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Cablegate: Uk Passes Temporary Terrorist Asset-Freezing Bill

VZCZCXRO1488
PP RUEHIK
DE RUEHLO #0322 0421441
ZNR UUUUU ZZH
P 111441Z FEB 10
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 4935
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBL/AMCONSUL BELFAST PRIORITY 1518
RUEHED/AMCONSUL EDINBURGH PRIORITY 1266

UNCLAS LONDON 000322

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON KTFN UK
SUBJECT: UK PASSES TEMPORARY TERRORIST ASSET-FREEZING BILL

REF: A. London 263
B. London 221
C. London 161

1. (SBU) Summary: A temporary terrorist asset-freezing bill became
law in the UK on February 10, having been fast-tracked through
parliament under emergency procedures. The Terrorist Asset-Freezing
(Temporary Provisions) Act 2010 was introduced following a Supreme
Court ruling that two of HM Treasury's asset-freezing orders were
unlawful. The new law validates the UK's terrorism orders, which
the court had refused to stay pending new legislation. HMG intends
to replace this temporary legislation, which expires December 31,
with permanent legislation that will undergo greater parliamentary
scrutiny. Prior to parliament's review of HMG's draft permanent
legislation, USG should share lessons learned from U.S. legislation
with HMG officials. End summary.

2. (U) The UK parliament passed a Terrorist Asset-Freezing
(Temporary Provisions) Bill which became law on February 10. This
new legislation was fast-tracked through parliament under emergency
procedures and allows HMG to maintain its asset-freezing regime
while it introduces legislation for a new, permanent regime which
complies with UN Resolution 1373. The legislation was enacted in
response to the Supreme Court's January 27 ruling that two of HM
Treasury's existing asset freeze orders were unlawful. HMG had used
secondary legislation under the UK's 1946 United Nations Act (which
is commonly used to implement the UK's UN obligations concerning
international peace and security) to introduce two asset freeze
orders in 2006 without a vote in parliament. The Court ruled that
the UK's Terrorism (United Nations Measure) Order 2006 and the
Al-Qaida and Taliban (United Nations Measure) Order 2006 were beyond
the scope of the power provided under the 1946 Act, and subsequently
quashed both orders. On February 4, the Supreme Court ruled not to
grant HMG a stay before its judgment took effect.

3. (U) Chancellor Darling presented the draft legislation in the
House of Commons on February 5 and it passed all subsequent stages
in the Commons on February 8. The bill moved to the House of Lords
on February 8 and was passed, without amendment, on February 9. It
received cross-party support throughout its passage but many Members
of Parliament criticized HMG's failure to introduce primary
legislation in 2006 which, they argued, would have put the
asset-freezing orders on firm legislative footing. During the
debate on the bill in the House of Commons, Mark Hoban, a
Conservative shadow Treasury minister, said: "We agree with the
Government that there needs to be proper controls in place to
prevent terrorists and suspected terrorists from having access to
their financial resources and the financial system. However, the
Government needs to recognize that we are here tonight, pushing
through this emergency retrospective legislation, because they
failed, despite many warnings, to put the asset-freezing regime on
to a proper legislative footing."

4. (SBU) The new legislation is retroactive to the January 27 court
ruling, which, HMT officials explained to us, was necessary to
convince banks that they would have legal cover to maintain the
asset-freezing regime which the court had voided. The bill protects
two further terrorism orders that relied on the same UN Act for
their legal substance and were therefore also at risk. It will
expire on December 31, by which time HMG intends to have passed
permanent asset-freezing legislation in parliament. HMG has already
published a draft Terrorist Asset-Freezing Bill.

5. (SBU) Comment: Passage of the temporary bill has provided HMG
time to prepare its permanent primary legislation and strategy that
will safeguard the UK's asset-freezing regime. This legislation
will receive parliamentary consultation, vetting and debate, and
will likely take into consideration some of the Supreme Court's due
process considerations. Treasury officials have told us that the
bill is unlikely to be debated during the current parliament, but
will be a priority of the new parliament after elections, expected
in May. USG should take advantage of the next few months to discuss
with HMG aspects of U.S. legislation that are both most useful and
problematic.

SUSMAN

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