My Lords, the instrument before us was laid on Tuesday 19 July 2022, under the powers provided by the Sanctions and Anti-Money Laundering Act 2018, also known as the sanctions Act. The Joint Committee on Statutory Instruments published its 12th report of the 2022-23 Session on Friday 14 October. The committee reported the instrument for two reasons: one for defective drafting and another relating to one of the sanctions regimes to which the amendment applies—the Burundi (Sanctions) Regulations 2021. I will address each of these briefly in turn.
First, the JCSI raised concerns about the absence of definitions on sanctions in the new information provisions. It is not satisfied that the drafting of the new regulation clearly achieves the stated policy to limit the functions in question to those imposed under the relevant instrument. We are considering the most appropriate way to address the committee on that point.
The second aspect flagged to us by the committee relates to the Burundi (Sanctions) Regulations 2021, which was originally laid in December 2021 to replace the Burundi (Sanctions) (EU Exit) Regulations 2019. The replacement regulations were made to reflect the 2020 Burundi elections and the peaceful transfer of power. As noble Lords may recall, the 2021 regulations were debated but they were not approved by resolutions of both Houses within 28 days, and therefore ceased to have effect on 23 January 2022. This was in accordance with Section 55(3) of SAMLA. Having carefully considered the consequences, the FCDO concluded that the 2019 regulations have not been revoked by the 2021 regulations and therefore remain in force. The Joint Committee on Statutory Instruments accepted this conclusion.
The UK Government continue to monitor developments in Burundi and to keep the sanctions regime under review; we are currently considering a 2022 regulation. We thank the committee for its detailed feedback and continued engagement on the FCDO’s sanctions legislation, which we continue to bring forward at pace. I also take this opportunity to thank those across your Lordships’ House for the continued support for amendments brought forward by His Majesty’s Government to update the sanctions regime throughout this Session.
Sanctions form a key pillar of our foreign policy. It is essential that our sanctions regimes are maintained and updated appropriately, so that we can respond at pace to the activities of malign actors around the world. Indeed, we have recently shown the strength and utility of our sanctions in our response to Vladimir Putin’s invasion of Ukraine and Russia’s crimes against the Ukrainian people.
The legislative instrument that we are debating today updates all our sanctions regimes, including those we are required to implement due to our UN obligations, as well as our autonomous UK regimes. These regulations ensure that crypto asset businesses
fall within the scope of financial sanctions reporting requirements, strengthening our ability to respond to emerging threats and evolving global standards.
Specifically, the regulations require crypto asset exchanges and custodian wallet providers to report to the Treasury if they encounter any designated persons in the course of business or if they are holding any frozen assets on behalf of customers who are designated. Crypto asset businesses are also required to report any suspected breaches of financial sanctions.
The regulations also include new powers for public authorities to share financial sanctions information with the Treasury. This change ensures a wide range of persons and organisations, from regulators to local authorities, have a dedicated information-sharing gateway. They will no longer have to rely on gateways that are not sanctions-specific or on the Treasury’s powers to compel information from partners.
We hope that this will give organisations confidence to share information so that the Government can better pursue breaches and uphold the integrity of UK sanctions. These changes are possible thanks to the Economic Crime (Transparency and Enforcement) Act 2022, which amended the sanctions Act in March this year.
The regulations also make changes to our various sanctions regimes to update definitions and clarify intentions. These amendments ensure that the definition of “designated person” is consistent across regulations. They include a correction of the reporting obligations relating to the transfer of funds to a ring-fenced account. They clarify that, within the Libya sanctions regime, it is not a breach of sanctions to credit a frozen account with interest and specify that Treasury licences would be available for the purpose of satisfying prior obligations. They also correct acronyms which were entered incorrectly into the initial regulations or were missing, and update the name of the African Union peacekeeping force in Somalia.
These regulations will ensure that our sanctions continue to hold to account corrupt officials, abusers of human rights, and malign actors across the world, and that our UN sanctions regimes remain accurate. To conclude, these amendments mean that our sanctions regimes take account of the most modern financial services and prevent loopholes being exploited in the future. I welcome this opportunity to hear views on these regulations. I beg to move.