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Terrorist Asset-Freezing (Temporary Provisions) Bill

My Lords, the Terrorist Asset-Freezing (Temporary Provisions) Bill makes provision for the temporary validity of Orders in Council that impose financial restrictions on, and in relation to, persons suspected of involvement in terrorist activity, and for connected purposes. The whole House will, I know, understand that terrorism continues to pose a threat to the UK. The Home Secretary recently raised the UK terrorist threat level to ““severe””, meaning that an attack on the UK is highly likely at any time. As noble Lords know, terrorist organisations including al-Qaeda have executed or planned a succession of attacks with the aim of causing mass casualties. Measures to prevent terrorist finance are at the heart of the international effort against terrorism. Without resources, terror networks are unable to plan, to organise or to execute attacks. For this reason, the United Nations requires that all states freeze, without delay, the assets and resources of people who commit, attempt to commit, participate in or facilitate the commission of terrorist acts. Our tools to combat terrorist finance therefore, have become an important part of the UK’s counterterrorist strategy. Our measures must be proportionate but they must also be robust and effective. Terrorist attacks are not expensive, and even small amounts of money in the wrong hands can cause devastation. The attacks in London on 7 July 2005 cost the perpetrators just £8,000. While financial sanctions have a long history, their use against terrorists is only around a decade old. The UN Security Council established an asset-freezing regime against the Taliban in 1999. It was quickly extended to include Osama bin Laden and persons associated with al-Qaeda. In the weeks after 9 September 2001, the UN created a separate requirement on member states to freeze the assets of those involved in terrorism more generally, where those individuals were identified by member states. The UK acted quickly; using secondary legislation under the United Nations Act, we were able to ensure that our freezing regime was in place by 10 October 2001, only 12 days after the UN Security Council passed the resolution. Some people have asked why we used secondary legislation under the UN Act in the first place rather than putting our regime into primary legislation. The answer is that in good faith we believed that the United Nations Act was the right legal base. Section 1 of the United Nations Act has been used since 1946 as an established basis for successive Governments to implement our UN obligations on matters concerning threats to international peace and security. Section 1 of the UN Act says: "““If, under Article forty-one of the Charter of the United Nations, the Security Council of the United Nations call upon His Majesty’s Government in the United Kingdom to apply any measures to give effect to any decision of that Council, His Majesty may by Order in Council make such provision as appears to Him necessary or expedient for enabling those measures to be effectively applied””." Given that there are clear UN Security Council obligations to freeze the assets of terrorists, the Government believed that the UN Act gave them legitimate authority to make secondary legislation to freeze terrorist assets. The Court of Appeal upheld the Government’s position. The Supreme Court decided on 27 January 2010 that the United Nations Act does not go so far as to give us that authority and that the Orders in Council we have used were therefore not validly made. However, I hope noble Lords will appreciate that until the Supreme Court made its judgment, the correct interpretation of the United Nations Act was unclear. The Government acted in good faith when using it as the basis for implementing UN asset-freezing obligations. The Supreme Court ruled that the Terrorism (United Nations Measures) Order 2006 and the Al-Qaida and Taliban (United Nations Measures) Order 2006 were beyond the scope of the power provided by Section 1 of the United Nations Act 1946, and quashed both orders. On 4 February, it ruled not to grant the Government any stay or pause before its judgment took effect. Assets frozen under the UN regime on al-Qaeda and the Taliban remain frozen under the effectively parallel EC regulation. However, the Supreme Court’s judgment has the effect of removing the sanctions for breach of its provisions, so we will attach sanctions to the EC regulation through secondary legislation. This will be debated in the House in due course through an affirmative procedure. The court then also struck down the terrorism order 2006, and in so doing rendered vulnerable the terrorism orders of 2001 and 2009. There is no back-up EC regulation for the UK’s designations under the terrorism orders. Primary legislation is therefore needed to ensure that we can continue to freeze terrorist assets. Currently, more than £150,000 is frozen in the UK under the terrorism orders. We need to act quickly to ensure that this money remains frozen and that suspected terrorists are not allowed to use the financial system to raise and move funds. That is why this Bill is being fast-tracked, with all stages being considered in this House in one day. I appreciate that one day is inadequate to consider legislation of this significance, but I hope noble Lords will understand why we need to act quickly. The Bill seeks to provide a temporary legal base for the Orders in Council, aimed at freezing assets of those we reasonably suspect are involved in terrorism where it is necessary to protect the people of this country. This Bill will, if passed, restore the UK’s terrorist asset-freezing regime in primary legislation as a stop-gap, before a full Bill can be considered and, I hope, passed into law. This course of action allows the House to scrutinise our proposals, while eliminating any risk of a gap in our asset-freezing regime. Through this action we are able to provide legal protection for the banks, to ensure that terrorist assets remain frozen, even though the Supreme Court judgment was not stayed. We have already published the full Bill to which today’s legislation is merely a bridge. I hope the House will agree that the fuller Bill deserves a great deal of scrutiny.