Jennifer White, a Glasgow-based solicitor with law firm bto talks us through the Sanctions and Anti-Money Laundering Bill currently making its way through Parliament.

The Sanctions and Anti-Money Laundering Bill was introduced to the House of Lords on 18 October 2017. It is scheduled to have its second reading on 1 November 2017.

The Bill seeks to enable the UK to continue to comply with the current UN sanctions regime after Brexit and is the first item of legislation brought to the House of Lords as part of the Brexit process.

Rationale

The UK’s implementation of UN and other multilateral sanctions is largely based on the European Communities Act 1972 (the “ECA”). Whilst the UK does have some domestic powers to impose certain sanctions, these are limited and are considered by the government insufficient to replicate the full range of sanctions currently in force through the UN and EU. As the ECA will be repealed following the UK’s exit from the EU, the government has stated that the UK “will need a new domestic legal framework to implement UN sanctions and any additional UK autonomous measures. If we do not do this, we will be in breach of international law.”

Scope

The Bill is designed to bring continuity and certainty and will preserve existing regimes whilst at the same time create additional powers which will, amongst other things, allow the government to make regulations to impose sanctions to comply with UN and other international obligations; to prevent terrorism; and for national security and international peace and security purposes. Sanctions regimes will be reviewed annually, and individuals and organisations will be able to challenge any sanctions imposed against them.

Additionally, the government notes the challenges faced globally from money laundering and refers to the UK’s standing as a global financial centre. In its explanatory notes, the government explains that as a result of this reputation the UK is particularly exposed to money laundering crimes and accordingly a “robust AML framework” is required to deal with such threats. Part 2 of the Bill provides new powers which will allow the UK to make, repeal and amend secondary legislation relating to anti-money laundering and counter terrorist financing.

Effect

The creation of a new UK sanctions regime will have an effect on business as it will likely increase due diligence requirements. However, it is significant to note that opposition parties have emphasised the importance of the UK assuming a coordinated approach with the EU in respect of sanctions policy post-Brexit. It is expected that the UK will continue to collaborate with the EU to achieve a harmonised approach.

The Bill can be accessed here: Sanctions and Anti-Money Laundering Bill 2017-19