Sanctions and Anti-Money Laundering Bill [HL]

Explanatory Notes

Legal background

9 The UK’s implementation of UN and other multilateral sanctions regimes largely relies on the European Communities Act 1972. The UK has limited domestic powers to unilaterally impose some sanctions (notably in domestic counter-terrorism), but these are not sufficient to implement the full range of sanctions currently in force through the UN and EU.

10 The United Nations Act 1946 provides powers for the government to implement sanctions agreed through resolutions of the UN Security Council. However, in 2010 the UK Supreme Court ruled that the power in that Act could not be lawfully used to apply asset freezes, which are a core element of most sanctions regimes. This led to the passing of the Terrorist Asset-Freezing etc. Act 2010. Part 1 of that Act, which deals with terrorist asset-freezing, will be replaced by this Bill.

11 Other legislation relating to sanctions includes the Immigration Act 1971 (which automatically excludes individuals from the UK who are subject to UN or EU travel bans) and the Export Control Act 2002 (which enables trade sanctions to be put in place). The most recent domestic primary legislation relating to sanctions is the Policing and Crime Act 2017, which put in place new powers enabling UN sanctions to be implemented without delay and made changes to the measures used to enforce financial sanctions.

12 After the UK leaves the EU, the UK will be unable to continue to use the European Communities Act 1972; therefore the UK will need a domestic framework of powers to continue to meet its international obligations to implement UN sanctions. Without this, the UK will be in breach of international law. The UK will also need new powers to implement sanctions which have not been put in place at UN level, otherwise it will be unable to co-operate with international allies, using sanctions as a foreign policy and national security tool.

13 The European Union (Withdrawal) Bill will freeze current sanctions regimes and designations in effect on the date of the UK’s withdrawal from the EU. The UK will not be able to rely on that provision in the long term because it does not enable frozen sanctions to be amended to keep up with fast moving events, and so existing regimes would quickly become out of date. Without new domestic sanctions powers, the UK would not be able to add, amend or lift sanctions regimes in response to UN requirements or in response to other objectives, such as foreign policy or national security imperatives.

14 The UK also currently relies on the European Communities Act 1972 to transpose EU Directives relating to money laundering and terrorist financing. Such Directives typically reflect the international standards set by the Financial Action Task Force. These powers were most recently used in June 2017 to transpose the Fourth EU Money Laundering Directive and associated Funds Transfer Regulation. Although the European Union (Withdrawal) Bill will freeze the UK’s Anti-Money Laundering/Counter-Terrorist Financing regime in effect as on the date of the UK’s withdrawal from the EU, the UK needs a legal power to make, amend and repeal relevant regulations. Failure to make such a power would prevent the UK updating that regime to address matters including emerging risks and updated international standards.

15 This Bill amends:

a. The Immigration Act 1971;

b. The Senior Courts Act 1981;

c. The Regulation of Investigatory Powers Act 2000;

d. The Serious Organised Crime and Police Act 2005;

e. The Serious Crime Act 2007;

f. The Crime and Courts Act 2013;

g. The Investigatory Powers Act 2016; and

h. The Policing and Crime Act 2017.

16 The Bill also makes repeals consequential on the repeal of Part 1 of the Terrorist Asset-Freezing etc. Act 2010.


Prepared 18th October 2017