Sanctions and Anti-Money Laundering Bill [HL]

Policy background

4 Sanctions are an important foreign policy and national security tool. They are restrictive measures which are designed to be temporary and can be used to coerce a change in behaviour, to constrain behaviour, or to communicate a clear political message to other countries or persons. As a permanent member of the UN Security Council, the UK plays a central role in negotiating global sanctions to counter threats to international peace and security. Like all other UN Charter states, the UK is obliged under international law to implement UN sanctions.

5 The UK and its international partners have also imposed and implemented sanctions in situations where the UN has chosen not to act, but where the UK has considered an international response was still necessary. Often this has involved close cooperation between the EU and United States (US), with the support of others, including Canada, Australia, Switzerland and Norway. This has included putting in place sanctions regimes, such as those in relation to Syria, and enhancing UN sanctions with additional autonomous measures, for example the sanctions against North Korea.

6 The UK currently implements over 30 sanctions regimes. These include country-specific sanctions regimes, including in relation to Russia, North Korea and Iran, as well as regimes targeting Da’esh, Al Qaida and other terrorist groups. As part of the North Korea and Syria sanctions regimes alone, the UK has played a key role in designating over 500 individuals and entities who are considered a threat to international peace and security. Sanctions can have a real impact, as shown in the key role they played in bringing Iran to the negotiating table and securing agreement to place robust safeguards on its nuclear programme. There are currently around 2,000 individuals and entities subject to sanctions implemented by the UK. Such "individuals and entities" are referred to collectively as "designated persons".

7 As set out in the government’s White Paper, Public consultation on the United Kingdom’s future legal framework for imposing and implementing sanctions (Cm 9408), the new legislative framework will need to provide powers to impose sanctions, to enable the UK to comply with its international obligations and continue to use sanctions as a foreign policy and national security tool once the European Communities Act 1972 has been repealed. The Bill intends to ensure maximum continuity and certainty; it sets up the powers that the UK will need to carry on implementing sanctions as it currently does. This view was also reflected in the formal government response to the consultation which was published on 2 August 2017 (Cm 9490). 1

8 The government’s White Paper additionally set out the intention to create a new legislative power (through the Bill) to enable it to make substantive amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (Money Laundering Regulations 2017) on the UK’s withdrawal from the EU, and to pass new regulations making provision against money laundering and terrorist financing. In the absence of such a power, it would not be possible to reform that regime to address emerging risks in this area after the UK ceases to be a member of the EU. The government would also be unable to update that regime to reflect international standards set by the Financial Action Task Force (FATF), of which the UK is a member.