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Economic Crime (Transparency And Enforcement) Act 2022

Contents

Part 3 - Sanctions

Chapter 1 – Monetary Penalties 

Section 54 Imposition of monetary penalties 

  1. This section amends section 146 of the Policing and Crime Act 2017 so that civil monetary penalties can be applied to persons for breaches of financial sanctions with no requirement for OFSI to prove that the person had knowledge or reasonable cause to suspect their activity breached sanctions. The burden on OFSI to prove that there was a breach of a prohibited act or failure to comply with an obligation remains. 
  2. Subsection (1A) refers to financial sanctions legislation as defined in section 143 of the Act and makes clear that in determining for the purposes of section 146(1) whether a person has breached a prohibition, or failed to comply with an obligation, any requirement imposed by financial sanctions legislation for the person to have known, suspected or believed any matter must be ignored. 

Section 55: Procedural rights 

  1. The existing legislation requires a minister (in practice the Economic Secretary to the Treasury) to conduct administrative reviews of financial sanctions monetary penalties personally. 
  2. This section amends section 147 of the Policing and Crime Act 2017 to take away the obligation on the Minister to carry out the review personally. The Minister retains the discretion to do so but in accordance with the Carltona doctrine this change means that other officials within the department may undertake the review instead where appropriate.  

Section 56: Reporting on breach of financial sanctions  

  1. This section amends section 149 of the Policing and Crime Act 2017 to allow OFSI to publish notices detailing violations by persons of financial sanctions in cases where it has decided not to impose a penalty.  

Chapter 2 – Imposition of Sanctions

Section 57: Streamlining process of making sanctions regulations

  1. This section, and 58 to 66, amend the Sanctions Act. These amendments relate to the powers of "an appropriate Minister". An "appropriate Minister" is defined in the Sanctions Act as the Secretary of State or the Treasury.
  2. The amendments made by Section 57 will omit section 2 of the Sanctions Act, which sets out additional requirements in relation to the making of sanctions regulations for purposes other than compliance with a UN obligation or international obligations.

Section 58: Urgent designation of persons by name

  1. Section 58 amends section 11 of the Sanctions Act, to make new provision about the restrictions on the power of an appropriate Minister to designate a person by name. These restrictions must be included in any regulations made under section 1 of the Sanctions Act which authorise the Minister to designate persons by name.
  2. Under section 11 as amended, such regulations must provide for a new urgent procedure for making designations. They will no longer need to provide that a Minister can designate a person only where the Minister considers that such a designation is appropriate, having regard to the purpose of the relevant sanctions regulations and to the likely significant effects of designation on the person (the "appropriateness test").
  3. To designate under the standard procedure, the Minister must have reasonable grounds to suspect that the person is involved in, or connected to, an activity set out in the regulations for a particular sanctions regime ("an involved person").
  4. The urgent procedure for making designations may be used where the Minister considers that it is in the public interest to do so. Under the urgent procedure, a Minister may designate a person where he or she does not consider that there are reasonable grounds to suspect that the person is an involved person, but where that person has been designated under corresponding provision of the law of the United States of America, the European Union, Australia or Canada, or any other country specified in regulations made by the Minister.
  5. A designation made under the new "urgent" procedure may remain in place for a period of 56 days (subject to extension for a further 56 days where the necessary conditions are met). In order for the designation to remain in place after this, the Minister must certify that he or she has reasonable grounds to suspect that the designated person is an involved person.
  6. This section also amends provisions of section 11 in relation to the obligation to provide a designated person with a statement of the reasons in relation to their designation. Statements of reasons must be provided whether the urgent or the standard procedure is used.

Section 59: Urgent designation of persons by description

  1. Section 59 amends section 12 of the Sanctions Act, which is similar to section 11 of that Act but provides for circumstances where an appropriate Minister designates a person by description rather than by name.
  2. Under section 12 as amended, sanctions regulations which provide for designation by description must provide for a new urgent procedure for making designations. This will be similar to the urgent designation procedure for designations by name.
  3. In relation to the standard procedure for designations by description, the amendments will remove the condition that such a power may only be used where it is not practicable for the Minister to identify by name all the persons falling within the description. Sanctions regulations will no longer need to provide that a Minister can designate by description only where the "appropriateness test" is met. That test is that the Minister considers that the designation of persons of that description is appropriate, having regard to the purposes of the relevant sanctions regulations and to the likely significant effects of the designation on persons of the specified description.
  4. Amendments are made to the provisions of section 12 which concern statements of reasons, to reflect these changes in the procedure for designation.

Section 60: Specified ships

  1. Section 60 will amend section 14 of the Sanctions Act, which allows an appropriate Minister to specify a ship that will be subject to sanctions, when authorised to do so by the regulations.
  2. The amendment will remove the requirement for such regulations to provide that the Minister may specify a ship only where he or she considers that it is appropriate for that ship to be specified, having regard to the purposes stated in the regulations.

Section 61: Existing Sanctions Regulations

  1. Section 61 provides that from Royal Assent, certain provisions will be read into, and out of, existing sanctions regulations which provide for designations to be made by name or by description. Through this mechanism, existing regulations which provide for designations by name are deemed to include – and always to have included - the urgent procedure. They are also deemed not to include, and not to have included, the statutory constraint that a designation may be made only where the Minister considers it "appropriate", as described above.

Section 62: Removal of reviews

  1. Section 62 removes the requirements in sections 24 and 28 of the Sanctions Act to review each designation and ship specification every three years.
  2. It also removes the obligation for Ministers to review and report to Parliament on each set of sanctions regulations every year

Section 63: Removal of reporting requirements

  1. Section 63 removes the requirements for Ministers to report to Parliament on (i) the creation of criminal offences in sanctions regulations; (ii) what sanctions regulations have been made and whether any of them had a human rights purpose; or (iii) certain matters relating to amendments to sanctions regulations.

Section 64: Court reviews: restrictions regarding damages

  1. Section 64 limits the circumstances in which damages can be awarded on claims relating to designations and ship specifications.
  2. Section 64(1) limits the ability of a court to award damages other than in cases of bad faith. Section 64(2) provides a power to make regulations, by affirmative procedure, limiting the amount of damages that a court can award.
  3. Section 64(3) provides that these measures have retrospective effect so far that they apply to all proceedings commenced after 4 March 2022.

Section 65: Sharing of Information

  1. This section amends section 16 of the Sanctions Act to make provision about the sharing of information. This will enable amendments to be made to extend relevant information powers in individual Sanctions Act regulations. This will help to ensure that other government departments, agencies and relevant bodies are authorised to share information proactively with the Treasury to facilitate OFSI’s functions. 

Section 66: Consequential Provision

  1. Section 66 creates a power for Ministers to make consequential amendments to Parts 1 and 3 of the Sanctions Act and sanctions regulations made under Part 1 of that Act.

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