Amendment to Criminal Finances Bill: Gross abuse of human rights

An amendment to the Criminal Finances Bill¹ (the Bill) currently before Parliament has recently been proposed to amend the Proceeds of Crime Act 2002 (POCA) to allow the High Court to make orders designating the conduct of a person - wherever it occurs - as connected to a gross human rights abuse, and to set prohibitions on that person’s ability to deal with property, funds and finances and access related services. Following an order designating conduct as connected to a gross human rights abuse it will be incumbent on the relevant authorities to seek a civil recovery order of any proceeds of such conduct.

The amendment has cross-party support and, all things being equal, stands a good chance of being adopted. It anticipates an important role for civil society by empowering individuals and NGOs to make applications for designating orders. This bears some resemblance to the proposed Global Magnitsky Human Rights Accountability Act in the US, which would require the President to consider “credible information” obtained by NGOs of human rights abuses when determining whether to apply sanctions on foreign individuals or entities. This potentially represents the beginning of a broader trend towards a greater reliance by governments on the expertise and evidence-gathering skills of NGOs to ensure effective enforcement action against persons responsible for human rights abuses.

The amendment also reflects a broader agenda which aims to ensure that financial institutions and other professional service providers do not facilitate the retention of funds derived from human rights abuses. Mindful of the reputational and legal risks associated with dealing in such assets, as well as the expectations of the UN Guiding Principles on Business & Human Rights (UN Guiding Principles), a growing number of financial institutions are reviewing their money-laundering policies and procedures as part of their human rights impact mitigation strategies.

Designating Orders

The amendment proposes that the High Court be given the power to make an order designating that the actions of a person (the respondent) constitute conduct connected to a gross human rights abuse and further order that:

1. a person is prohibited from dealing with property, funds or economic resources owned, held or controlled by the respondent if the person knows or has reasonable cause to suspect that he/she is dealing with property, funds or economic resources owned;
2. a person is prohibited from making property, funds or financial services available, directly or indirectly to the respondent if the person knows or has reasonable cause to suspect that he/she is making property, funds or economic resources services so available;
3. a person is prohibited from making funds or financial services available to any person for the benefit of the respondent if the person knows or has reasonable cause to suspect that he/she is making funds or economic resources services so available.

These prohibitions will in effect prevent the respondent from dealing with his assets or availing himself of services in relation to his property, funds or finances. They can be imposed for a maximum of two years, and there is no need to establish a connection between the gross human rights abuse and the property subject to the designating order.

An application for such an order may be made by the Government, individuals and entities, expressly including NGOs. The High Court must be satisfied that it is in the public interest to make such an order.  The Government will be under a duty to apply for such an order where the requirements are met and it is in the public interest.

Conduct connected to a gross human rights abuse

Conduct connected to a gross human rights abuse is defined as:

1. involvement by Person A in torture or other serious breaches of human rights and fundamental freedoms against Person B, where Person B sought or seeks to expose illegal activity carried out by foreign public officials or to obtain, exercise, defend or promote human rights and fundamental freedoms;
2. activities by Person C as an agent in connection with the activity by Person A;
3. activities by Person D to profit from, materially assist, sponsor or provide financial, material or technological support for, or goods and services in support of, the activity by Person A;
4. commission by Person E, whether or not a public official, of the illegal activity carried out by foreign public officials.

Civil Recovery: gross abuse of human rights

Conduct that has been designated as connected to a gross human rights abuse and would amount to a criminal offence had it occurred in the UK will also be deemed to amount to what is known as “unlawful conduct”. This means that the proceeds of such conduct can be subject to the existing civil recovery regime under POCA. The relevant authorities will be under a duty to seek to initiate recovery proceedings where they have evidence of the existence of proceeds of conduct designated as connected to a gross human rights abuse.

To date, the UK Government’s efforts to curtail access to finance and financial services for human rights abusers has largely focussed on slavery and human trafficking. In particular:

1. The Modern Slavery Act 2015 (MSA) amended the list of “lifestyle offences” in Schedule 2 of POCA to include offences under the MSA, making it easier for the prosecuting authorities to bring confiscation proceedings against persons convicted of slavery or human trafficking.
2. The Transparency in Supply Chains etc. practical guide, published by the government to assist businesses in preparing slavery and human trafficking statements pursuant to section 54 of the MSA notes the risk of financial institutions laundering funds derived from modern slavery.

This amendment recognises that abuses relating to a wider range of human rights can bring commercial benefits for perpetrators and their associates, and seeks to remove that financial incentive. Having said that, there remain a number of unanswered questions which the Court would need to consider if the amendment to the Bill became law in its current form.

Firstly, the amendment envisages that the respondent’s abusive conduct would need to occur in response to another person seeking to “exercise” human rights. It is unclear what circumstances would be necessary to fulfil this criteria. This may well be a low hurdle, as the Bill is already restricted to gross abuses.

The meaning of “gross human rights abuse” has been the subject of much debate over the years. In a 1993 working paper, the UN Commission on Human Rights’ Sub-Commission on Prevention of Discrimination and Protection of Minorities noted that “distinguishing between gross and less serious human rights violations…cannot be done with complete precision”. This reflects current thinking, although the following helpful guidance can be found in the Interpretative Guide to the UN Guiding Principles published by the Office of the United Nations High Commissioner for Human Rights (OHCHR):

There is no uniform definition of gross human rights violations in international law, but the following practices would generally be included: genocide, slavery and slavery-like practices, summary or arbitrary executions, torture, enforced disappearances, arbitrary and prolonged detention, and systematic discrimination. Other kinds of human rights violations, including of economic, social and cultural rights, can also count as gross violations if they are grave and systematic, for example violations taking place on a large scale or targeted at particular population groups.²

Ultimately, the effectiveness of the new law will hinge largely on the number of applications made to the High Court by NGOs capable of complex investigations involving asset-tracing exercises such as Global Witness, Amnesty International and Human Rights Watch.

Such investigations are on the increase, and the link between human rights and finance is very much in focus. Against this backdrop, the amendment highlights the importance of financial institutions and other professional service providers ensuring their due diligence and on-going monitoring processes are well-attuned to identifying clients and business partners with potential links to human rights abuses.