Global Security

GS 81: Letter to the Chair of the Committee from Sarah McCarthy-Fry MP, Exchequer Secretary to the Treasury

TERRORIST ASSET FREEZING: PUBLIC CONSULTATION

I am writing to draw the attention of your Committee to today’s launch of a public consultation exercise on the draft Terrorist Asset-Freezing Bill.

As you will be aware from the debates in the passage of the Terrorist Asset-Freezing (Temporary Provisions) Bill and my Written Ministerial Statements at the time, the Government recognises the need for full scrutiny of asset freezing legislation. The public

consultation exercise is an important part of this scrutiny.

Attached is the Written Ministerial Statement that I have laid before Parliament today, which outlines in detail our approach to the consultation exercise and the new terrorist asset freezing legislation.

Copies of the public consultation document have been placed in the libraries of both Houses and will also be available on the Treasury website: http://www.hmtreasurv.gov.ulslconsult index.htm

The consultation will close in three months’ time on 18 June 2010.

The Government is keen to work with Parliamentary Committees and all Members of both Houses of Parliament to achieve a cross-party approach to taking forward the draft legislation and I look forward to discussing this matter with you further.

Written Ministerial Statement

TERRORIST ASSET FREEZING

Following the decision of the Supreme Court quashing the Terrorism (United Nations Measures) Order 2006, and its indication that the Terrorism (United Nations Measures) Order 2009 was vulnerable to being quashed on the same basis as the 2006 Order, Parliament passed the Asset-Freezing (Temporary Provisions) Act 2010 in February. The Act restores the validity in law of the UK’s terrorist asset freezing regime until 31 December 2010, providing a period for Parliament to consider and pass more permanent legislation without in the meantime incurring a gap in our terrorist asset freezing regime that would have damaged national security.

The Government has set out its proposals for permanent terrorist asset freezing legislation in the draft Terrorist Asset-Freezing Bill that was published on 5 February 2010. The structure of the draft Bill closely follows that of the Terrorism (United Nations Measures) Order 2009 and contains a number of safeguards to protect human rights, for example the requirement that asset freezes can only be made where necessary for public protection and the requirement that asset freezes expire after 12 months unless the Treasury has reviewed the case and made a fresh decision to renew the asset freeze.

The Government is fully committed to ensuring that there is proper transparency and accountability to Parliament with respect to the operation of the terrorist asset freezing regime. That is why since December 2006, the Treasury has reported quarterly to Parliament on the operation of the terrorist asset freezing regime. The most recent report was laid on 8 March 2010.

The draft Terrorist Asset-Freezing Bill will further strengthen transparency and accountability to Parliament, by enshrining in law the requirement to report quarterly to Parliament on the operation of the terrorist asset freezing regime, and by requiring an annual independent review of the asset freezing regime, with a report following such a review to be laid before Parliament.

Consistent with our commitment to transparency, the Government has made it clear that it wishes there to be full and proper scrutiny of our proposals for new terrorist asset freezing legislation. These are important legislative proposals. It is right that members of the public and other interested parties should have the opportunity to consider the proposals and submit views and evidence. And it is right that Parliament’s consideration of the legislation in due course should be informed by the views and evidence of the public and interested parties. This is why the Government proposed a sunset clause of 31 December 2010 in the temporary legislation-to allow sufficient time for external views and evidence to be gathered and considered by Parliament when it scrutinises the new legislation.

The Government is today launching a public consultation exercise on the draft Terrorist Asset-Freezing Bill, which will close in three months’ time on 18 June 2010. The consultation document, which would complement and aid any future scrutiny by Members of both Houses or a select committee, if that is the decision of Parliament, explains the background to terrorist asset freezing: the terrorist threat and the role of finance in supporting terrorism; the international framework for terrorist asset freezing; and the UK’s current approach to terrorist asset freezing. The consultation document also sets out how our current terrorist asset freezing legislation works and explains the provisions in the proposed new terrorist asset freezing legislation. The consultation particularly invites views on the following questions:

· Does the draft Bill set out the most effective way of meeting our UN obligations and protecting national security whilst also ensuring sufficient safeguards in respect of human rights?

· Do you have any views on the current operation of the UK’s asset freezing regime under the Terrorism Orders?

· Does the Regulatory Impact Assessment accurately reflect the costs and benefits of the regime? Is there more that can be done to reduce the costs for the financial sector and others in implementing the regime whilst maintaining its effectiveness?

The Government hopes that the consultation exercise will be useful in stimulating public debate on these important issues and that it will provide a valuable source of views and evidence that will assist Parliament in scrutinising the Terrorist Asset-Freezing Bill in due course. The Government is keen to work with Parliamentary Committees and all Members of

both Houses of Parliament to seek to achieve a cross-party approach to taking forward the draft legislation.

HM Treasury

18 March 2010