Terrorism Asset-Freezing (Jersey) Law 2011: Amendments: Law drafting instructions

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A decision made 2 February 2015:

MINISTERIAL DECISION REFERENCE: MD-ER–2015-0007
DECISION SUMMARY TITLE: Terrorist Asset-Freezing Legislation - Amendments
DECISION SUMMARY AUTHOR:	External Relations	IS THE DECISION SUMMARY PUBLIC OR EXEMPT?		Public
REPORT TITLE: Terrorist Asset-Freezing Legislation - Amendments
REPORT AUTHOR OR NAME OF PERSON GIVING REPORT: (if different from Decision Summary Author)	External Relations	IS THE REPORT PUBLIC OR EXEMPT		Public
DECISION AND REASON FOR THE DECISION: The Minister for External Relations authorised the submission of law drafting instructions for proposed amendments to terrorist asset-freezing legislation as described in the attached report dated 30 January 2015. Further to review of the legislation for the prevention of terrorism financing and to enable terrorist asset-freezing, two amendments to the Terrorism Asset-Freezing (Jersey) Law 2011 are proposed, as follows: To clarify the interpretation of ‘ownership’ or ‘control’ of funds, so that the terms explicitly include any funds that are 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. To amend the description of a ‘designated person’, so that it includes 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 effect 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. Article 40 of the TAFJL provides that “(1) The States may by Regulations amend the Schedule and any of Articles 1, 2, 3, 4, 5, 6 and 8.” of the Law. In addition, amendments are proposed in connection with and to similar effect as the changes in (1) above: To clarify the interpretation of the phrase “belonging to, owned, held or controlled” in Council Regulation (EC) No 881/2002 and Council Regulation (EU) No 753/2011, as they have effect in Jersey, explicitly to include funds and economic resources ‘jointly’ or ‘indirectly’ owned or controlled by the relevant persons. It is proposed that such clarification might be introduced either by means of amendments to the EU Legislation (Sanctions – Al-Qaida) (Jersey) Order 2014 and the EU Legislation (Sanctions – Afghanistan) (Jersey) Order 2014, or by an amendment to the EU Legislation (Sanctions) (General Provisions) (Jersey) Order 2014.
RESOURCE IMPLICATIONS: There are no resource implications arising from the decision.
ACTION REQUIRED: External Relations shall – inform the Greffe of the decision; forward drafting instructions to the Law Draftsman.
SIGNATURE:			POSITION: Minister for External Relations

DATE SIGNED			EFFECTIVE DATE OF THE DECISION

Terrorism Asset-Freezing (Jersey) Law 2011: Amendments: Law drafting instructions

MD-ER-2015-0007

REPORT

Terrorist Asset Freezing Legislation – Amendments

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, arising 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.

The TAFJL requires that the assets of a designated person or entity, who/which is or is suspected of being involved in terrorism or terrorist financing, must be frozen.

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.

Issues

Amendments to the TAFJL are proposed to address two issues:

Definition of funds ‘belonging to, 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 or controlled by the relevant persons.

The relevant legislation in respect of terrorist asset-freezing comprises:

Terrorist Asset Freezing (Jersey) Law 2011;
Council Regulation (EC) No 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the Al-Qaida network, as given effect in Jersey by the EU Legislation (Sanctions – Al-Qaida) (Jersey) Order 2014; and
Council Regulation (EU) No 753/2011 concerning restrictive measures directed against certain individuals, groups, undertakings and entities in view of the situation in Afghanistan, as given effect in Jersey by the EU Legislation (Sanctions – Afghanistan) (Jersey) Order 2014.

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;
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; 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.

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, including an asset-freeze and a prohibition on making funds or economic resources available to a relevant designated person or entity.

In addition, the TAFJL includes asset-freezing measures, inter alia, in respect of any person designated by Council Regulation (EC) No 2580/2001.

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.

Proposals

It is proposed that amendments should be made to the TAFJL as follows:

(1) To clarify the interpretation of ‘ownership’ or ‘control’ of funds, so that the terms explicitly include any funds that are 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 primarily extend the range of assets that must be frozen under Article 13, and also broaden the extent of assets on which information must be disclosed to the Minister under Article 22 of the TAFJL.

(2) To amend the description of a ‘designated person’, so that it includes 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 effect 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.

Article 40 of the TAFJL provides that “(1) The States may by Regulations amend the Schedule and any of Articles 1, 2, 3, 4, 5, 6 and 8.” of the Law.

A further amendment is proposed in connection with and to similar effect as the changes in (1) above:

(3) To clarify the interpretation of the phrase “belonging to, owned, held or controlled” in Council Regulation (EC) No 881/2002 and Council Regulation (EU) No 753/2011, as they have effect in Jersey, explicitly to include funds and economic resources ‘jointly’ or ‘indirectly’ owned or controlled by the relevant persons.

It is proposed that such clarification might be introduced either by means of amendments to the EU Legislation (Sanctions – Al-Qaida) (Jersey) Order 2014 and the EU Legislation (Sanctions – Afghanistan) (Jersey) Order 2014, or by an amendment to the EU Legislation (Sanctions) (General Provisions) (Jersey) Order 2014.

Recommendation

The Minister for External Relations is asked to approve a law drafting request to prepare amendments to the terrorist asset-freezing legislation as described above.

External Relations

30 January 2015

[1] The Council of Europe is the international organisation founded in 1949, promoting co-operation between all countries of Europe in the areas of legal standards, human rights, democratic development, the rule of law and cultural co-operation.