On 29 October 2020, the House of Lords is due to debate the draft Sanctions (EU Exit) (Consequential Provisions) (Amendment) Regulations 2020. These regulations were laid under the draft affirmative procedure. This means they must be approved by both Houses of Parliament before they can be brought into force.

The regulations would make amendments to three existing sets of regulations made under the Sanctions and Anti-Money Laundering Act 2018, referred to collectively as the 2019 sanctions regulations. These amendments would allow the 2019 sanctions regulations to amend other existing pieces of primary and secondary legislation to ensure they contain up-to-date references to counter-terrorism sanctions legislation. These changes form part of the legislative preparations for the UK to implement sanctions under domestic law after the end of the Brexit transition period.

Through sanctions regimes, governments take targeted measures against designated individuals or organisations, for example terrorist organisations or foreign governments deemed to be breaking international norms. Measures might include freezing international assets and restricting international travel for key individuals, or imposing export controls on the sale of arms to certain countries.

UK’s post-Brexit sanctions

The Sanctions and Anti-Money Laundering Act was passed in 2018 as part of the UK’s preparations for Brexit. It enables the UK to:

• continue to implement UN sanctions regimes; and
• keep anti-money laundering and counter-terrorist financing measures up to date.

The majority of sanctions implemented by the UK derive either from UN Security Council resolutions (UNSCRs) or multilateral agreements put in place at EU level. The legal basis underpinning the way the UK implemented both UN and EU sanctions regimes has been largely EU law. Theresa May’s Government brought in the Sanctions and Anti-Money Laundering Act to provide a new legal basis outside the EU legal framework, stating that otherwise existing domestic law and retained EU law would not be sufficient.

Since the act came into force, the Government has used it to make numerous regulations that will allow the UK to continue to implement existing sanctions regimes after the end of the transition period. In addition, in July 2020, the Government announced the first new sanctions under the 2018 act. The new sanctions impose asset freezes and travel bans on individuals and organisations involved in human rights abuses.

What would the draft regulations do?

The draft Sanctions (EU Exit) (Consequential Provisions) (Amendment) Regulations 2020 would make amendments to the three regulations that have already been made under the 2018 act. The explanatory memorandum to the draft regulations refers to these regulations collectively as the “2019 sanctions regulations”. They are:

• ISIL (Da’esh) and Al Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 (SI 2019/466). These regulations will give effect to the UK’s obligation to implement the UN sanctions regime against ISIL (Da’esh), Al Qaida and associated individuals and groups. Some provisions within these regulations have already been brought into force. The regulations are due to come fully into force at the end of the transition period.
• Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019 (SI 2019/573). These regulations will replace the EU’s autonomous sanctions regime against ISIL (Da’esh) and Al Qaida and the EU’s counter-terrorism sanctions regime set out in Council Common Position 2001/931/CFSP (CP931). CP931 sets out the criteria for listing persons, groups or entities involved in terrorist acts and identifies the actions that constitute terrorist acts. The regulations will also give effect to the UK’s obligations under UNSCR 1373. Some provisions within these regulations have already been brought into force. The regulations are due to come fully into force at the end of the transition period.
• Counter-Terrorism (Sanctions) (EU Exit Regulations) 2019 (SI 2019/577). These regulations will also give effect to the UK’s obligations under UNSCR 1373. They will do this by giving the Treasury power to impose financial sanctions on designated persons involved in terrorism. These regulations are due to come into force at the end of the transition period.

The draft regulations would amend the 2019 sanctions regulations so that they themselves would make amendments to various other pieces of primary and secondary legislation as follows:

• Charities Act 2011: Section 178 says that anyone designated under the Al Qaida (Asset-Freezing) Regulations 2011 is disqualified from being a charity trustee or trustee of a charity. The 2011 regulations will be revoked at the end of the transition period by the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019. The draft regulations will update section 178 so that anyone designated under any of the 2019 sanctions regulations would be disqualified from being a charity trustee or trustee of a charity.
• Sanctions and Anti-Money Laundering Act 2018: Section 49 confers a power to make regulations facilitating the detection or investigation of terrorist financing, or preventing terrorist financing. Section 49(3) defines “terrorist financing” for these purposes by reference to offences under several other pieces of legislation. This would be updated to remove references to offences under the 2011 regulations and add references to offences under the 2019 sanctions regulations.
• Electronic Money Regulations 2011 (SI 2011/99): These regulations provide that registration as a “small electronic money institution” may be refused if someone responsible for the management or operation of the business has been convicted of an offence under specified provisions of counter-terrorism sanctions legislation. This would be updated to add a reference to certain offences under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019.
• Payment of Services Regulations 2017 (SI 2017/752): These regulations provide that registration as a “small payment institution” may be refused if someone responsible for the management or operation of the business has been convicted of an offence under specified provisions of counter-terrorism sanctions legislation. This would be updated to add a reference to certain offences under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019.
• Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692): The definition of “terrorist financing” in these regulations would be updated to include a reference to offences under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019.

The explanatory memorandum to the draft regulations states that all these amendments are consequential on the commencement at the end of the transition period of the counter-terrorism sanctions framework established by the 2019 sanctions regulations.

Parliamentary scrutiny

The House of Lords Secondary Legislation Scrutiny Committee did not draw the draft regulations to the special attention of the House. The Joint Committee on Statutory Instruments did not consider that they required to be reported to both Houses.

The House of Commons is due to consider the draft regulations in a delegated legislation committee on 5 November 2020.

Read more

• House of Commons Library, The Future of Sanctions, 26 September 2018

Image by moneycortex from Pixabay.