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The Government are committed to reporting quarterly on the operation of the UK's terrorist asset-freezing regime. We believe this is essential to ensure transparency and accountability of the regime. The Terrorist Asset-Freezing etc. Act 2010 (the Act) has enshrined in law the commitment to report quarterly to Parliament on the operation of the UK's asset-freezing regime mandated by UN Security Council Resolution 1373.
This is the first report under the 2010 Act and it covers the period from when the Act came into force on 17 December 2010 to 31 March 20111. This report also covers the operation of the UN al-Qaeda and Taliban asset-freezing regime.
As of 31 March 2011, a total of just under £230,0002 of funds relating to terrorism were frozen in the UK. This covers funds frozen under the UK's domestic terrorist asset-freezing regime, mandated by UN Security Council Resolution 1373, and also funds frozen under the UN al-Qaeda and Taliban asset-freezing regime, mandated by UN Security Council Resolution 1267.
In the period 17 December 2010 to 31 March 2011, the Treasury made one new designation under the Act. The final designation was made in respect of the military wing of Hezbollah, including the External Security Organisation (ESO). This replaced a designation of the ESO only, extending the freeze to the entire military wing of Hezbollah.
The Act contains a transitional provision that ensured that all designations made under the Terrorism (United Nations Measures) Order 2009 which were in force at the time the Act came into force remained valid as final designations under the Act until 17 March 2011, whereupon they would lapse if not already renewed. All 57 UK domestic asset freezes were therefore reviewed during the quarter to see whether they should be renewed as final designations under the Act.
Maintaining a fair and effective licensing system is crucial to ensuring the overall proportionality of the asset-freezing regime, whether the individuals concerned are subject to an asset freeze in accordance with a UN or EU listing, or domestic designation. A licensing framework is put in place for each person in the UK on a case-by-case basis. The key objective of the licensing system is to strike an appropriate balance between minimising the risk of diversion of funds to terrorism and implementing asset freezes in a proportionate way. Licences contain appropriate controls to protect against the risk of the diversion of funds for terrorist finance.
A total of 12 licences were issued this quarter under the Act in relation to four persons subject to an asset freeze. Of these, two were new licences, whereas the other 10 were existing licences which were reissued under the Act so as to reference the current legislation rather than the Terrorism (United Nations Measures) Order 2009, under the authority of which they were originally issued.
In addition to issuing licences relating to a specific person, the Treasury may also issue general licences, which apply to all persons designated under a particular regime or regimes. Licences are granted where there is a legitimate need for such transactions to proceed and where they can proceed without giving rise to any risk of terrorist finance.
The UN al-Qaeda and Taliban asset-freezing regime, established under UNSCR 1267, is implemented in the UK by Council Regulation (EC) No. 881/2002. Enforcement measures are provided for in the UK's Al-Qaida and Taliban (Asset-Freezing) Regulations 2010.
The general licences referred to above also apply to the UNSCR 1267 regime, with the exception of the general licence for insurance, the provision of which is not prohibited under the UNSCR 1267 regime.
2 This figure reflects the most updated account balances available and includes approximately $64,000 of suspected terrorist funds frozen in the UK. This has been converted using exchange rates as of 8/4/11.
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