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