The Al-Qaida and Taliban (Asset-Freezing) Regulations 2010

Statutory Instruments

2010 No. 1197

Criminal Law

The Al-Qaida and Taliban (Asset-Freezing) Regulations 2010

Made

7th April 2010

Coming into force in accordance with regulation 1(1)

The Treasury make the following Regulations in exercise of the powers conferred by section 2(2) of, and paragraph 1A of Schedule 2 to, the European Communities Act 1972(1).

In accordance with paragraph 2(2) of Schedule 2 to the European Communities Act 1972, a draft of this instrument was laid before Parliament and approved by a resolution of each House of Parliament.

The Treasury are designated(2) for the purposes of section 2(2) of the European Communities Act 1972 in relation to the prevention of terrorist financing.

These Regulations make provision for a purpose mentioned in section 2(2) of that Act and it appears to the Treasury that it is expedient for the reference to Annex I of Council Regulation (EC) No. 881/2002 of 27 May 2002(3) concerning certain restrictive measures directed against certain persons and entities associated with Usama bin Laden, the Al-Qaida network and the Taliban, to be construed as a reference to that Annex as amended from time to time.

Citation, commencement and application

1.—(1) These Regulations may be cited as the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010 and come into force on the day after the day on which they are made.

(2) An offence may be committed under these Regulations—

(a) by any person in the United Kingdom; or

(b) by any person elsewhere who is—

(i) a British citizen;

(ii) a British overseas territories citizen who acquired their citizenship from a connection with Gibraltar;

(iii) a British subject under Part 4 of the British Nationality Act 1981 (British subjects)(4) with the right of abode in the United Kingdom; or

(iv) a body incorporated or constituted under the law of any part of the United Kingdom.

Interpretation

2.—(1) In these Regulations—

“the 2000 Act” means the Financial Services and Markets Act 2000(5);

“body corporate” includes a Scottish partnership;

“the Council Regulation” means Council Regulation (EC) No. 881/2002 and references to Annex I of that Regulation are to be construed as references to that Annex as amended from time to time;

“designated person” means a natural or legal person, group or entity listed in Annex I to the Council Regulation;

“document” includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form;

“relevant institution” means—

(a)

a person who has permission under Part 4 of the 2000 Act (permission to carry on regulated activities);

(b)

an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to the 2000 Act (EEA passport rights)(6) which has permission under paragraph 15 of that Schedule(7) as a result of qualifying for authorisation under paragraph 12 of that Schedule(8) to accept deposits; and

(c)

an undertaking which by way of business operates a currency exchange office, transmits money (or any representations of monetary value) by any means or cashes cheques which are made payable to customers.

(2) The definition of “relevant institution” in paragraph (1) must be read with—

(a) section 22 of the 2000 Act (the classes of activity and categories of investment);

(b) any relevant order under that section(9); and

(c) Schedule 2 to that Act (regulated activities).

(3) Any expression used both in these Regulations and in the Council Regulation has the meaning that it bears in the Council Regulation.

Freezing funds and economic resources of designated persons

3.—(1) A person must not deal with funds or economic resources belonging to, or owned, held, or controlled by, a designated person.

(2) In paragraph (1) “deal with” means—

(a) in respect of funds—

(i) use, alter, move, allow access to or transfer;

(ii) deal with in any other way that would result in any change in volume, amount, location, ownership, possession, character or destination; or

(iii) make any other change that would enable use, including portfolio management; and

(b) in respect of economic resources, exchange or use to obtain funds, goods or services in any way, including (but not limited to) by selling, hiring or mortgaging the resources.

(3) It is an offence for a person to contravene the prohibition in paragraph (1) knowing, or having reasonable cause to suspect, that the funds or economic resources belonged to or were owned, held or controlled by a designated person.

Making funds or economic resources available to a designated person

4.—(1) A person must not make available, directly or indirectly, to or for the benefit of a designated person—

(a) funds; or

(b) economic resources.

(2) It is an offence for a person to contravene the prohibition in paragraph (1)(a) knowing, or having reasonable cause to suspect, that the funds were being made available (directly or indirectly) to or for the benefit of a designated person.

(3) It is an offence for a person to contravene the prohibition in paragraph (1)(b) knowing, or having reasonable cause to suspect—

(a) that the economic resources were being made available (directly or indirectly) to or for the benefit of a designated person; and

(b) that the designated person would be likely to exchange the economic resources, or use them in exchange, for funds, goods or services.

(4) For the purposes of this regulation—

(a) funds or economic resources are made available for the benefit of a designated person only if that person thereby obtains, or is able to obtain, a significant financial benefit; and

(b) “financial benefit” includes the discharge of a financial obligation for which the designated person is wholly or partly responsible.

Exceptions

5.—(1) It is not an offence under regulation 3 or 4 to credit a frozen account with—

(a) interest or other earnings due on the account; or

(b) payments due under contracts, agreements or obligations that were concluded or arose before the account became a frozen account.

(2) It is not an offence under regulation 4 for a relevant institution to credit a frozen account where it receives funds transferred to the account.

(3) Regulation 3 applies to any funds credited to a frozen account in accordance with this regulation.

(4) In this regulation “frozen account” means an account with a relevant institution which is held or controlled by a designated person.

Circumventing prohibitions etc.

6.  It is an offence for a person to participate knowingly and intentionally in activities the object or effect of which is (directly or indirectly) to—

(a) circumvent a prohibition in regulation 3(1) or 4(1); or

(b) enable or facilitate the contravention of any such prohibition.

Licences

7.—(1) The Treasury may grant a licence to disapply a prohibition in regulation 3(1) or 4(1) in relation to acts specified in the licence.

(2) A licence may be—

(a) general or granted to a category of persons or to a particular person;

(b) subject to conditions;

(c) of indefinite duration or subject to an expiry date.

(3) The Treasury may vary or revoke a licence at any time.

(4) The Treasury, where they grant, vary or revoke a licence, must—

(a) in the case of a licence granted to a particular person, give written notice of the licence, variation or revocation to that person; and

(b) in the case of a general licence or a licence granted to a category of persons, take such steps as the Treasury consider appropriate to publicise the licence, variation or revocation.

(5) A person commits an offence who, for the purpose of obtaining a licence, knowingly or recklessly—

(a) provides information that is false in a material respect; or

(b) provides or produces a document that is not what it purports to be.

(6) A person who purports to act under the authority of a licence but who fails to comply with any conditions included in the licence commits an offence.

Information provisions

8.  Schedule 1 (which contains provisions concerning information gathering and disclosure) has effect.

Officers of a body corporate etc.

9.—(1) Where an offence under these Regulations committed by a body corporate—

(a) is committed with the consent or connivance of any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity; or

(b) is attributable to any neglect on the part of any such person,

that person as well as the body corporate is guilty of the offence and is liable to be proceeded against and punished accordingly.

(2) In paragraph (1) “director”, in relation to a body corporate whose affairs are managed by its members, means a member of the body corporate.

(3) Paragraph (1) also applies in relation to a body that is not a body corporate, with the substitution for the reference to a director of the body of a reference—

(a) in the case of a partnership, to a partner;

(b) in the case of an unincorporated body other than a partnership—

(i) where the body’s affairs are managed by its members, to a member of the body;

(ii) in any other case, to a member of the governing body.

Penalties

10.—(1) A person guilty of an offence under regulation 3, 4, 6 or 7, or paragraph 5(1)(b) or (d) of Schedule 1 is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;

(b) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.

(2) A person guilty of an offence under paragraph 2(4) or 5(1)(a) or (c) of Schedule 1 is liable on summary conviction to imprisonment for a term not exceeding three months or to a fine not exceeding level 5 on the standard scale or to both.

Proceedings

11.—(1) Proceedings against any person for an offence may be taken before the appropriate court in the United Kingdom having jurisdiction in the place where that person is for the time being.

(2) In England and Wales an information relating to an offence that is triable by a magistrates’ court may be so tried if it is laid—

(a) before the end of twelve months from the date on which evidence sufficient in the opinion of the prosecutor to justify the proceedings came to the prosecutor’s knowledge, but

(b) not later than three years from the commission of the offence.

(3) In Scotland—

(a) summary proceedings for an offence may be commenced—

(i) before the end of twelve months from the date on which evidence sufficient in the Lord Advocate’s opinion to justify the proceedings came to the Lord Advocate’s knowledge, but

(ii) not later than three years from the commission of the offence; and

(b) section 136(3) of the Criminal Procedure (Scotland) Act 1995(10) (time limit for certain offences) applies for the purpose of this paragraph as it applies for the purpose of that section.

(4) In Northern Ireland, summary proceedings for an offence may be instituted—

(a) before the end of twelve months from the date on which evidence sufficient in the opinion of the prosecutor to justify the proceedings came to the prosecutor’s knowledge, but

(b) not later than three years from the commission of the offence.

(5) For the purposes of this regulation—

(a) a certificate signed by or on behalf of the prosecutor or the Lord Advocate as to the date on which such evidence as is referred to in paragraphs (2) to (4) came to the prosecutor’s or the Lord Advocate’s knowledge is conclusive evidence of that fact, and

(b) a certificate purporting to be so signed is presumed to be so signed unless the contrary is proved.

(6) No proceedings for an offence, other than for a summary offence, may be instituted in England, Wales or Northern Ireland except with the consent of the Attorney General or, as the case may be, the Advocate General for Northern Ireland.

(7) Whether or not such consent has been given, paragraph (6) does not prevent—

(a) the arrest of any person in respect of an offence, or

(b) the remand in custody or on bail of any person charged with an offence.

(8) Until the coming into force of section 27 of the Justice (Northern Ireland) Act 2002 (Advocate General)(11), the reference in paragraph (6) to the Advocate General for Northern Ireland is to be read as a reference to the Attorney General for Northern Ireland.

(9) In this regulation, “offence” means an offence under these Regulations.

Notices

12.—(1) This regulation has effect in relation to any notice to be given to a person by the Treasury under regulation 7(4)(a).

(2) Any such notice may be given—

(a) by posting it to the person’s last known address; or

(b) where the person is a body corporate which has its registered or principal office in the United Kingdom, by posting it to that office.

(3) Where the Treasury do not have an address in the United Kingdom for the person, they must make arrangements for the notice to be given to the person at the first available opportunity.

The Crown

13.—(1) These Regulations bind the Crown, subject to the following provisions of this regulation.

(2) No contravention by the Crown of a provision of these Regulations makes the Crown criminally liable; but the High Court or, in Scotland, the Court of Session may, on the application of a person appearing to the Court to have an interest, declare unlawful any act or omission of the Crown which constitutes such a contravention.

(3) Nothing in this regulation affects Her Majesty in her private capacity; and this is to be construed as if section 38(3) of the Crown Proceedings Act 1947(12) (meaning of Her Majesty in her private capacity) were contained in these Regulations.

Amendments and revocations

14.  The primary and secondary legislation mentioned in Schedule 2 is amended or revoked as set out in that Schedule.

Dave Watts

Tony Cunningham

Two of the Lords Commissioners of Her Majesty’s Treasury

7th April 2010

Regulation 8

SCHEDULE 1

Information provisions

Cooperation with UK or international investigations

1.  The Treasury must take such steps as they consider appropriate to cooperate with any investigation, in the United Kingdom or elsewhere, relating to the funds, economic resources or financial transactions of a designated person.

Reporting obligations of relevant institutions

2.—(1) A relevant institution must inform the Treasury as soon as practicable if it knows or suspects that a relevant person—

(a) is a designated person; or

(b) has committed an offence under regulation 3, 4, 6 or 7.

(2) Where a relevant institution informs the Treasury under sub-paragraph (1), it must state—

(a) the information or other matter on which the knowledge or suspicion is based;

(b) any information it holds about the relevant person by which the person can be identified; and

(c) the nature and amount or quantity of any funds or economic resources held by the relevant institution for the relevant person at any time up to five years prior to the relevant designation being made.

(3) A relevant institution must inform the Treasury without delay if it credits a frozen account in accordance with regulation 5(2).

(4) A relevant institution that fails to comply with a requirement in sub-paragraph (1), (2) or (3) commits an offence.

(5) In this paragraph, “relevant person” means—

(a) a person who is a customer of the institution;

(b) a person who was a customer of the institution at any time in the period of five years immediately preceding the relevant designation being made; or

(c) a person with whom the institution has had dealings in the course of its business during that period.

Powers to request information

3.—(1) The Treasury may request a designated person to provide information concerning—

(a) funds and economic resources owned, held or controlled by the designated person; or

(b) any disposal of such funds or economic resources, whether the disposal occurred before or after the person became a designated person.

(2) Where the Treasury believe that it is necessary for the purpose of monitoring compliance with or detecting evasion of these Regulations, the Treasury may request a designated person to provide such information as the Treasury may reasonably require about expenditure—

(a) by or on behalf of the designated person; and

(b) for the benefit of the designated person.

(3) The Treasury may request a person acting under a licence granted under regulation 7 to provide information concerning—

(a) funds or economic resources dealt with under the licence;

(b) funds or economic resources made available under the licence.

(4) The Treasury may request any person in or resident in the United Kingdom to provide such information as the Treasury may reasonably require for the purpose of—

(a) monitoring compliance with or detecting evasion of these Regulations;

(b) obtaining evidence of the commission of an offence under these Regulations;

(c) establishing—

(i) the nature and amount or quantity of any funds or economic resources owned, held or controlled by a designated person; or

(ii) the nature and amount or quantity of any funds or economic resources made available directly or indirectly to, or for the benefit of, a designated person; or

(iii) the nature of any financial transactions entered into by a designated person.

(5) The Treasury may specify the manner in which, and the period within which, information is to be provided.

(6) If no such period is specified, the information which has been requested must be provided within a reasonable time.

(7) A request may include a continuing obligation to keep the Treasury informed as circumstances change, or on such regular basis as the Treasury may specify.

Production of documents

4.—(1) A request under paragraph 3 may include a request to produce specified documents or documents of a specified kind or description.

(2) Where the Treasury request that documents be produced, they may—

(a) take copies of or extracts from any document so produced;

(b) request any person producing a document to give an explanation of it; and

(c) where that person is a body corporate, request any person who is a present or past officer of, or employee of, the body corporate to give such an explanation.

(3) Where the Treasury request a designated person or a person acting under a licence granted under regulation 7 to produce documents, that person must—

(a) take reasonable steps to obtain the documents, if not already in the person’s possession or control; and

(b) keep the documents under the person’s possession or control (except for the purpose of providing them to the Treasury or as the Treasury may otherwise permit).

Failure to comply with request for information

5.—(1) A person commits an offence who—

(a) without reasonable excuse refuses or fails within the time and in the manner specified (or, if no time has been specified, within a reasonable time) to comply with any request made under this Schedule;

(b) knowingly or recklessly gives any information or produces any document which is false in a material particular in response to such a request;

(c) with intent to evade the provisions of this Schedule, destroys, mutilates, defaces, conceals or removes any document; or

(d) otherwise wilfully obstructs the Treasury in the exercise of their powers under this Schedule.

(2) Where a person is convicted of an offence under this paragraph, the court may make an order requiring that person, within such period as may be specified in the order, to comply with the request.

General power to disclose information

6.—(1) The Treasury may disclose any information obtained by them in exercise of their powers under these Regulations (including any document so obtained and any copy or extract made of any document so obtained)—

(a) to a police officer;

(b) to any person holding or acting in any office under or in the service of—

(i) the Crown in right of the Government of the United Kingdom;

(ii) the Crown in right of the Scottish Administration, the Government of Northern Ireland or the Welsh Assembly Government;

(iii) the States of Jersey, Guernsey or Alderney or the Chief Pleas of Sark;

(iv) the Government of the Isle of Man;

(v) the Government of any British overseas territory;

(c) to the Legal Services Commission or, in Scotland, the Legal Aid Board;

(d) to the Financial Services Authority, the Jersey Financial Services Commission, the Guernsey Financial Services Commission, or the Isle of Man Insurance and Pensions Authority and Financial Supervision Commission;

(e) for the purpose of giving assistance or cooperation, pursuant to the Council Regulation, to any person in the service of the Council of the European Union, the European Commission or the government of any country;

(f) with a view to instituting, or otherwise for the purposes of, any proceedings—

(i) in the United Kingdom, for an offence under these Regulations; or

(ii) in any of the Channel Islands, the Isle of Man or any British overseas territory, for an offence under a similar provision in any such jurisdiction; or

(g) with the consent of a person who, in their own right, is entitled to the information or to the possession of the document, copy or extract, to any third party.

(2) In this paragraph, “in their own right” means not merely in the capacity of a servant or agent of another person.

Application of provisions

7.—(1) Nothing done under this Schedule is to be treated as a breach of any restriction imposed by statute or otherwise.

(2) The provisions of this Schedule are not to be treated as limiting the powers of the Treasury to impose conditions in connection with the discharge of their functions under regulation 7.

(3) Nothing in this Schedule is to be read as requiring a person who has acted as counsel or solicitor for any person to give or produce any privileged information or document in their possession in that capacity.

(4) Nothing in this Schedule authorises a disclosure that—

(a) contravenes the Data Protection Act 1998(13); or

(b) is prohibited by Part 1 of the Regulation of Investigatory Powers Act 2000(14).

Regulation 14

SCHEDULE 2 Amendments and revocations

Amendment of the Counter-Terrorism Act 2008

1.  In section 63(1) of the Counter-Terrorism Act 2008 (application to set aside financial restrictions decision)(15), after paragraph (a) insert—

“(aa) the Al-Qaida and Taliban (Asset-Freezing) Regulations 2010 (S.I. 2010/1197),”.

Amendments to the Al-Qa’ida and Taliban (United Nations Measures) Order 2002

2.  The Al-Qa’ida and Taliban (United Nations Measures) Order 2002(16) is amended in accordance with paragraphs 3 to 10.

3.  In article 1(4) for “Articles 6, 7, 8 and 9” substitute “Article 6”.

4.  In article 2(1)—

(a) in paragraph (1) omit the following definitions—

(i) “funds”;

(ii) “relevant institution”; and

(b) omit paragraph (2).

5.  Omit articles 7 to 10 and 12.

6.  In article 18 omit “, the Treasury”.

7.  In article 20—

(a) in paragraph (1) for “, 6(3), 7, 8(9) or 9” substitute “or 6(3)”;

(b) in paragraph (3) omit “article 12(1) or (2) or”;

(c) omit paragraph (5); and

(d) in paragraph (16) omit “or the Treasury”.

8.  For article 21 substitute—

“Exercise of powers of the Secretary of State

21.   The Secretary of State may to such extent and subject to such restrictions and conditions as the Secretary of State may think proper, delegate or authorise the delegation of any of the Secretary of State’s powers under this Order to any person, or class or description of persons, approved by the Secretary of State, and references in this Order to the Secretary of State shall be construed accordingly.”.

9.  In article 22 omit “or the Treasury”.

10.  In Schedule 2—

(a) in paragraph 1(1) omit “, the Treasury”;

(b) in paragraph 2(1) omit “, the Treasury”;

(c) in paragraph 3 omit “or the Treasury”;

(d) in paragraph 4(c) omit “or the Treasury”.

Revocations

11.  The following Orders are revoked—

(a) the Al-Qa’ida and Taliban (United Nations Measures) (Amendment) Order 2002(17); and

(b) the Al-Qaida and Taliban (United Nations Measures) Order 2006(18).

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make provision relating to the enforcement of Council Regulation (E.C) No 881/2002 of 27 May 2002 (O.J. L 139, 29.5.2002, p.9) (“the Council Regulation”) which relate to restrictive measures directed at certain persons and entities associated with Usama bin Laden, the Al-Qaida network and the Taliban.

The measures include the freezing of funds, financial assets and economic resources of such persons and ensuring that any funds, financial assets and economic resources are not made available to them.

Regulation 2 defines designated persons as any person named in Annex I to the Council Regulation (as amended from time to time).

Regulations 3 and 4 provide that an offence is committed where a person contravenes prohibitions against dealing with funds and economic resources belonging to designated persons and against making funds or economic resources available, directly or indirectly, to or for the benefit of designated persons.

Regulation 5 provides for an offence not to be committed where exceptions to the prohibitions are provided by the Council Regulation. These permit the crediting of frozen accounts with interest and payments due under contracts and obligations entered into before the account became frozen, and permit a relevant institution to credit a frozen account with funds transferred to it.

Regulation 6 provides that it is an offence to circumvent the prohibitions.

Regulation 7 provides a licensing procedure to enable funds and economic resources to be exempted from the prohibitions.

Regulations 9 to 11 contain provisions about penalties, proceedings and who, in relation to bodies corporate and other bodies, may be prosecuted for an offence under the Regulations.

Regulation 13 provides that the provisions of the Regulations apply to the Crown but, in the event of a contravention, the Crown is not criminally liable.

Schedule 1 provides powers for the Treasury to obtain and disclose information.

Schedule 2 amends section 63 of the Counter-Terrorism Act 2008 (c.28) so that a person affected by a decision made by the Treasury in connection with the exercise of their functions under these Regulations may apply to the court to have the decision set aside. Amendments are made to certain provisions in the Al-Qa’ida and Taliban (United Nations Measures) Order 2002 (S.I. 2002/111) and the Al-Qa’ida and Taliban (United Nations Measures) (Amendment) Order 2002 (S.I. 2002/251) is revoked. These amendments and revocation replicate those made by the Al-Qaida and Taliban (United Nations Measures) Order 2006 (S.I. 2006/2952). This Order was quashed by the Supreme Court on 4 February 2010 in the case of Her Majesty’s Treasury v Mohammed Jabar Ahmed and others [2010] UKSC 2, and is formally revoked by these Regulations.

A list of designated persons is available on the Internet at: www.hm-treasury.gov.uk/documents/fin_sanctions_index

An impact assessment of the effect that this instrument will have on the costs of business may be obtained from the Asset Freezing Unit, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ and is also available on HM Treasury’s website (www.hm-treasury.gov.uk) and is annexed to the Explanatory Memorandum which is available alongside the instrument on the OPSI website (www.opsi.gov.uk).

(1)

1972 c.68. Section 2(2) was amended by the Legislative and Regulatory Reform Act 2006 (c.51), section 27(1)(a) and the European Union (Amendment) Act 2008 (c.7), section 8(1). Paragraph 1A of Schedule 2 was inserted by section 28 of the Legislative and Regulatory Reform Act 2006.

(2)

European Communities (Designation) (No 4) Order 2007 (S.I. 2007/2133).

(3)

OJ No L 139, 29.05.2002, p.9, as amended by Council Regulation 1286/2009 of 23 December 2009 (OJ No L346, 23.12.2009, p.42). Annex I was most recently amended by Commission Regulation (EU) 207/2010 of 10 March 2010 (OJ No L63 12.03.2010, p.1).

(4)

1981 c.61. Part 4 was amended by the British Overseas Territories Act 2002 (c.8), section 1(1)(b) and the Nationality, Immigration and Asylum Act 2002 (c.41), sections 15 and 161, Schedule 2, paragraph 1(i) and Schedule 9.

(5)

2000 c.8.

(6)

As amended by S.I. 2006/3221.

(7)

As amended by S.I. 2003/2066, S.I. 2007/3253, the Enterprise Act 2002 (c.40), sections 276 and 278(1), Schedule 24, paragraphs 2 to 6, Schedule 25, paragraphs 19(a) and 40(1), and the Consumer Credit Act 2006 (c.14) section 33(9).

(8)

As amended by S.I. 2007/126 and S.I. 2007/3253.

(9)

The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) as amended, most recently by the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010 (S.I. 2010/86).

(10)

1995 c.47

(11)

2002 c.26.

(12)

1947 c.44.

(13)

1998 c.29.

(14)

2000 c.23.

(15)

2008 c.28.

(16)

S.I. 2002/111 as amended by S.I. 2002/251. S.I. 2006/2952, which also amended this instrument, was quashed by the Supreme Court on 4 February 2010. Other amending instruments are not relevant.

(17)

S.I.2002/251.

(18)

S.I. 2006/2952.