John Glen contributions to the Sanctions and Anti-Money Laundering Act 2018


Tue 1st May 2018 Sanctions and Anti-Money Laundering Bill [Lords] (Commons Chamber)
3rd reading: House of Commons
Report stage: House of Commons
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Sanctions and Anti-Money Laundering Bill [Lords] Debate

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Department: HM Treasury
Legislation Page: Sanctions and Anti-Money Laundering Act 2018

Sanctions and Anti-Money Laundering Bill [Lords]

(3rd reading: House of Commons)
(Report stage: House of Commons)
John Glen Excerpts
Tuesday 1st May 2018

(2 years, 4 months ago)

Commons Chamber
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HM Treasury
Mr Speaker Hansard
1 May 2018, 4:54 p.m.

I think the hon. Gentleman has achieved his objective. I gently point out that I still have propositions to put to the House and there is not a huge amount of time for the second group. I hope that that is the end to points of order. I thank the hon. Gentleman for what he has said.

Amendments made: Amendment 10, page 2, line 11, clause 1, at end insert—

“(ea) provide accountability for or be a deterrent to gross violations of human rights, or otherwise promote—

(i) compliance with international human rights law, or

(ii) respect for human rights,”.

This amendment makes clear that sanctions regulations can be made for the purpose of preventing, or in response to, a gross human rights abuse or violation.

Amendment 11, page 2, line 12, leave out “and human rights”.

This amendment is consequential on Amendment 10.

Amendment 12, page 2, line 16, leave out “human rights,”.

This amendment is consequential on Amendment 10.

Amendment 13, page 2, line 38, at end insert—

“(6A) In this Act any reference to a gross violation of human rights is to conduct which—

(a) constitutes, or

(b) is connected with,

the commission of a gross human rights abuse or violation; and whether conduct constitutes or is connected with the commission of such an abuse or violation is to be determined in accordance with section 241A of the Proceeds of Crime Act 2002.”

This amendment establishes that “gross violation of human rights” includes the torture of a person, by a public official or a person in an official capacity, where the tortured person has sought to expose the illegal activity of a public official or to defend human rights or fundamental freedoms.

Amendment 14, page 3, line 3, after first “to” insert “(e), (ea) and (f) to”. —(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 2

Types of Sanction

Amendment made: 15, page 3, line 26, clause 2, after “to” insert “(e), (ea) and (f) to”. —(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 28

Review of Regulations

Amendment made: 16, page 22, line 25, clause 28, after “to” insert “(e), (ea) and (f) to”. —(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 40

Revocation and amendment of regulations under section 1

Amendment made: 17, page 31, line 39, clause 40, after “to” insert “(e), (ea) and (f) to”.—(Sir Alan Duncan.)

This amendment is consequential on Amendment 10.

Clause 56

Extent

Amendment made: 20, page 43, line 7, clause 56, after first “1”, insert “, section (Public registers of beneficial ownership of companies registered in British Overseas Territories)”.—(Dame Margaret Hodge.)

This amendment is consequential on NC6.

Clause 57

Commencement

Amendment made: 18, page 43, line 31, clause 57, at end insert—

“( ) section (Periodic reports on exercise of power to make regulations under section 1);”—(Sir Alan Duncan.)

This amendment has the effect that the commencement date of clause (Periodic reports on exercise of power to make regulations under section 1) is the day on which the Act is passed.

New Clause 4

Independent review of regulations with counter-terrorism purpose

‘(1) The Secretary of State must appoint a person to review the operation of such asset-freeze provisions of relevant regulations made by the Secretary of State as the Secretary of State may from time to time refer to that person.

(2) The Treasury must appoint a person to review the operation of such asset-freeze provisions of relevant regulations made by the Treasury as the Treasury may from time to time refer to that person.

(3) The persons appointed under subsection (1) and (2) may be the same person.

(4) In each calendar year, by 31 January—

(a) the person appointed under subsection (1) must notify the Secretary of State of what (if any) reviews under that subsection that person intends to carry out in that year, and

(b) the person appointed under subsection (2) must notify the Treasury of what (if any) reviews under that subsection that person intends to carry out in that year.

(5) Reviews of which notice is given under subsection (4) in a particular year—

(a) may not relate to any provisions that have not been referred before the giving of the notice, and

(b) must be completed during that year or as soon as reasonably practicable after the end of it.

(6) The person who conducts a review under this section must as soon as reasonably practicable after completing the review send a report on its outcome to—

(a) the Secretary of State, if the review is under subsection (1), or

(b) the Treasury, if the review is under subsection (2).

(7) On receiving a report under this section the Secretary of State or (as the case may be) the Treasury must lay a copy of it before Parliament.

(8) The Secretary of State may pay the expenses of a person who conducts a review under subsection (1) and also such allowances as the Secretary of State may determine.

(9) The Treasury may pay the expenses of a person who conducts a review under subsection (2) and also such allowances as the Treasury may determine.

(10) For the purposes of this section, regulations are “relevant regulations” if—

(a) they are regulations under section 1, and

(b) they state under section 1(3) at least one purpose which—

(i) is not compliance with a UN obligation or other international obligation, and

(ii) relates to counter-terrorism.

(11) A purpose “relates to counter-terrorism” if the report under section 2 in respect of the regulations indicated that, in the opinion of the appropriate Minister making them, the carrying out of that purpose would further the prevention of terrorism in the United Kingdom or elsewhere.

(12) For the purposes of this section a provision of relevant regulations is an “asset-freeze provision” if and to the extent that it—

(a) imposes a prohibition or requirement for a purpose mentioned in section 3(1)(a), (b) or (d), or

(b) makes provision in connection with such a prohibition or requirement.

(13) If a provision is referred under this section which contains a designation power, any review under this section of the operation of that provision may not include a review of any decisions to designate under that power.”

This new clause requires the appointment of an independent reviewer to conduct reviews of sanctions regulations which impose asset-freezes or similar financial sanctions where the regulations are made for purposes relating to the prevention of terrorism and have been referred to the independent reviewer for review.—(John Glen.)

Brought up, and read the First time.

John Glen Portrait The Economic Secretary to the Treasury (John Glen) - Hansard

I beg to move, That the clause be read a Second time.

Mr Speaker Hansard
1 May 2018, 4:53 p.m.

With this it will be convenient to discuss the following:

Government new clause 5.

Government new clauses 15 to 17.

New clause 2—Companies House: due diligence and resources—

“(1) For the purposes of preventing money laundering, the Companies Act 2006 is amended as follows.

(2) In section 1061 (the registrar’s functions) after subsection (1) insert—

‘(1A) Functions directed by the Secretary of State under subsection (1)(b) must include due diligence on a person wishing to register a company.

(1B) In this section ‘due diligence’ has the same meaning as ‘customer due diligence measures’ in regulation 3 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 692/2017).”

(3) In section 1063 (Fees payable to the registrar), in subsection (2)(a) after ‘Secretary of State’ insert ‘including the duty of due diligence under section 1061(1A).’”

This new clause would amend the duties of Companies House to ensure that any person wishing to register a company must be checked for due diligence by Companies House, in line with the measures included in the Money Laundering Regulations 2017. It also ensures that the Secretary of State can charge fees for due diligence checks to cover costs incurred by Companies House.

New clause 7—Money laundering exemptions—

“The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) are exempted from amendment or revocation under the Legislative and Regulatory Reform Act 2006 and under the European Union (Withdrawal) Act 2018.”

This new clause would prevent any amendment or repeal of the 2017 Money Laundering Regulations via powers contained in the Legislative and Regulatory Reform Act 2006 and the European Union (Withdrawal) Act 2018.

New clause 8—Public register of beneficial owners of overseas entities—

“(1) The Secretary of State must, in addition to the provisions made under paragraph 6 of Schedule 2, create a public register of beneficial ownership information for companies and other legal entities registered outside of the UK that own or buy UK property, or bid for UK government contracts.

(2) The register must be implemented within 12 months of the day on which this Act is passed.

(3) For the purposes of this section ‘a register of beneficial ownership for companies and other legal entities registered outside of the UK’ means a public register—

(a) which contains information about overseas entities and persons with significant control over them, and

(b) which in the opinion of the Secretary of State will assist in the prevention of money laundering.”

This new clause would create a public register of beneficial ownership information for companies and other legal entities outside of the UK that own or buy UK property, or bid for UK government contracts, within 12 months.

New clause 10—Parliamentary committee to scrutinise regulations—

“(1) A Minister may not lay before Parliament a statutory instrument under section 49(5) unless a Committee of the House of Commons charged with scrutinising statutory instruments made under this Act has recommended that the instrument be laid.

(2) The committee of the House of Commons so charged under subsection (1) may scrutinise any reviews carried out under section 28 of this Act.”

This new clause would require a specialised House of Commons Committee to approve all statutory instruments laid under the affirmative procedure under this Act. The Committee would also scrutinise the Government’s reviews of sanctions regulations.

New clause 11—Failure to prevent money laundering—

“(1) A relevant body (B) is guilty of an offence if a person commits a money laundering facilitation offence when acting in the capacity of a person associated with B.

(2) For the purposes of this section “money laundering facilitation offence” means—

(a) concealing, disguising, converting, transferring or removing criminal property under section 327 of the Proceeds of Crime Act 2002 (concealing etc);

(b) entering into an arrangement which the person knows, or suspects, facilitates (by whatever means) the acquisition, retention, use, or control of criminal property under section 328 of the Proceeds of Crime Act 2002 (arrangements); or

(c) the acquisition, use or possession of criminal property, under section 329 of the Proceeds of Crime Act 2002 (acquisition, use and possession).

(3) It is a defence for B to prove that, when the money laundering facilitation offence was committed, B had in place adequate procedures designed to prevent persons acting in the capacity of a person associated with B from committing such an offence.

(4) A relevant body guilty of an offence under this section is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction in England and Wales, to a fine; or

(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.

(5) It is immaterial for the purposes of this section whether—

(a) any relevant conduct of a relevant body, or

(b) any conduct which constitutes part of a relevant criminal offence,

takes place in the United Kingdom or elsewhere.

(6) In this section, ‘relevant body’ and ‘acting in the capacity of a person associated with B’ have the same meaning as in section 44 of the Criminal Finances Act 2017 (meaning of relevant body and acting in the capacity of an associated person).”

This new clause would make it an offence if a relevant body failed to put in place adequate procedures to prevent a person associated with it from carrying out a money laundering facilitation offence. A money laundering facilitation offence would include concealing, disguising, converting, transferring or removing criminal property under section 327 of the Proceeds of Crime Act 2002.

New clause 12—Public register of beneficial ownership of trusts and similar legal arrangements—

“(none) The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 are amended by leaving out paragraph (12) of regulation 45 (Register of beneficial ownership) and inserting—

‘(12) The Commissioners must ensure that the register is published.’.”

This new clause would require the Government to publish the register of beneficial ownership of trusts and similar legal arrangements on the day this Act is passed.

New clause 13—Due diligence—

“(1) For the purposes of preventing money laundering, when a company is formed, any company formation agent providing formation services must ensure that the identity and business risk profile of all beneficial owners of the company are established in accordance with—

(a) the customer due diligence measures under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692),

(b) regulations made under section 44 of this Act, or

(c) the Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on anti-money laundering measures.

(2) For the purposes of subsection (1), Companies House is to be treated as a ‘company formation agent’.”

This new clause would ensure that when a company is formed in the UK, the relevant formation services must identify the beneficial owners of the company. It will also treat Companies House as a “company formation agent”, ensuring that the data on the public register of beneficial ownership for companies is accurate.

New clause 18—Winding up companies of designated persons—

“(1) The Secretary of State may, in respect of a designated person subject to sanctions regulations under this Act—

(a) present a petition under section 124A of the Insolvency Act 1986 to wind up a company owned or controlled by a designated person; and

(b) make a disqualification order under section 8 of the Company Directors Disqualification Act 1986 against a designated person who is or has been a director or shadow director of a company or an overseas company.

(2) In this section, ‘company’ means a company registered under the Companies Act 2006 in the United Kingdom or a company that may be wound up under Part 5 of the Insolvency Act 1986 (unregistered companies).

(3) In this section, ‘overseas company’ means a company incorporated or formed outside the United Kingdom”.

This new clause would ensure the Secretary of State could close down companies owned or controlled by a person subject to sanctions under this Act using the pre-existing powers in the Insolvency Act 1986 and Company Directors Disqualification Act 1986.

New clause 20—Periodic review of exercise of powers and operation of Act—

“(1) As soon as reasonably practicable after the end of—

(a) the period of six months beginning with the day this Act is passed, and

(b) every 12 month period which ends with the first or subsequent anniversary of the end of the period mentioned in the preceding paragraph,

(2) Subject to issues of confidentiality the said report shall include a summary of any representations made in relation to the exercise or proposed exercise of the powers and the response of the appropriate Minister to the same.

(4) The Independent Reviewer appointed pursuant to section 20 of the Terrorism Prevention and Investigation Measures Act 2011 (‘the 2011 Act’) shall include a review of the operation of this Act in the reports by the Independent Reviewer produced pursuant to the 2011 Act.”

This new clause would require a periodic review of the exercise of the powers and operation of this Act six months after Royal Assent and every 12 months thereafter.

Amendment 1, page 1, line 8, clause 1, leave out “appropriate” and insert “necessary”.

Amendment 2, page 2, line 17, at end insert—

“(i) further the prevention of organised crime, or

(j) further the prevention of human trafficking.”

Government amendment 23.

Amendment 29, page 15, line 4, clause 15, at end insert—

“(i) provide for the procedure to be followed for an application for an exception or licence”.

This amendment would ensure that the regulations will include a procedure for applying for an exception or for a licence.

Government amendment 24.

Amendment 3, page 20, line 12, clause 22, leave out “3 years” and insert “12 months”.

Amendment 4, page 20, line 14, leave out “3 years” and insert “12 months”.

Amendment 5, page 21, line 36, clause 26, leave out “3 years” and insert “12 months”.

Amendment 6, page 21, line 38, leave out “3 years” and insert “12 months”.

Amendment 7, page 31, line 12, clause 38, leave out “may include guidance about—” and insert “must include, but is not limited to, guidance about—”.

Amendment 8, page 31, line 15, at end insert—

‘(3) The appropriate Minister must review the guidance issued under this section and lay a report before Parliament every 12 months.”

Government amendment 25.

Amendment 21, page 36, line 8, clause 48, leave out paragraph (a).

This amendment would remove paragraph 2(a) from Clause 48, which enables the appropriate Minister to amend, repeal or revoke enactments for regulations under section 1 or 44 using Henry VIII powers.

Amendment 9, page 37, line 27, clause 49, at end insert—

“(5A) A statutory instrument containing regulations under section 1 that repeals, revokes or amends—

(a) an Act of the Scottish Parliament,

(b) a Measure or Act of the National Assembly for Wales, or

(c) Northern Ireland legislation,

must receive the consent of the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly, respectively.”

This amendment would require the UK Government to obtain the consent of the devolved administrations before repealing, revoking or amending devolved legislation using a statutory instrument containing regulations under section 1.

Amendment 22, page 39, line 4, clause 51, leave out subsection (3).

This amendment would remove subsection (3) of Clause 51, which states that if a reporting provision is not complied with, the appropriate Minister must publish a written statement explaining why that Minister failed to comply with it.

Government amendments 26 and 19.

Amendment 30, page 59, line 5, schedule 3, at end insert—

“Solicitors (Scotland) Act 1980

‘(4) The Solicitors (Scotland) Act 1980 is amended as follows.

(5) Section 34(1)(d) is repealed.

(6) In section 35(1), after paragraph (c) insert—

(cc) as to the way in which solicitors and incorporated practices are to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017”.”.

This amendment would amend the Solicitors (Scotland) Act 1980, ensuring it is consistent with this Act.

Amendment 27, page 59, line 14, at end insert—

“Insolvency Act 1986 (c. 45)

‘(1) In section 124A of the Insolvency Act 1986 (petition for winding up on grounds of public interest), after paragraph (1)(d) insert—

(e) any information notified to the Secretary of State pursuant to regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.’”

This amendment, which is consequential on NC18, would amend the Insolvency Act 1986 to ensure it is consistent with this Act.

Amendment 28, page 59, line 14, at end insert—

“Company Directors Disqualification Act 1986 (c. 46)

‘(1) In section 8 of the Company Directors Disqualification Act 1986 (Disqualification of director on finding of unfitness), after paragraph (1) insert—

(1A) The Secretary of State may apply to the court for a disqualification order to disqualify a person who is, or has been, a director or shadow director of a company, if that person is subject to regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.’”

This amendment, which is consequential on NC18, would amend the Company Directors Disqualification Act 1986 to ensure it is consistent with this Act.

John Glen Portrait John Glen - Parliament Live - Hansard
1 May 2018, 4:54 p.m.

It is my privilege to address the second group of amendments, but before I do I would just like to acknowledge, as the hon. Member for Salisbury, the good will from across the House in light of the events of 4 March. With respect to the previous debate, I would like to acknowledge the work of my right hon. Friend the Member for Newbury (Richard Benyon), the hon. Member for Rhondda (Chris Bryant) and, in particular, my right hon. Friend the Minister for Europe and the Americas, who has done so much to come up with an outcome, which we have just expressed, that will mean a great deal to my constituents in Salisbury.

New clauses 2 and 13 aim to improve the quality of information on our company register. The Government believe that they would do so at a significant cost to UK business and would require considerable consequential change to the UK company law system for the measure to function. Companies House is taking active steps to improve the quality of data on the register. It has already increased its resourcing to support these investigations and more is being sought. Since the start of March, the first tranche of cases of non-compliance with beneficial ownership registration requirements were passed from Companies House to the Insolvency Service. The cases will form the basis of the first prosecutions for non-compliance with such requirements and should be prosecuted shortly.

New clause 18 and amendments 27 and 28, which were tabled by the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), allow for action to be taken against so-called brass-plate companies that breach sanctions. The reason that brass-plate companies have not been prosecuted or wound up relates to the challenges of collecting evidence of their activities, not a lack of legal powers. I look forward to hearing what he has to say, but the amendments do not provide any enhanced ability to take action against such companies. We continue to explore with partners across Government whether we could do more to address this issue, so I hope that in due course, hon. Members will agree to withdraw this set of amendments.

I now turn to amendment 19, to which new clause 5 has a similar purpose. These proposals seek to clarify the interaction of powers in the Bill with the provisions of the European Union (Withdrawal) Bill. New clause 7 seeks to constrain the powers of future Governments to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. However, the powers in the European Union (Withdrawal) Bill are necessary to ensure a functioning statute book immediately after the UK ceases to be a member of the EU.

Amendment 30 seeks to amend the Solicitors (Scotland) Act 1980 to give the Law Society of Scotland greater powers to conduct its role as an anti-money laundering supervisor. The Government strongly support all supervisors having adequate powers to effectively monitor and take measures to ensure compliance from their members and to use proportionate and dissuasive sanctions when their members do not comply with the rules. The Law Society of Scotland has raised with Treasury officials the issues that it would like to amend in legislation. They are looking closely at this issue and will continue to work with the Law Society of Scotland to address it. I therefore respectfully ask the hon. Member for Glasgow Central (Alison Thewliss) not to press that amendment, but no doubt we will have a discussion in due course.

New clause 8, on beneficial ownership, seeks to set down in legislation an obligation to implement, within 12 months of the Bill getting Royal Assent, our commitment to establishing a public register of company beneficial ownership of overseas companies that own or buy property in the UK. The UK was the first country in the G20 to establish a public register of company beneficial ownership, and Transparency International concluded that we are one of just three G20 countries with a “very strong” legal framework around beneficial ownership.

Let me be clear to the House that the Government are committed to establishing this register and to bringing increased transparency to UK property ownership. The Government committed in January to publishing a draft Bill before the summer recess, and we recently published our response to the call for evidence. We will legislate early in the next parliamentary Session to establish the register by 2021. We will be the first country to establish the register and it is important to get it right.

New clause 12 would require HMRC’s register of trusts that generate UK tax consequences to be published. Information held on the register is accessible to law enforcement agencies and allows them to readily draw together information on trusts, including offshore trusts, when they generate a UK tax consequence. However, trusts, unlike companies, do not have any independent legal personality in their own right. They are frequently established for legitimate and highly personal reasons, such as protecting assets for children or vulnerable adults. Placing this information into the public domain would infringe the privacy rights of trust beneficial owners and needlessly publicise the financial affairs of vulnerable people for whom trusts are established. I therefore ask Members not to press those amendments.

New clause 11 seeks to create a corporate criminal offence of failure to prevent money laundering, which is not necessary because of reforms to the anti-money laundering regime already in place. The proposed offence is substantively available in respect of firms regulated for anti-money laundering purposes by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which require regulated firms to have policies, controls and procedures to mitigate and manage risks of money laundering and terrorist financing. Failure to comply with these requirements is already a criminal offence.

Furthermore, through the introduction of the senior managers regime, banks are now required to ensure that a named senior manager has unequivocal responsibility for overseeing the firm’s efforts to counter financial crime. If a relevant firm breaches its anti-money laundering obligations, the FCA can take action against the responsible senior manager, if they can prove that they did not take such steps as a person in their position could reasonably have been expected to take to avoid the breach occurring. The new clause would not, therefore, go beyond the existing regulatory framework in this area.

Break in Debate

Helen Goodman Hansard
1 May 2018, 5:01 p.m.

Those two amendments were tabled by the SNP.

John Glen Portrait John Glen - Hansard
1 May 2018, 5:01 p.m.

I am happy to be corrected, and I apologise to the hon. Lady.

Amendment 29 relates to the procedure by which individuals or entities apply for licences and exceptions to be included in the regulations. Retaining the application procedures in guidance will give the Government the flexibility to update them as needed and to respond to stakeholder feedback.

The Government have tabled new clause 4 because we recognise the concern raised by the Independent Reviewer of Terrorism Legislation and the Joint Committee on Human Rights that the repeal of part 1 of the Terrorist Asset-Freezing etc. Act 2010 would remove the independent reviewer’s oversight of domestic counter-terrorism asset freezes. Government new clauses 15 to 17 and amendments 23 to 26 will provide the UK Government with the powers necessary to enforce UK sanctions regulations against ships in international and foreign waters. These powers will ensure adherence to the standards set out in relevant UN Security Council resolutions and provide protection against the transportation of dangerous and harmful goods in international waters. These provisions contain important safeguards on the use of these powers, including a requirement to have reasonable grounds to suspect that sanctions are being flouted before enforcement action can be taken as well as flag state and foreign state consent where relevant.

New clause 20, tabled by the hon. Member for Glasgow Central—I hope I have got that one right—would oblige the Secretary of State to lay a report before Parliament each year on the exercise of the powers in the Bill. We have a range of reporting requirements in the Bill already, including an annual report on the sanctions regulations in force, and further reports when sanctions are imposed or amended. In addition, new clause 3 sets out reporting requirements for regulations made under the human rights purpose. We consider it unnecessary, therefore, to add an additional report on top of these, given that the issues that would be addressed in the report would be mirrored by those already required in the Bill.

Amendments 3 to 6, also tabled by the hon. Lady, would require that every sanctions designation be comprehensively re-examined annually. We agree that sanctions should only be in place for as long as there are good reasons for them to be so, and the Bill contains a range of procedures to ensure that all our sanctions are subject to regular scrutiny and review. We believe that three-year comprehensive reviews, combined with a robust package of procedural safeguards in the Bill, will ensure that these standards are at least maintained, so we would ask that she consider not pressing her amendments.

New clause 10, tabled by the hon. Members for Bishop Auckland and for Oxford East, would require statutory instruments that are to be considered under the draft affirmative procedure to receive a positive recommendation from a House of Commons Committee before being laid. All secondary legislation to which it would apply requires affirmative votes before coming into force, and we believe that that negates the need for additional parliamentary scrutiny. Sanctions are a manifestation of the UK’s foreign policy. They are not stand-alone or independent initiatives. Indeed, a number of existing parliamentary Committees have considered, or are planning to consider, sanctions issues, including the House of Lords EU Committee and the House of Commons Treasury Committee. It is not clear why further layers of scrutiny are necessary or desirable.

Amendment 22 would remove the requirement for Ministers to publish a written statement of explanation if they did not comply with a reporting provision. I should make it clear that this provision does not in any way displace the statutory duty to report; Ministers who fail to comply with that duty must face the consequences, regardless of whether an explanation is given.

Amendment 1, tabled by the hon. Member for Glasgow Central, would mean that sanctions regulations could be created only when that was deemed “necessary” for the purposes of the Bill, rather than when it was deemed “appropriate”. For many years the use of sanctions has been an essential part of international diplomacy, to respond to threats such as terrorism or to change unacceptable or threatening behaviour. It is important for the Government of the day to have the flexibility to impose sanctions or not to do so, after a thorough review of the prevailing political situation. Changing “appropriate” to “necessary” would mean that the Government could consider sanctions only as the last resort.

Amendment 9 would require the legislative consent of the devolved Administrations for any sanctions regulation made under section 1, if that regulation included a consequential repeal of, revocation of, or amendment to any law created by those Administrations. The power to create sanctions regulations falls under matters that are reserved to Westminster, and that includes modifications consequential on those regulations. Under the UK’s constitutional settlement, foreign policy is a reserved matter. The Bill gives the Government the power to impose sanctions as a foreign policy and national security tool.

Alison Thewliss Portrait Alison Thewliss - Hansard
1 May 2018, 5:07 p.m.

I have already made this point to the Minister. I agree that the Scottish Parliament does not have the power to impose sanctions, but why do the UK Government want to say that we cannot do so when it is already clear that we cannot? Why should the Government revoke something that we cannot actually do?

John Glen Portrait John Glen - Hansard
1 May 2018, 5:07 p.m.

We contend that the amendment would change this part of the devolution settlement, and we have received no representations from the Scottish Government on it.

Amendment 21 would remove Ministers’ power to make consequential amendments, related to sanctions and anti-money laundering regulations, to existing primary and secondary legislation. That would remove the ability to ensure that the statute book works after sanctions have been imposed. The power is not unusual, and is confined to modifications that arise solely as a result of sanctions or anti-money laundering provision. In any case, regulations making such modifications of the statute book would be dealt with by the draft affirmative procedure, so both Houses would need to approve them before they could come into force. I ask the House to preserve that important power.

Let me make it clear that the Government support the principle of amendment 2, tabled by the hon. Member for Glasgow Central, which is to help prevent organised crime and human trafficking. Those are serious issues that we are strongly committed to tackling. However, as we have explained before, we do not think it necessary to state that sanctions regulations could be created for these purposes in the Bill, because it already provides the powers to impose sanctions in these cases.

Government new clause 5 is technical. It simply seeks to clarify the interaction of the powers in this Bill with the provisions of the European Union (Withdrawal) Bill. This Bill contains powers that enable the Government to amend retained EU law to impose or lift sanctions. The new clause simply makes it clear that restrictions in the European Union (Withdrawal) Bill do not prevent those powers from being exercised in the way that was intended.

Anneliese Dodds Portrait Anneliese Dodds (Oxford East) (Lab/Co-op) - Hansard
1 May 2018, 5:09 p.m.

I shall speak to amendment 21 and new clauses 8 and 13. I will try to be disciplined, as the Minister was, by keeping my remarks as brief as possible, but I would state that while many of us feel that we have seen some progress in terms of transparency for overseas territories, we need a much broader programme of reform so that we stamp out dirty money from the British financial system.

While the Minister referred to amendment 21, he failed to grasp its significance and intention. As with other Brexit-related Bills, the Opposition have many concerns about the wide-ranging powers that this Bill gives to Ministers, and in particular the way in which it gives Ministers the ability to amend, repeal or revoke legislation through regulations without appropriate scrutiny. We frequently cited Lord Judge in Committee, but it is appropriate that I do so one last time in this Chamber. He was very clear about the dangers of this power. As he said, it gives Ministers

“‘regulation-making powers for this, that and the other’”.

He is a very learned person and, as he put it,

“the secondary will override the primary.”—[Official Report, House of Lords, 17 January 2018; Vol. 788, c. 718-19.]

I do not think that many Government Members could disagree with that. Clearly this is an excessive power. It is not justified by the need for speed, for reasons that were well rehearsed in Committee.

The Government have yet again today maintained that these powers are for the sole purpose of combating money laundering and maintaining a sanctions regime, but we heard just a few moments ago that these issues can be highly contentious. There can be different points of view within our parliamentary system on these matters, and that must be reflected in an appropriately inclusive parliamentary procedure.

The Committee advocated by Her Majesty’s Opposition is necessary precisely because the European Scrutiny Committee will not be operating in its same form after we leave the EU, and our sanctions policy will not be derived from the EU once we have left. That is surely the whole point, so we will need another body that can conduct that scrutiny. We will not want Members turning up on an ad hoc basis to a secondary legislation Committee ill briefed, ill prepared and not expert about the topics at hand. That is why we are making our call, and the arguments for such a body are self-explanatory.

Break in Debate

Sir Alan Duncan Hansard
1 May 2018, 6:55 p.m.

I will indeed.

We have had spirited discussions on many aspects of the Bill, both on the Floor of the House and in the Public Bill Committee. I thank in particular the Bill team, who have given up pretty much a year of their lives to work on every dot, comma and detail of the legislation. They have been dutiful, punctilious and hard-working. They have been burning the midnight oil and have put up with my occasional tetchiness—

John Glen Portrait John Glen - Hansard
1 May 2018, 6:55 p.m.

Really?

Sir Alan Duncan Hansard
1 May 2018, 6:55 p.m.

Yes, really.