue to implement sanctions for the same reasons we do now—for example, in the interests of international peace and security or to further a foreign policy objective of the UK. As my right hon. Friend the Foreign Secretary said on Second Reading last week, we already implement human rights-based sanctions against 10 countries, including Iran, Libya, South Sudan and the Democratic Republic of the Congo. Overall, that means that sanctions against more than 200 individuals and entities are in place now, and that approach will continue under the Bill.

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[Richard Benyon]

I am grateful to my right hon. Friend for his remarks. My hon. Friend the Member for Cheltenham and I have gone quite a long way in looking at an alternative definition that would meet the requirements of the Magnitsky standard and that is consistent across our judicial system. Does my right hon. Friend support that direction of travel, and will what he commits to bringing forward on Report satisfy those who have campaigned on the matter for a long time?

[Sir Alan Duncan]

I can certainly say to my right hon. Friend that we will endeavour to work towards that destination. He will appreciate that in Government, agreement to certain processes requires collective responsibility. I want to see what we can do to head in the direction that he has campaigned for, but we will have to wait until the days leading up to Report to get to the point when I can say so for certain. I hope the hon. Lady will withdraw amendment 1.

[Helen Goodman]

That was a very interesting exchange. I wish to thank and commend the right hon. Member for Newbury for what he has said and for the thought that he has put into this matter. Obviously, we all want legislation to be good, and we do not wish to create a fest for lawyers. That is not the purpose here. The Government might have done the more reasonable thing and accepted amendments 1 and 2 and said, “By the way, they are not absolutely perfect, so parliamentary counsel will have to dot the i’s and cross the t’s and get the drafting absolutely perfect.” The Minister has not done that. In the spirit of compromise and consensus building, in which the Minister has said consistently that he is interested, I would like to draw a distinction between amendment 1 and amendment 2. Questions about the drafting seem to relate to amendment 2, but everybody who has spoken seems to agree with amendment 1. For that reason, I will press amendment 1 to a vote.

[Sir Alan Duncan]

In my everlasting search for consensus, may I put this logical argument to the hon. Lady? Those who feel fervently about this issue see the two amendments as part of a package. If we were to take one without the other, it would deny us the opportunity to have a broader debate in the whole House on the entire issue known as the Magnitsky Act. Cutting off one from the other would not necessarily please the campaigners, so it would be advantageous to put this matter to the whole House, should it get that far.

[Helen Goodman]

Our objective is not to satisfy campaigners in this House, but to get the law right.

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Division 5

Ayes: 9

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Labour: 7
Scottish National Party: 2

Noes: 10

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Conservative: 8

[Helen Goodman]

I beg to move amendment 14, in clause 1, page 2, line 21, at end insert—

‘(3A) Regulations under this section must be accompanied by the publication of a written memorandum by the appropriate Minister, and such a memorandum must set out—

(a) how the relevant sanctions are consistent with the overall foreign policy objectives of the UK government, including any specific regional objectives where appropriate;

(b) clear objectives for the relevant sanctions, including well-defined and realistic demands against which compliance can be judged;

(c) a coherent overarching diplomatic strategy for achieving the relevant objectives, including steps to actively and systematically communicate with targeted countries or persons on the specific concerns underpinning the sanctions against them;

(d) a clear exit strategy, including specific and measurable changes in the behaviour of any target or targets to be required as a precondition of any future suspension or lifting of the relevant sanctions; and

(e) specific steps to be taken by Ministers to promote co-operation with, and where possible the adoption of, any autonomous UK sanctions by other countries.”

This amendment would require the Government to publish a memorandum setting out the objectives of any sanctions issued under this Act, and how they are consistent with the UK’s foreign policy objectives.

This amendment is about making coherent and sensible plans when we impose sanctions. We want the Government to lay before the House a public document that sets out how the relevant sanctions are consistent with the Government’s overall foreign policy objectives; clear objectives for the relevant sanctions; a coherent overarching diplomatic strategy for achieving the relevant objectives; an exit strategy; and specific steps to be taken by Ministers to promote co-operation with or adoption of any autonomous UK sanctions by other countries.

Lord Ahmad said in the other place that through sanctions we are looking to change people’s behaviour. We are not interesting in hitting ordinary people rather than regimes. We want to minimise the humanitarian impact on innocent civilians. That is why we think that being a bit clearer about the aim of particular sanctions on particular regimes is extremely important.

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[Richard Benyon]

I am confused by this one. I may be a member of the Intelligence and Security Committee, and I would not want anyone in this Committee to think that I have gone native and that somehow we want everything hushed up. I am entirely in favour of transparency of strategy, because that is the easiest way for Parliament to hold the Government of the day to account. But it seems to me that elements of this amendment would make it unworkable. It would favour the kind of state that we might seek to sanction, by laying bare before the world a strategy that, at times, it is worth while keeping within the corridors of power. I am sure some people will accuse me of being part of some sort of elite or believing in closed government, but it is absolutely not true.

The amendment calls for a memorandum that would show

“clear objectives for the relevant sanctions, including well-defined and realistic demands against which compliance can be judged…a coherent overarching diplomatic strategy”.

That is available, to an extent, and is discussed. It is part of our national security strategy. But to communicate in a way that would be helpful to—the actual words used in this amendment—“targeted countries,” would burden future Governments and that of today in a way that concerns me. I hope we may get some clarification on this, either from my right hon. Friend the Minister or the hon. Member for Bishop Auckland.

[Sir Alan Duncan]

I can confidently say that if anyone has a hot water bottle, I am prepared to offer them very good money for it. I have not got quite as many layers on as some others in the Committee. I will respond to the points made about this amendment and in large part concur with the comments made by my right hon. Friend the Member for Newbury.

The Bill as drafted already requires a Minister to lay before Parliament a report alongside the introduction of any sanctions regulation. Amendment 14 appears to duplicate that duty, setting out a number of specific factors to be included in such a report. I have some sympathy with the aim of the amendment. Given the potential effects of sanctions, they should only be used where it is appropriate and where the Government have thought through all of the consequences. It is right and proper that the Government can and should be held to account over the use of this power. As I have said, clause 2 already requires the Government to lay a report before Parliament alongside the introduction of any sanctions regulation.

The report would set out why a Minister considered the sanctions regulations to be consistent with the purposes outlined in the Bill, and why they were a reasonable course of action. I assure hon. Members that it will clearly state the objectives of the sanctions, their place within a broader diplomatic and foreign policy strategy and, if appropriate, the conditions under which they might be lifted—for example through the resolution of an armed conflict to which they were designed to apply.

In addition, the Government have committed to publishing an annual review of each of the sanctions regimes, which will be laid before Parliament as set out in clause 27. That report will explain why the sanctions regimes continue to be appropriate and how they meet the objectives set out in the original report.

[Helen Goodman]

Which clause is the Minister referring to?

[Sir Alan Duncan]

Clause 27. I hope that helps the hon. Lady.

The requirements in the Bill demonstrate that we are committed to being open before Parliament about the objectives of our sanctions regimes. To that extent, I do not disagree with the principle behind the amendment; rather, it is our view that the provisions are already sufficiently covered by clause 2 and the annual report under clause 27.

I want to make it clear that the Government will ensure that we have a coherent diplomatic strategy in place as part of the process by which we consider whether sanctions are appropriate; but to set that out publicly on the introduction of the regime, as would be required under new subsection (3A)(c), which the amendment would add to the clause, would, as my right hon. Friend the Member for Newbury has said, risk exposing our hand in sensitive areas and at inopportune times. It could be counterproductive and result, therefore, in less effective sanctions and foreign policy overall.

That is also the case with setting out an exit strategy at the start. Sometimes an exit strategy is clear from the purpose of the regime—for example, as I have said, promoting the resolution of an armed conflict. However, it might be inadvisable to oblige the Government to be so explicit in advance, especially where doing so might prejudice sensitive negotiations or affect our work with international partners.

The same is true for the amendment’s new subsection (3A)(e), which would oblige the Government to take the steps that we are taking with our international partners to promote co-operation on our individual sanctions regimes. As we have said many times, sanctions are most effective when they are implemented multilaterally, and we are committed to working closely with our partners to ensure that sanctions are implemented by the widest possible groupings. Setting that out in Parliament in advance risks undermining those discussions, which, by their nature, are private and sensitive. Therefore, while we respect the intentions behind the amendment, I urge the hon. Lady to withdraw it, on the basis of the detailed explanation I have given.

[Helen Goodman]

I was interested to hear what the Minister said. In the previous debate, on Magnitsky, he prayed in aid of his position paragraphs (f), (g) and (h) of clause 1(2), which were of course tabled by Labour Lords and added to the Bill in the other place. I notice that he has just done the same thing again: he prayed in aid clause 27, which was also added.

I take seriously the points about not being foolhardy in being open. It is a difficult, tricky balance, but in view of the arguments made by the right hon. Member for Newbury and the Minister, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Sir Alan Duncan]

I beg to move amendment 3, in clause 1, page 3, line 2, leave out “(d)” and insert “(h)”.

This amendment expands the reference in Clause 1 to subsection (2) so that it covers paragraphs (e) to (h) of that subsection (as well as paragraphs (a) to (d)).

[The Chair]

With this it will be convenient to discuss Government amendments 5 and 6.

[Sir Alan Duncan]

These are straightforward consequential amendments to the Bill. The purposes for which sanctions regulations can be introduced, set out in clause 1(2), were amended in the other place through an amendment tabled by Opposition peers. That amendment added four additional purposes for which sanctions could be imposed, as we have just discussed. They are: promoting the resolution of armed conflicts or the protection of civilians in conflict zones; promoting compliance with international humanitarian and human rights law; contributing to multilateral efforts to prevent the spread and use of weapons and materials of mass destruction; and promoting respect for human rights, democracy, the rule of law and good governance.

The Government opposed the amendment at the time, on the basis that those areas were all covered by the Bill as it was drafted. However, I reassure hon. Members that we will not seek to overturn the change. Given that, consequential amendments 3, 5 and 6 are necessary to update cross-references to the list of purposes throughout the Bill. They update references to purposes (a) to (d) in three separate places to include the additional purposes (e) to (h) in clause 1(2). I commend the amendments to the Committee.

Amendment 3 agreed to.

Question proposed, That the clause, as amended, stand part of the Bill.

[Sir Alan Duncan]

The purpose of the clause, as we have discussed in detail, is to enable the Secretary of State or the Treasury to make sanctions regulations for a number of purposes, such as to comply with international obligations or for other specified reasons, including in the interests of national security or the prevention of terrorism in the UK or elsewhere. Mr Speaker, the clause is in many ways the core of the Bill.

[Mike Freer (Finchley and Golders Green) (Con)]

Mr Speaker?

[Sir Alan Duncan]

Did I say Mr Speaker? I have been so chilled to the marrow, Dame Cheryl, that I am losing my bearings.

[The Chair]

I have not morphed into Speaker Bercow.

[Sir Alan Duncan]

Dame Cheryl, the clause gives the Government the ability to create sanctions regulations and to ensure that we can do so in order to continue to comply with our international obligations, such as UN Security Council resolutions, after we leave the European Union. Alongside allowing us to meet our international obligations, it will ensure that we can continue to use sanctions to meet our foreign policy and national security goals.

As a result of the amendment in the other place, the clause now specifies a range of other purposes for which sanctions can be imposed, including to promote compliance with international humanitarian law and international human rights law and to promote respect for human rights, democracy, the rule of law and good governance. That list shows that we can continue to implement sanctions for the purposes for which they are currently used. I reassure colleagues that the UK will also be able to implement measures in the same sectors as currently—financial, migration, trade, aviation and maritime. The clause is the foundation of the legislation, so I ask that it stand part of the Bill.

[Helen Goodman]

This is the most important clause in the Bill, and it was much improved in the Lords. I am slightly disappointed that we have not been able to make more progress, but it was clear from the debate that the right hon. Member for Newbury felt that he had been given assurances that progress will be made between now and Report. We hope very much that that progress is made. We take the Minister at his word on that, and we will undoubtedly come back and look at these issues on Report. For now, we are completely happy for the clause to stand part of the Bill.

Question put and agreed to.

Clause 1, as amended, accordingly ordered to stand part of the Bill.

Clauses 19 and 20 ordered to stand part of the Bill.

Clause 21

Periodic review of certain designations

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[Sir Alan Duncan]

I rather sense this will forever be known as the bobble hat amendment.

[Alison Thewliss]

The Minister is just jealous.

[Sir Alan Duncan]

I certainly am.

Reviews are crucial to maintaining effective sanctions regimes, and sanctions should not remain in place where there is no longer a reason for them to do so. Clause 21 requires the Government to conduct a comprehensive re-examination of each designation decision at least every three years. That is one of a number of safeguards that the Bill provides for designated persons. The amendments would oblige the Government to re-examine each designation annually.

I agree completely that sanctions designations need to be based on solid, legally robust evidence. The UK has pushed hard for that in the EU—that is widely recognised, including, for example, in the House of Lords European Union Committee’s recent report, “The legality of EU sanctions”—and we are committed to maintaining those high standards. I recognise that the EU generally reviews its sanctions regimes annually. However, as noted during the passage of the Bill in the other place, EU reviews are relatively light touch. Designated persons are invited by the Council to present new information, and member states are able to make observations, but they are under no obligation to engage. In contrast, the triennial review envisaged in the Bill would be a comprehensive re-examination of each and every designation.

The Bill as drafted includes a robust package of procedural safeguards, including a number of amendments introduced in the other place. The combined package would provide a higher level of protection for designated persons—at least as strong as current EU standards, if not better. The Government would review all sanctions regulations annually and present the results in a written report to Parliament. If the report concluded that there were no longer good reasons for maintaining a UK sanctions regime, we would lift it. Any changes made to the equivalent sanctions regimes of the EU or other international partners would be examined closely as part of the annual review.

Alongside this annual review of the regulations, the Bill requires the Government to put in place a dynamic process to reassess designations on request. The triennial review is not the only opportunity; a designated person can request a reassessment of their designation at any time, and can request a further reassessment where a significant matter has not previously been considered by the Minister. I take the point that a designated person who has requested a reassessment, challenged it in court and failed to establish any unlawfulness will not have a further review until a significant new matter arises or until the triennial review. However, there will be no need for a further review if the lawfulness of the designation has been established and nothing has changed since. If there are new arguments to be tested or if the passage of time has changed the situation, a further reassessment can be requested. If not, there will be no need for one.

Ministers can instigate a reassessment at any time—for example, if the person concerned has been delisted by the EU. They will have every interest in initiating reassessments proactively, both in the interests of justice and to minimise the risk and cost of legal challenges— a compelling argument in many a ministerial decision. In any case, if the EU decided to revoke the designation of a person also designated in the UK, I would certainly want to reassess the corresponding UK designation.

The provisions will ensure that UK sanctions are under constant scrutiny and that the Government are obliged to respond swiftly to new information and challenges. The triennial review will provide a further backstop to ensure that each and every determination is considered afresh on a regular, predetermined cycle. This aligns with current practice in Australia and will put us ahead of countries such as the US and Canada, which have no such process at all. It will not prevent more frequent reviews; indeed, we have mechanisms in place that oblige us to carry out more frequent reviews where appropriate.

Requiring the Government to conduct such reviews every year would be extremely resource-intensive and—given the finite Government resources dedicated to sanctions—would take resources away from other important areas. It could also make litigation more complex.

[Alison Thewliss]

Will the Minister give way?

[Sir Alan Duncan]

I am on my last three words, but yes. The hon. Lady has got in under the wire.

[Alison Thewliss]

I did not realise that the Minister had reached his last three words. He mentions resources and cost implications. Can he give us more specific detail?

[Sir Alan Duncan]

If something has to happen three times as frequently, it will take up a lot more resource.

I hope that the arguments I have put to the Committee have convinced the hon. Lady that the compulsion to have a review every year is superfluous, given all the other layers and safeguards that exist in the Bill.

[Jo Stevens (Cardiff Central) (Lab)]

If the Minister cannot tell us what the triple cost is, can he tell us what this costs at the moment?

[Sir Alan Duncan]

We do things as part of the EU, so it is not possible to segregate the cost in the way the hon. Lady asks. What we are doing is setting up an autonomous regime instead of being part of a collective regime.

I hope that the arguments that I have put to the Committee have persuaded the hon. Member for Bishop Auckland to withdraw her amendment.

[Helen Goodman]

I think the Minister has noticed some scepticism towards the points he made. We will press the matter to a vote.

Question put, That the amendment be made.

Division 6

Ayes: 9

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Labour: 7
Scottish National Party: 2

Noes: 10

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Conservative: 8

Question proposed, That the clause stand part of the Bill.

[Sir Alan Duncan]

Reviews are crucial to maintaining effective sanctions regimes. Sanctions should not remain in place where there is no longer a reason for them to do so. This clause ensures best practice by requiring a comprehensive re-examination of every sanctions designation at least once every three years. The process will ensure that all sanctions designations are based on up-to-date information and that any that are not are revoked. There is nothing preventing a Minister from instigating a reassessment at any time, for example if new evidence comes to light. An individual is also able to challenge their designation, requiring a reassessment by the Minister—[Interruption.]

[The Chair]

Order. Could the Whips have conversations outside the Committee room on this matter, please? I am trying to give them a break; it is warmer out there.

[Sir Alan Duncan]

An individual is also able to challenge their designation, requiring a reassessment by the Minister and potentially further examination by a court.

The clause should be seen alongside other safeguards in the Bill, in particular clause 27, which requires the overall sanctions regime to be reviewed annually. In that review, the Minister must be assured that sanctions are appropriate for their purpose; that, apart from United Nations or other international obligations, there are still good reasons to pursue that purpose; and that proposing sanctions is a reasonable course of action for that purpose. The results of the review must be laid before Parliament. I make it clear that the only time a designated person will not be able to request a reassessment is when they have challenged their designation, it has been upheld either by a Minister or by the court, and there have been no significant changes.

The review provided by this clause is a provision that stands behind all the others. Therefore, combined with the other safeguards in the Bill, I believe that reviewing each individual listing at least every three years is appropriate. This is a backstop measure to ensure that each and every designation is reviewed afresh at least every three years.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Clauses 22 to 26 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mike Freer.)