Schedule 2 Terrorist Finance
351.This Schedule amends the Terrorism Act 2000 (c. 11) in a number of respects.
Part 1 Account monitoring orders
352.The Terrorism Act contains provision enabling a judge to order a person to produce particular material to a constable for the purposes of a terrorist investigation (paragraphs 5 to 10 of Schedule 5). Information on accounts held by financial institutions is included and may be subject to such orders. This power is, however, not well suited to information relating to transactions. In particular it only relates to material in the possession, power or custody of the financial institution or to material which will come into existence within 28 days of the order. As a result such production orders cannot require the “real-time” disclosure of the fact that a transaction on the account has occurred, as there may well be a delay before the material recording that fact is produced.
353.Thus there is a gap in the current provisions where investigating authorities need to be able to obtain information relating to the account or accounts held with a specified financial institution by a named individual or body. Account monitoring orders will be the mechanism available to obtain this information. The information required is principally that relating to transactions on the account. The information sought is similar to that which is sought by account monitoring orders provided for in the Proceeds of Crime Bill. However, it has a different scope to that Bill, in that the order can be obtained for the purposes of a terrorist investigation* and so is focused on terrorism as opposed to all criminal activity. Account monitoring orders are to be provided for by the addition of a new Schedule (Schedule 6A) to the Terrorism Act 2000.
*Terrorist investigation is defined in section 32 of the Terrorism Act.
354.An account monitoring order will have the effect of requiring a financial institution to provide specified information in relation to an account (for example, details of all transactions passing through the account) at a specified place or places for a specified period not exceeding 90 days. This information will normally be provided in the form of a bank statement.
355.An account monitoring order may be obtained if the person making it is satisfied that the application satisfies all three requirements of subparagraph (1) of paragraph 2 of new Schedule 6A.
356.Paragraph 3, subparagraph (2) allows an applicant for an account monitoring order to vary the description of information sought in the application. This is necessary so that an application does not fail completely where the judge is prepared to make the order in relation to certain of the information specified but not all. This flexibility avoids the need for a further application to be made.
357.Paragraph 6(1) provides that account monitoring orders made by a judge have effect as if they were orders of the court. This enables a failure to comply with an account monitoring order to be dealt with as a contempt.
358.Paragraph 6(2) is necessary as the information which is described in the order will be held by the financial institution subject to various restrictions on its disclosure to third parties. This subparagraph makes it clear that the order has effect, and must be complied with, despite the existence of such restrictions.
359.Paragraph 7(1) precludes the use of a statement made by a financial institution in response to an account monitoring order as evidence against the financial institution in any criminal proceedings.
360.There are three exceptions to this rule. Failure to comply with an account monitoring order will be dealt with as a contempt of court. Subparagraph (2)(a) provides that any statement given by a financial institution can be used in such proceedings. Subparagraph (2)(c) prevents a financial institution being free to provide evidence inconsistent with a statement already provided in proceedings against it for an offence. The third exception addresses the possibility, albeit low, that a financial institution which has given a statement in response to an account monitoring order is subsequently convicted of an offence under any of sections 15 to 18 of the Terrorism Act. The statement made may well contain information relevant to what money or other property may be subject to a forfeiture order under section 23 of that Act. This provision allows the statement to be used in such proceedings.
Part 2 Restraint orders
361.At present, the Terrorism Act contains a provision enabling the High Court to make a restraint order, freezing assets, to prevent someone accused of an offence under sections 15 to 18 of the Terrorism Act from selling his property in order to avoid forfeiture.
362.The Act makes a fundamental change to this scheme. The point at which a restraint order may be made is brought forward to any time after an investigation has been started (at present, although a restraint order may be made at the investigative stage, it is only possible to do so where charges are anticipated). This will reduce the risks that funds will be dissipated or used for terrorism before a decision has been made on whether to institute criminal proceedings .
363.Paragraph 2, subparagraph (2) allows the High Court to make a restraint order where a criminal investigation has commenced into a suspected offence under any of sections 15 to 18 of the Terrorism Act. Because at an early stage of a criminal investigation, there are no proposed proceedings, the references to proposed proceedings have been changed to any proceedings for the offences under investigation.
Part 3 Disclosure of information
364.Under section 19 of the Terrorism Act it is an offence for a person who, by virtue of information which has come to him in the course of a trade, profession, business or employment, believes or suspects that another person has committed an offence under sections 15 to 18 of that Act to fail to disclose it to a constable.
365.Paragraph 5 adds a number of provisions to the Terrorism Act. By virtue of new section 21A (inserted by paragraph 5(2)) where a person knows or suspects, or has reasonable grounds for knowing or suspecting, that a person has committed an offence under any of sections 15 to 18 of that Act, and the information came to him in the course of a business in the regulated sector, he must disclose that information. Failure to do so is an offence. Section 19 is amended to remove such persons from the scope of that section (paragraph 5(3)). The regulated sector is defined in Part 1 of Schedule 3A added by sub-paragraph (6)of paragraph 5.
366.That this provision is only directed at persons who are carrying out activities in the regulated sector reflects the fact that they should be expected to exercise a higher level of diligence in handling transactions than those engaged in other businesses. Where a business carries out some activities which are specified in Schedule 3A, Part 1 and some which are not, then it is only to the extent that information is obtained in the course of the specified activities that is covered by these provisions.
367.The requirement to pass on information where there are reasonable grounds to know or suspect that someone has committed an offence lays down an objective test for criminal liability. In recognition of this subsection (6) of section 21A provides that the court must take any guidance issued by a supervisory authority or any other appropriate authority into account when determining whether an offence has been committed. That guidance has to be approved by the Treasury and is published in a manner approved by the Treasury so as to bring it to the attention of persons likely to be affected by it. A list of supervisory authorities is to be found in Schedule 3A, Part 2.
368.Paragraph 5 also adds a further new provision to the Terrorism Act (section 21B). This provision ensures that persons in the regulated sector can disclose information which causes them to know or suspect, or gives them reasonable grounds to know or suspect, that an offence has been committed to the police without fear of breaching any other legal restriction which would otherwise apply.
