March 12, 2015: 4th Independent Reviewer Report of Terrorist Asset-Freezing etc. Act of 2010

Every year, there is an independent review of the UK’s TAFA 2010 law, and its implementation. This year’s report has a lot of statistical and historical context in it. Interesting points:

As to designations being challenged in court:

The only possible improvement that I could suggest to current processes is
prompted by the reflection that when decisions to designate are tested on appeal, there has been a persistent tendency to de-designate rather than to defend the
decision in court.

and

During the period under review, two persons designated by the Treasury under
TAFA 2010 brought a challenge by way of judicial review, not to their designation
but the fact that it was publicised. That fact was said to have prejudiced their ability
to receive a fair trial. The High Court held that the decision to publicise generally,
without giving them the opportunity of making representations and without giving
the trial judge or the judge in charge of the criminal proceedings the opportunity of
considering the matter, was flawed. It accordingly directed that their names be
removed from the published list of those designated. However their designations
remained in force, and the High Court indicated that the names could remain on a
list of designated persons distributed to financial institutions.31

The case for expanded use of TAFA:

Over 600 extremists are among the many Britons who have travelled out to
Syria and Iraq. A significant proportion have joined ISIL and other extremist
groups. They are reckoned to be more numerous than the Britons who fought
in previous or current theatres of jihad such as Bosnia, Afghanistan and
Somalia.

In addition to the potential of such persons to commit terrorist acts abroad,
there is some evidence that a minority of returning fighters may have been
involved or wish to be involved in terrorist activity at home. This growing risk
caused the threat level to the UK from international terrorism to be raised in
August 2014 to “severe“, meaning that an attack is highly likely.

Travel to and from such conflict zones, together with the preparation of
terrorist acts, often requires funding and facilitation.

The small number of designations indicates that asset-freezing law has played
only a marginal role in combating the most serious terrorist threat of the
present time.

De-risking and frozen assets:

Whilst they are not allowed to close a frozen account,financial institutions do
not wish to deal with persons or organisations believed to be associated with
terrorism, citing reputational and regulatory risk. The imposition of some huge
penalties for money-laundering and the facilitation of sanctions breaches,
particularly in the US, gives a degree of substance to such concerns.

When a designation expires or is revoked, it is normal for banking services to
be withdrawn – notwithstanding the provision by the Treasury of a letter such
as I have recommended,49 explaining the position – and for great difficulty to
be experienced by the designated person in finding another banker.

Nor have more radical solutions – for example, the imposition of a universal
service obligation on the banks, a power to require banking services to be
provided in a particular case,50 or a role for the Bank of England as banker of
last resort – been adopted.

And only one new recommendation:

Recommendation 13

The Chair of AFRG meetings at which new potential designations are discussed
should consider adopting a “devil’s advocate” approach, whereby one member of the
AFRG is asked to put the case against designation, thus assisting the group in
identifying any possible weaknesses in the case put forward. Sufficient material
should be provided (including, where appropriate, primary intelligence underlying
agency assessments) for this exercise to be performed in a meaningful way.