Sanctions and Anti-Money Laundering Bill (HC Bill 176)

A

BILL

[AS AMENDED IN PUBLIC BILL COMMITTEE]

TO

Make provision enabling sanctions to be imposed where appropriate for the
purposes of compliance with United Nations obligations or other international
obligations or for the purposes of furthering the prevention of terrorism or for
the purposes of national security or international peace and security or for the
purposes of furthering foreign policy objectives; to make provision for the
purposes of the detection, investigation and prevention of money laundering
and terrorist financing and for the purposes of implementing Standards
published by the Financial Action Task Force relating to combating threats to
the integrity of the international financial system; and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 Sanctions regulations

CHAPTER 1 Power to make sanctions regulations

Power to make sanctions regulations

1 5Power to make sanctions regulations

(1) An appropriate Minister may make sanctions regulations where that Minister
considers that it is appropriate to make the regulations—

(a) for the purposes of compliance with a UN obligation,

(b) for the purposes of compliance with any other international obligation,
10or

Sanctions and Anti-Money Laundering BillPage 2

(c) for a purpose within subsection (2).

(2) A purpose is within this subsection if the appropriate Minister making the
regulations considers that carrying out that purpose would—

(a) further the prevention of terrorism, in the United Kingdom or
5elsewhere,

(b) be in the interests of national security,

(c) be in the interests of international peace and security,

(d) further a foreign policy objective of the government of the United
Kingdom,

(e) 10promote the resolution of armed conflicts or the protection of civilians
in conflict zones,

(f) promote compliance with international humanitarian and human
rights law,

(g) contribute to multilateral efforts to prevent the spread and use of
15weapons and materials of mass destruction, or

(h) promote respect for human rights, democracy, the rule of law and good
governance.

(3) Regulations under this section must state the purpose (or purposes) of the
regulations, and any purpose stated must be—

(a) 20compliance with a UN obligation, or other international obligation,
specified in the regulations, or

(b) a particular purpose that is within subsection (2).

(4) Section 2 contains additional requirements in relation to regulations stating a
purpose within subsection (2) above.

(5) 25In this section “sanctions regulations” means regulations which do one or more
of the following—

(a) impose financial sanctions (see section 3);

(b) impose immigration sanctions (see section 4);

(c) impose trade sanctions (see section 5 and Schedule 1);

(d) 30impose aircraft sanctions (see section 6);

(e) impose shipping sanctions (see section 7);

(f) impose sanctions within section 8 (other sanctions for purposes of UN
obligations);

(g) make supplemental provision in connection with any provision of the
35regulations or other regulations made under this section.

(6) In this section “supplemental provision” includes any provision authorised by
any other provision of this Act to be made by regulations under this section
(see in particular sections 9 to 19 and section 48).

(7) In this Act—

  • 40UN obligation” means an obligation that the United Kingdom has by
    virtue of a UN Security Council Resolution;

  • UN Security Council Resolution” means a resolution adopted by the
    Security Council of the United Nations;

  • “international obligation” means an obligation of the United Kingdom
    45created or arising by or under any international agreement.

(8) For the purposes of any provision of this Act which refers to an “appropriate
Minister”, the following are appropriate Ministers—

Sanctions and Anti-Money Laundering BillPage 3

(a) the Secretary of State;

(b) the Treasury.

(9) None of paragraphs (a) to (h) of subsection (2) is to be taken to limit the
meaning of any other of those paragraphs.

2 5Additional requirements for regulations for a purpose within section 1(2)

(1) This section applies to regulations under section 1 any of whose purposes (as
stated under section 1(3)) is a discretionary purpose.

In this section “discretionary purpose” means a purpose which is not
compliance with a UN obligation or other international obligation but is within
10section 1(2).

(2) An appropriate Minister may not decide that it is appropriate to make
regulations to which this section applies unless, in respect of each discretionary
purpose stated in the regulations, that Minister—

(a) has considered whether there are good reasons to pursue that purpose
15and has determined that there are, and

(b) has considered whether the imposition of sanctions is a reasonable
course of action for that purpose and has determined that it is.

(3) In subsection (2)(b) “sanctions” means prohibitions and requirements of the
kinds which are imposed by the regulations for the purpose in question (or
20both for that purpose and for another purpose of the regulations).

(4) In relation to any regulations to which this section applies, the appropriate
Minister making the regulations (“the Minister”) must at the required time lay
before Parliament a report which explains in respect of each discretionary
purpose stated under section 1(3) in the regulations—

(a) 25why the Minister considers that carrying out that purpose would meet
one or more of the conditions in paragraphs (a) to (h) of section 1(2),

(b) why the Minister considers that there are good reasons to pursue that
purpose, and

(c) why the Minister considers that the imposition of sanctions (within the
30meaning given by subsection (3)) is a reasonable course of action for
that purpose.

(5) Nothing in subsection (4) requires the report to contain anything the disclosure
of which may, in the opinion of the Minister, damage national security or
international relations.

(6) 35In subsection (4) “the required time” means—

(a) in the case of regulations contained in a statutory instrument which is
laid before Parliament after being made, the same time as the
instrument is laid before Parliament;

(b) in the case of regulations contained in a statutory instrument a draft of
40which is laid before Parliament, the same time as the draft is laid.

Sanctions and Anti-Money Laundering BillPage 4

Types of sanction

3 Financial sanctions

(1) For the purposes of section 1(5)(a) regulations “impose financial sanctions” if
they impose prohibitions or requirements for one or more of the following
5purposes—

(a) freezing funds or economic resources owned, held or controlled by
designated persons (see section 9);

(b) preventing financial services from being provided to, or for the benefit
of—

(i) 10designated persons,

(ii) persons connected with a prescribed country, or

(iii) a prescribed description of persons connected with a prescribed
country;

(c) preventing financial services from being procured from, or for the
15benefit of—

(i) designated persons,

(ii) persons connected with a prescribed country, or

(iii) a prescribed description of persons connected with a prescribed
country;

(d) 20preventing funds or economic resources from being made available to,
or for the benefit of—

(i) designated persons,

(ii) persons connected with a prescribed country, or

(iii) a prescribed description of persons connected with a prescribed
25country;

(e) preventing funds or economic resources from being received from—

(i) designated persons,

(ii) persons connected with a prescribed country, or

(iii) a prescribed description of persons connected with a prescribed
30country;

(f) preventing financial services from being provided, where the services
relate to financial products, or financial products of a prescribed
description, issued by designated persons;

(g) preventing persons from owning, controlling or having a prescribed
35interest in persons (other than individuals) which are—

(i) designated persons,

(ii) connected with a prescribed country, or

(iii) of a prescribed description and connected with a prescribed
country.

(2) 40For the purposes of section 1(5)(a) regulations also “impose financial
sanctions” if they impose prohibitions or requirements for the purpose of
preventing persons from entering into, or continuing to be a party to,
arrangements for commercial purposes, or for prescribed commercial
purposes, with—

(a) 45designated persons,

(b) persons connected with a prescribed country, or

(c) a prescribed description of persons connected with a prescribed
country.

Sanctions and Anti-Money Laundering BillPage 5

(3) In subsection (1) any reference to funds, economic resources or financial
services being made available, received, procured or provided is to their being
made available, received, procured or provided (as the case may be) directly or
indirectly.

(4) 5In subsection (2) “arrangements” includes any agreement, understanding,
scheme, transaction or series of transactions (whether or not legally
enforceable).

(5) Sections 53 and 54 contain definitions for the purposes of this Act of—

  • “economic resources”,

  • 10“financial products”,

  • “financial services”,

  • “freeze”, and

  • “funds”.

(6) Section 55 makes provision about the meaning of —

(a) 15funds or economic resources being “owned, held or controlled” or
“made available” (see subsection (4) of that section),

(b) a person “owning” or “controlling” another person (see subsection (5)
of that section), and

(c) a person being “connected with” a country (see subsection (6) of that
20section).

4 Immigration sanctions

(1) For the purposes of section 1(5)(b) regulations “impose immigration sanctions”
if they provide for designated persons (see section 9) to be excluded persons
for the purposes of section 8B of the Immigration Act 1971.

(2) 25As to the effect of such provision, see section 8B of the Immigration Act 1971
(as amended by paragraph 1 of Schedule 3 to this Act).

5 Trade sanctions

(1) For the purposes of section 1(5)(c) regulations “impose trade sanctions” if they
impose prohibitions or requirements for one or more of the purposes
30mentioned in Part 1 of Schedule 1.

(2) Part 2 of that Schedule makes further provision in connection with regulations
which impose trade sanctions.

6 Aircraft sanctions

(1) For the purposes of section 1(5)(d) regulations “impose aircraft sanctions” if
35they impose prohibitions or requirements for one or more of the following
purposes—

(a) detaining disqualified aircraft (see subsection (6)) within the United
Kingdom, or controlling the movement of disqualified aircraft within
the United Kingdom and the airspace over the United Kingdom;

(b) 40ensuring that disqualified aircraft—

(i) do not overfly the United Kingdom, or

(ii) leave the airspace over the United Kingdom;

Sanctions and Anti-Money Laundering BillPage 6

(c) preventing persons from owning, chartering or operating aircraft
registered in a prescribed country;

(d) preventing aircraft from being registered in a prescribed country;

(e) preventing the registration of—

(i) 5aircraft in which a designated person (see section 9) holds a
prescribed interest (or designated persons, taken together, hold
a prescribed interest), or

(ii) aircraft chartered by demise to designated persons.

(2) For the purposes of section 1(5)(d) regulations also “impose aircraft sanctions”
10if they authorise directions within subsection (3), (4) or (5).

(3) Directions are within this subsection if they are given for a purpose mentioned
in subsection (1)(a) or (b) and either—

(a) they are given by the Secretary of State to—

(i) the CAA,

(ii) 15a person who holds a licence under Chapter 1 of Part 1 of the
Transport Act 2000 (air traffic services), or

(iii) an airport operator, or

(b) they are given to the operator or pilot in command of a disqualified
aircraft by—

(i) 20the Secretary of State, or

(ii) a person mentioned in paragraph (a)(i), (ii) or (iii).

(4) Directions are within this subsection if they are given by the Secretary of State
to the CAA for the purpose of terminating the registration of any aircraft
mentioned in subsection (1)(e).

(5) 25Directions are within this subsection if they are given by the Secretary of State
to the operator or pilot in command of a British-controlled aircraft for the
purpose of preventing the aircraft from—

(a) overflying a prescribed country, or

(b) landing in a prescribed country.

(6) 30In this section “disqualified aircraft” means aircraft—

(a) owned, chartered or operated by—

(i) designated persons,

(ii) persons connected with a prescribed country, or

(iii) a prescribed description of persons connected with a prescribed
35country,

(b) registered in a prescribed country, or

(c) originating from a prescribed country.

(7) Provision authorising directions by virtue of subsection (2) may include
provision—

(a) 40as to the effect of any such directions so far as they are inconsistent with
requirements or permissions under any other enactment;

(b) requiring a person not to disclose any such directions if the Secretary of
State notifies the person to that effect.

(8) For the purposes of this section any reference to the United Kingdom includes
45a reference to the territorial sea.

(9) In this section “aircraft”—

Sanctions and Anti-Money Laundering BillPage 7

(a) subject to paragraph (b), includes—

(i) unmanned aircraft, and

(ii) aircraft capable of spaceflight activities;

(b) does not include the naval, military or air-force aircraft of any country.

(10) 5In this section—

  • “airport” means the aggregate of the land, buildings and works
    comprised in an aerodrome within the meaning of the Civil Aviation
    Act 1982 (see section 105(1) of that Act);

  • “airport operator”, in relation to an airport, means the person by whom
    10the airport is managed;

  • “British-controlled aircraft” has the same meaning as in section 92 of the
    Civil Aviation Act 1982;

  • “the CAA” means the Civil Aviation Authority;

  • “enactment” includes an enactment mentioned in any of paragraphs (a) to
    15(d) of section 48(6);

  • “operator”, in relation to an aircraft, means the person having the
    management of the aircraft, and cognate expressions are to be
    construed accordingly;

  • “pilot in command”, in relation to an aircraft, means the pilot designated
    20by the operator as being in command and charged with the safe
    conduct of its flight, without being under the direction of any other
    pilot in the aircraft;

  • “registration” means registration in the register of aircraft kept by the
    CAA.

7 25Shipping sanctions

(1) For the purposes of section 1(5)(e) regulations “impose shipping sanctions” if
they impose prohibitions or requirements for one or more of the following
purposes—

(a) detaining within the United Kingdom, or controlling the movement
30within the United Kingdom of—

(i) disqualified ships (see subsection (8)), or

(ii) specified ships (see section 14);

(b) ensuring that disqualified ships or specified ships—

(i) do not enter the United Kingdom, or

(ii) 35leave the United Kingdom;

(c) preventing persons from owning, controlling, chartering or
operating—

(i) ships registered in a prescribed country,

(ii) ships flying the flag of a prescribed country, or

(iii) 40specified ships;

(d) preventing ships from—

(i) being registered in a prescribed country, or

(ii) flying the flag of a prescribed country;

(e) preventing the registration of—

(i) 45ships in which a designated person (see section 9) holds a
prescribed interest (or designated persons, taken together, hold
a prescribed interest),

Sanctions and Anti-Money Laundering BillPage 8

(ii) ships in which persons connected with a prescribed country
hold a prescribed interest, or

(iii) specified ships.

(2) For the purposes of section 1(5)(e) regulations also “impose shipping
5sanctions” if they authorise directions within subsection (3), (4) or (5).

(3) Directions are within this subsection if they are given for a purpose mentioned
in subsection (1)(a) or (b) and either—

(a) they are given to a harbour authority by the Secretary of State, or

(b) they are given to the master or pilot of a disqualified ship or a specified
10ship by—

(i) the Secretary of State, or

(ii) a harbour authority.

(4) Directions are within this subsection if they are given by the Secretary of State
to the Registrar for the purpose of terminating the registration of any ship
15mentioned in subsection (1)(e).

(5) Directions are within this subsection if they are given by the Secretary of State
to the master or pilot of a British ship (see subsections (12) and (13)) for the
purpose of preventing the ship from travelling to—

(a) the sea or other waters within the seaward limits of the territorial sea
20adjacent to a prescribed country, or a particular place in that sea or
those waters, or

(b) harbours in a prescribed country.

(6) For the purposes of section 1(5)(e) regulations also “impose shipping
sanctions” if, for the purpose of the implementation of so much of a UN
25Security Council Resolution as provides for the taking of measures in relation
to ships designated for purposes of that resolution, they make provision—

(a) relating to such ships and corresponding to provision that may be
made by virtue of subsection (1)(a), (b), (c) or (e),

(b) authorising directions corresponding to directions within subsection
30(3) to be given in relation to, or to the master or pilot of, such a ship, or

(c) authorising directions corresponding to directions within subsection
(4) to be given in relation to such a ship.

(7) Provision made by virtue of subsection (6) may describe the ships to which it
relates by reference to the instrument in which the ships are designated,
35including by reference to that instrument as varied or supplemented from time
to time.

(8) In this section “disqualified ships” means ships—

(a) owned, controlled, chartered, operated or crewed by—

(i) designated persons,

(ii) 40persons connected with a prescribed country, or

(iii) a prescribed description of persons connected with a prescribed
country,

(b) registered in a prescribed country,

(c) flying the flag of a prescribed country, or

(d) 45originating from a prescribed country.

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(9) Provision authorising directions by virtue of this section may include
provision as to the effect of any such directions so far as they are inconsistent
with requirements under any other enactment.

(10) Provision made by virtue of this section may include provision as to the
5meaning of any reference in the provision to a ship being “crewed” by persons.

(11) In subsection (1) any reference to the United Kingdom includes a reference to
the territorial sea.

(12) In this section “British ship” means a ship which—

(a) is registered under Part 2 of the Merchant Shipping Act 1995,

(b) 10is a Government ship within the meaning of that Act,

(c) is registered under the law of a relevant British possession,

(d) is not registered under the law of a country outside the United
Kingdom but is wholly owned by persons each of whom has a United
Kingdom connection, or

(e) 15is registered under an Order in Council under section 1 of the
Hovercraft Act 1968.

(13) For the purposes of subsection (12)(d), a person has a “United Kingdom
connection” if the person is—

(a) a British citizen, a British overseas territories citizen or a British
20Overseas citizen,

(b) an individual who is habitually resident in the United Kingdom, or

(c) a body corporate which is established under the law of a part of the
United Kingdom and has its principal place of business in the United
Kingdom.

(14) 25In this section—

  • “enactment” includes an enactment mentioned in any of paragraphs (a) to
    (d) of section 48(6);

  • “harbour authority” has the same meaning as in the Merchant Shipping
    Act 1995 (see section 313(1) of that Act);

  • 30“master” includes every person (except a pilot) having command or
    charge of a ship and, in relation to a fishing vessel, means the skipper;

  • “pilot”, in relation to a ship, means any person not belonging to the ship
    who has the conduct of the ship;

  • “the Registrar” means the Registrar General of Shipping and Seamen or,
    35where functions of that person are being discharged by another person,
    that other person;

  • “registration” means registration in the register of British ships
    maintained by the Registrar;

  • “relevant British possession” means—

    (a)

    40any of the Channel Islands,

    (b)

    the Isle of Man, or

    (c)

    any British overseas territory;

  • “ship” includes every description of vessel (including a hovercraft) used
    in navigation, except the naval, military or air-force ships of any
    45country.