MD-ER-2015-0010
REPORT
Terrorist Asset-Freezing (Amendment of Law) (Jersey) Regulations 2015
Background
The Terrorist Asset Freezing (Jersey) Law 2011 (“TAFJL”) was introduced to address perceived weaknesses in Jersey’s measures to prevent the potential financing of terrorism. Those concerns arose indirectly from the UK Supreme Court judgment in the case of HM Treasury v. Ahmed (2010), declaring the Terrorism (United Nations Measures) Order 2006 and article 3(1)(b) of the Al-Qaida and Taliban (United Nations Measures) Order 2006 to be ultra vires. Consequently, it has been proposed, in due course, to seek revocation of the Al-Qa’ida and Taliban (United Nations Measures – Channel Islands) Order 2002.
The TAFJL requires that the assets of a designated person or entity must be frozen. ‘Freezing’ means that no person may deal in any way with funds or economic resources which are, or are suspected to be, owned, held or controlled by a designated person.
For the purposes of the TAFJL, a ‘designated person’ is –
(a) A person designated by the Minister for External Relations because the Minister considers it is necessary to protect the public from terrorism and reasonably suspects or believes the person is or has been involved in terrorist activity, or is acting on behalf of such a person;
(b) A person designated under the UK Terrorist Asset-Freezing etc. Act 2010;
(c) A person included in the list published in accordance with Council Regulation (EC) No 2580/2001 on specific restrictive measures against certain persons and entities with a view to combating terrorism.
Issues
Amendments to the TAFJL are proposed to address two issues:
- Definition of funds ‘owned, held or controlled’ by a person
The Council of Europe[1] Moneyval mutual assessment review of Jersey’s financial services regulation took place from 18-24 January 2015. Following the assessment, the review team has provided preliminary findings for consideration by the Jersey authorities.
Amongst a number of positive observations on the implementation of terrorist asset-freezing legislation, the preliminary findings included a recommendation that the relevant terrorist legislation should expressly extend the definition of funds subject to freezing to cover assets ‘jointly’ or ‘indirectly’ owned, held or controlled by the relevant persons.
- Implementation of UN Security Council terrorist listings
Jersey is included as a territory to which the United Kingdom’s ratification of the United Nations Charter (1945) applies, and is thereby obliged to implement UN Security Council Resolutions to the extent that these fall within the domestic competence of Jersey.
The UN Security Council has, by Resolutions (“UNSCR”) 1373 (2001), UNSCR 1267 (1999) and subsequent Resolutions including UNSCR 1988 (2011) and 1989 (2011), established Committees responsible for the listing of individuals and entities linked with Al Qaida and the Taliban and other terrorist organisations.
The United Kingdom, and other members of the European Union, comply with their UN terrorism sanctions obligations by the implementation of EU restrictive measures:
- Council Regulation (EC) No 2580/2001 of 27 December 2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, which implements UNSCR 1373 (2001);
- Council Regulation (EC) No 881/2002 of 27 May 2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the Al-Qaida network, which implements UNSCRs 1267 (1999), 1373 (2001) and 1989 (2011); and
- Council Regulation (EU) No 753/2011 of 1 August 2011 concerning restrictive measures directed against certain individuals, groups, undertakings and entities in view of the situation in Afghanistan, which implements UNSCRs 1267 (1999) and 1988 (2011).
The TAFJL includes asset-freezing measures, inter alia, in respect of any person designated by Council Regulation (EC) No 2580/2001.
In addition, in accordance with the common external relations policy of the Council of Ministers, the Minister for External Relations has introduced legislation to give effect to the designation of individuals and entities under EU restrictive measures 881/2002 and 753/2011.
However, due to the legislative process involved in drafting and approving an EU Regulation, there is frequently a delay of several days or longer between the UN Sanctions Committee listing and the EU designation of a person or entity. As a result, there is a risk of ‘asset flight’, i.e. if the listed person or entity is able to remove the relevant assets from the EU or Jersey before the necessary legislation can be brought into force.
Proposed amendments
The proposed amendments to the TAFJL would:
(1) Clarify the interpretation of ‘ownership’ or ‘control’ of funds, so that the terms would explicitly include any funds that were jointly or co-owned, or indirectly owned, or controlled by a designated person. The purpose of this change would be to eliminate any potential uncertainty regarding the extent of assets that must be frozen under the TAFJL.
The proposed amendment would clarify the range of assets that must be frozen under Article 13, and also clarify the extent of assets on which information must be disclosed to the Minister under Article 22 of the TAFJL.
(2) Amend the description of a ‘designated person’, so that it included a person who has been listed by a United Nations Sanctions Committee established in pursuance of UNSCRs 1373 (2001), UNSCR 1267 (1999), UNSCR 1988 (2011) or 1989 (2011). This change would affect an asset freeze in Jersey immediately that a person or entity is listed by the relevant UN terrorist Sanctions Committee, prior to any EU Regulation and without the need for further Jersey asset-freezing legislation.
Manpower and resource implications
The proposed amendments have no manpower or resource implications.
External Relations
3 February 2015