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Terrorist Asset-Freezing (Temporary Provisions) Bill

I note the observation from the noble Lord, Lord King. Matters relating to serious organised crime are already dealt with by other agencies and legislation. This legislation focuses on the use of finances that are specifically related to the risk of terrorism activity which threatens the United Kingdom. No doubt the authorities will at all times be vigilant in recognising the area where organised crime may well abut terrorist activity, and will be alert to ensure that we are vigilant in addressing that risk. I should make it clear at the outset that today’s Bill, and the fuller Bill, seek only to restore the asset-freezing regime that is implemented through the terrorism orders— that is, the regime mandated by UN Security Council Resolution 1373, where listings are made at the national level. The Bill does not seek to restore the UN al-Qaeda and Taliban asset-freezing regime. That is the regime mandated by UN Security Council Resolution 1267, where listings are made at the UN. As I mentioned earlier, the al-Qaeda regime remains in effect through a directly applicable EC regulation. Noble Lords will be aware that the Supreme Court had specific concerns about the UN al-Qaeda regime—in particular, the lack of direct access to a court for people who are listed at the UN. Those specific concerns do not arise on this Bill, because it seeks only to restore the terrorism order regime, where decisions are made nationally and individuals have access to UK courts. With the House’s permission, I shall briefly outline the Bill’s effects. It seeks to maintain the Treasury’s power under the Orders in Council to designate persons if they meet both the required conditions of a legal test: reasonable suspicion that the person is involved in terrorist activity, and that the designation is necessary for public protection. The effect of a designation is to forbid dealing with a designated person’s funds and economic resources; to forbid making funds or economic resources available to such persons, and to forbid funds or economic resources being made available to a person when the designated person will obtain significant financial benefit. The orders will continue to provide for licences to permit access to funds and to ameliorate the effect of the sanctions. The Treasury will remain open to legal challenge to its asset-freezing decisions, including the procedures approved by Parliament in the Counter-Terrorism Act 2008. Perhaps I might turn briefly to retrospection. The Bill makes retrospective provision in one respect only. It gives retrospective legal authority for banks and any other institutions to maintain existing freezes between the dates of the Supreme Court judgment—4 February—and Royal Assent. I know that retrospective legislation is a very serious business and should be contemplated only where absolutely necessary. I assure your Lordships that this provision is necessary; without legal cover, banks would not have been able to maintain existing asset freezes for the past five days, and asset flight might already have happened at a cost and risk to our national security. The Bill is time-limited to expire on 31 December 2010. We believe that the end of the year is the right timetable, as it will allow time for more permanent asset-freezing legislation to be given full consideration both in Parliament and in pre-legislative scrutiny. I could not be confident that, given elections and recesses, this job of scrutiny could be safely dispatched and a full Bill could then be taken through both Houses before 31 July 2010. Today’s Bill is unavoidably urgent, but we do not believe that we should be fast-tracking two asset-freezing Bills through Parliament in close succession. I want to respond to a number of points concerning human rights safeguards that were raised yesterday in debating the Bill in the other place, and which I expect noble Lords will also want to discuss today, both at Second Reading and in Committee. There are fundamental issues that are important to all Members of this House. Our intention is that all those issues be fully considered and debated when this House considers permanent asset-freezing legislation in the coming months. However, I understand that noble Lords will want some discussion of these issues today to be satisfied that the regime they are voting to extend in this Bill today until the end of the year is proportionate and fair. Before coming to some specific issues, I want to explain that our asset-freezing regime is tried, tested and fit for purpose. It was subject to rigorous analysis by the Financial Action Task Force in 2007 and was judged to be, in its words, ““fully compliant”” with international best practice—we are the first country, incidentally, to get this top mark—and we have improved it through experience. For example, as the Supreme Court itself pointed out, the Terrorism Order 2009 is an improvement on the 2006 order, with more safeguards and greater proportionality. One question that was raised yesterday in the other place, and which I see is also raised in an amendment we will discuss later, is whether ““reasonable suspicion”” is the right legal test. We believe strongly that it is. If we want the regime to be preventive rather than punitive, which we all do, freezing people’s assets only when they are convicted is not the right approach. Such an approach is not very preventive as it may mean that freezes cannot be imposed for more than a year after someone has been detained, while they are still awaiting trial. Indeed, waiting to freeze assets until someone is convicted may simply appear punitive; an additional form of punishment on top of a prison sentence. The Financial Action Task Force is clear that reasonable suspicion is a proper legal basis for meeting UN asset-freezing obligations. As I mentioned earlier, we do not simply rely on the reasonable suspicion test. Designations must also be necessary for public protection, which acts as a safeguard against any arbitrary use of the power to make designations. A number of Members in the other place expressed concern that using reasonable suspicion as a test may leave people in a sort of limbo situation where they have their assets frozen without knowing the case against them, without being charged with a criminal offence and without any means of getting an asset freeze removed. I will explain why this perception is not accurate. First, it is not true that people do not know the case against them. When people are designated, we provide them with as much information as we can share about the reasons for their listing. Only relatively few cases involve closed source material that cannot be shared directly with the designated person. Of the 33 UK people currently designated under the terrorism orders, six were designated on the basis of closed information and 27 were designated on the basis of open material. Secondly, it is not true to say that people on an asset freeze list are never charged with a criminal offence. In fact, a clear majority also face action through the criminal justice system. Of the 33 people designated under the terrorism orders, 27 have been charged with a terrorist offence. Of these, 22 have been convicted; four are awaiting trial or retrial; one has recently had their charges dropped and we are urgently reviewing their listing. Finally, it is not true to say that people can never get off an asset freeze list. The Treasury has a track record of actively reviewing designations and revoking them when they no longer meet the legal test. Of the 51 UK designations made under the orders to date, 18 have been revoked following a Treasury review; for example, where criminal charges have been dropped or where an individual is no longer assessed to pose a significant threat. Under the Bill, the Treasury will continue to carry out such reviews on a yearly basis, or more frequently when there has been a change in a person’s circumstances. A further question raised on several occasions yesterday in the other place was whether the right of individuals to challenge their designations in court under a judicial review procedure provided sufficient redress. The Government are of the view that court scrutiny should happen after freezing decisions have been taken and individuals have decided to challenge them. We do not believe that courts should be taking the decision to impose the freeze in the first place. These are decisions that the Executive can rightly take, with the safeguard, as I outlined earlier, that all decisions must be necessary for public protection and supported by proper evidence. We believe that judicial review is the right procedure for the courts to examine cases that are brought before them. Judicial review is not, as some might argue, a light touch that lets the Executive off the hook. On the contrary, as we have seen in control order cases that have come before the courts, a judicial review procedure closely scrutinises the Government’s decision-making processes and the evidence used to support them. It might help if I explain in detail how the judicial review procedure works for control orders. There is an automatic review process by the High Court to determine whether the Secretary of State's decision to make a control order was flawed. In other words, the judge must agree: first, that there is reasonable suspicion that the individual is or has been involved in terrorism-related activity; and, secondly, that a control order is necessary to protect members of the public from a risk of terrorism. The judge must also satisfy himself that each obligation imposed by the order is necessary and compliant with the ECHR, including Article 5, which deals with the right to liberty, and Article 8, which deals with the right to respect for private and family life. The judge will further ensure that the individual's right to a fair hearing in accordance with Article 6 is protected. If any of these tests is not met, the judge can quash the order, quash one or more obligations imposed by the order or give directions for the revocation of the order or for the modification of the obligations that it imposes. The court may consider the case in open or closed session, depending on the nature and sensitivity of the information under consideration. Individuals are represented in open court by a lawyer of their choice. Special advocates are used to represent the interests of the individuals in closed sessions. Finally, I know that a number of noble Lords will be concerned about the human rights impacts of the asset-freezing regime and will have noted the comments of some of the Supreme Court judges referring to the regime as ““draconian”” and designated persons as ““prisoners of the state””. Again, these points were raised in the other place yesterday. I should stress that the Supreme Court did not make findings that the asset-freezing regime breached human rights. It quashed the orders because of the legal base. Given that the court did not make human rights findings, we should be careful not to take some individual comments in the judgment as representing definitive views of the court about the nature of the regime. Some of the Supreme Court Justices expressed clear views that the orders were not disproportionate. The noble and learned Lord, Lord Brown, for instance, said: "““I am unimpressed by the alternative grounds on which the Order is challenged, those of certainty and proportionality. Primary legislation introducing this same asset-freezing regime could not have been declared incompatible on those grounds. It is only because the Order was plainly insufficiently mandated by the SCR 1373 that I would hold it invalid””." The noble and learned Lord, Lord Mance, with whom the noble and learned Lord, Lord Phillips, agreed, said: "““I agree with the Court of Appeal’s reasoning and conclusion that the relevant provisions of articles 7 and 8 were and are sufficiently certain to be valid … I am at present also unpersuaded ""that the content of the Orders could be challenged on grounds of lack of proportionality, although I need express no final view about this. Combating terrorism, and the freezing of funds or resources which can be used for terrorist purposes, are undoubtedly matters of first importance””." We take great care to ensure that the regime is proportionate. As set out in the Written Statement that I laid before this House on Friday, central to this is our licensing regime. We make sure when we designate people that we immediately issue a legal aid licence so that people can receive legal aid, if eligible. We also immediately issue a licence to allow them to receive and use their state benefits without delay. We do not limit people only to basic expense. We impose licence conditions, but only conditions that are proportionate to ensuring that funds are not diverted to terrorism. As I announced on Friday, we no longer require spouses of designated persons to report to the Treasury on how they spend benefits money. That will help to minimise the impact that the regime has on spouses and families. In closing, in these times of severe threat to our national security, we cannot afford to fail to take the necessary steps to prevent terrorists raising and using funds for purposes of terrorism. Without primary legislation of the kind before the House today, we will leave gaps in our defences which could be exploited by people who intend serious harm to the British public. The Bill ensures that the proper safeguards we set out in the Terrorism Order 2009 will continue to apply. At the same time, the Bill will provide Parliament with the proper time needed to consider and debate the permanent legislation in full. I therefore commend the Bill to the House.