Sanctions and Anti-Money Laundering Bill

Written evidence submitted by Amnesty International UK (SAMLB02)

Evidence for the public bill committee – the sanctions and anti-money laundering bill

Amnesty International welcomes the government’s prioritising of this important area in the process of exiting the EU through the Sanctions and Anti-Money Laundering Bill. Amnesty’s main interest in this Bill of course concerns the use of sanctions in preventing or reducing human rights violations and breaches of international humanitarian law.

We support the addition of specific human rights clauses in the section detailing the purposes for which sanctions may be brought by the government. Consequential amendments in the Minister’s name show the government’s welcome recognition of these specific and important purposes, which bring the Bill in line with other legislation, such as the Export Control Act 2002.

The other key area Amnesty International feels the Bill could be improved is in tackling the important issue of taking enforcement action against Brass Plate companies.

BACKROUND: Sanction Busting and ‘brass plate’ companies

Amnesty International’s report From London to Juba evidenced how foreign arms brokers are using a loophole in the UK that allows them to register in the UK and pose as reputable UK companies whilst breaching arms sanctions.

In one case, a Ukrainian man registered a company called S-profit Ltd. in the UK, which was then named by the South Sudanese government – who are subject to arms sanctions – as a prospective supplier of Ukrainian small arms, in a deal worth $44million.

Although often known to the government, it is difficult to take the necessary enforcement action against these companies because these companies have little or no actual presence in the UK, making it difficult to gather the evidence necessary to bring a criminal prosecution under the Arms Export Control Act 2002.

The Sanctions & Anti-Money Laundering Bill is an opportunity for the government to close this loophole, either by inserting specific powers to take action or by linking the Bill to existing enforcement mechanisms. This would give the UK the means to ensure that foreign companies are not able to set up and masquerade as UK businesses to facilitate breaching sanctions and embargoes.

In of itself, enforcement action against these companies may not prevent them unlawfully selling arms in another jurisdictions but it would allow the UK to meet its international obligations and help trigger an international multilateral response through, for example, more effective implementation of the Arms Trade Treaty. Over time this will make it harder and harder for these companies to breach sanctions and embargoes.


There are two main ways in which the Bill might be amended in order to ensure brass plate companies can be tackled by enforcement agencies. The first it to write in to the Bill specific powers to take actions in these cases; the second is to link the sanctions regime with existing enforcement powers elsewhere.

In Clause 2 of the Bill, financial enforcement actions with which those deemed to be subject to sanctions are laid out. These include provisions such as freezing funds and the transfer of funds between designated individuals or organisations.

These measures may not, however, always be useful in tackling brass plate companies who simply use the status of being a registered UK company as a front for sanction-busting. A specific enforcement action that allows companies and individuals to be struck from the register of companies would help combat this specific problem.

Amnesty International UK respectfully suggests that an amendment is inserted here to put in place explicit powers to strike businesses from the register if companies and close them down:

Page 4, line 34, at end insert-

"( ) striking off from the register of companies a designated person, or a person (other than an individual) owned or controlled by a designated person;

( ) closing down a designated person, or a person (other than an individual) owned or controlled by a designated person."

Clause 16 makes provision for enforcement by regulations. Significant powers to take actions against companies, however, already exists elsewhere within UK law. Most significantly with the Insolvency Service, which has the ability to wind up companies in the public interest, not just those that are insolvent. The Insolvency Service also now houses the BEIS’ Criminal Enforcement Team, meaning it now has the ability to prosecute as well. If the sanctions regime could be linked with the enforceability powers of the Insolvency Service or given similar powers, it would allow the government to rapidly tackle brass plate companies.

Amnesty International UK therefore suggests an amendment to Clause:

Page 16, line 10, at end insert-

"( ) for the Secretary of State, on the basis of relevant information, to wind

up companies associated with designated persons if it is expedient and

in the public interest to do so;

( ) for the Secretary of State to 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, if it is expedient and in the public

interest to do so."

Page 56, line 9, at end insert-

"Insolvency Act 1986 (c. 45)

In section 124A, 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 2017.""

Page 39, line 34, at end insert-

""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);"

Page 39, line 43, at end insert-

""overseas company" means a company incorporated or formed outside

the United Kingdom;

Together, these amendments would enable the government to respond quickly to brass plate companies who use their UK-registered status to enhance their reputations whilst simultaneously breaching UK arms sanctions.

The sanctions regime must be fully enforceable, especially against those flagrantly ignoring the strict rules put in place and who continue to supply arms to some of the most dangerous places and brutal conflicts around the world.


The purpose of Sanctions is ultimately to change behaviour. Amnesty recognises that sanctions are intended to be temporary in nature in order to ensure that once an entity’s offending behaviour has been corrected it can resume its lawful business. Some may contest that winding up a company is therefore final and not temporary.

The Sanctions Bill, however, makes specific reference to the powers contained in the 1979 Customs and Excise Management Act under enforcement powers. This Act includes wide ranging powers for the forfeiture of goods and the right of UK enforcement officers to seize and remove these. Whilst most powers exercised for sanctions purposes are reversible, some can also be final.

The process of striking a company from the register, disqualifying a director and winding up a company, as outlined above, is compatible with the intentions of sanctions because it offers companies multiple opportunities to change their behaviour or to seek remedy in wrongful cases, whilst still enabling the government to take final action in cases where unlawful behaviour has not changed.

For example, when a company issued with a winding up order by the Insolvency Service it can challenge this at any stage. If the company satisfies those petitioning for the closure that it has done nothing wrong, it can be reinstated. This allows companies the opportunity to desist in any potentially unlawful activity and demonstrate this, as well as exercising a right of remedy where an order has been issued in error.

If no challenge is brought and a company is wound up and struck off the register on public interest grounds for suspected unlawful activity, there is also a further ability to appeal. Under Section 1030 of the Companies Act 2006, a company has six years in which to apply to have the decision reversed.

In the case of Brass Plate companies, this would actually represent the introduction of behaviour-changing sanctions. As Amnesty has shown, they have no current incentive to change their behaviour – no official checks are made on who they are, impractical criminal evidence standards for prosecuting are required, and they have no assets in the UK to be seized. Instead, when served with a winding up order, they would have the choice between engaging in lawful behaviour in future or be wound up for continued unlawful behaviour. Knowing they could quickly be shut down for unlawful activity will also dis-incentivise re-registering in the UK.


During the Lords stage, the Minister expressed concerns about compatibility of such actions with the European Convention on Human Rights. In Amnesty’s opinion, it is difficult to see how removing companies and directors or winding up companies would create additional or new ECHR compatibility problems. The Insolvency Act already provides winding up powers in the public interest, and includes processes which the government presumably considers to be ECHR compliant. As the right to property is not an absolute right, for any measure to be taken under this approach, it would need to be in accordance with Article 1 Protocol 1:

ECHR, Protocols to the Convention for the Protection of Human Rights and Fundamental Freedoms

ARTICLE 1 – Protection of property

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.

That would of course need to be assessed in any case following this Bill, to ensure the measures taken were lawful and struck the appropriate balance between the general public interest and the rights of the individuals concerned, which is common practice. As such, it seems highly unlikely that adding to the scope of the regulations would create human rights concerns. Indeed, given the purpose, it is quite the opposite.

The Sanctions Bill itself already links to an Act that contains similar powers to move against property: The Customs and Excise Management Act 1979. This Act contains provisions that affect the financial interests of companies and individuals under forfeiture powers. Similarly, the Insolvency Act powers to wind up companies involve the seizing of assets, but with important safeguards of appeal lasting six years. Neither Acts are considered to be generally problematic for ECHR rights; and one is already linked to explicitly in the Bill.  

February 2018


Prepared 1st March 2018