Office of Public Sector Information
Section 62
1 (1) The Treasury may give a direction under this Schedule if one or more of the following conditions is met in relation to a country.
(2) The first condition is that the Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering activities being carried on—
(a) in the country,
(b) by the government of the country, or
(c) by persons resident or incorporated in the country.
(3) The second condition is that the Treasury reasonably believe that there is a risk that terrorist financing or money laundering activities are being carried on—
(a) in the country,
(b) by the government of the country, or
(c) by persons resident or incorporated in the country,
and that this poses a significant risk to the national interests of the United Kingdom.
(4) The third condition is that the Treasury reasonably believe that—
(a) the development or production of nuclear, radiological, biological or chemical weapons in the country, or
(b) the doing in the country of anything that facilitates the development or production of any such weapons,
poses a significant risk to the national interests of the United Kingdom.
(5) The power to give a direction is not exercisable in relation to an EEA state.
2 (1) “Terrorist financing” means—
(a) the use of funds, or the making available of funds, for the purposes of terrorism, or
(b) the acquisition, possession, concealment, conversion or transfer of funds that are (directly or indirectly) to be used or made available for those purposes.
(2) “Money laundering” means an act which falls within section 340(11) of the Proceeds of Crime Act 2002 (c. 29).
(3) “Nuclear weapon” includes a nuclear explosive device that is not intended for use as a weapon.
(4) “Radiological weapon” means a device designed to cause destruction, damage or injury by means of the radiation produced by the decay of radioactive material.
(5) “Chemical weapon” means a chemical weapon as defined by section 1(1) of the Chemical Weapons Act 1996 (c. 6), other than one whose intended use is only for permitted purposes (as defined by section 1(3) of that Act).
(6) “Biological weapon” means anything within section 1(1)(a) or (b) of the Biological Weapons Act 1974 (c. 6).
3 (1) A direction under this Schedule may be given to—
(a) a particular person operating in the financial sector,
(b) any description of persons operating in that sector, or
(c) all persons operating in that sector.
(2) In this Schedule “relevant person”, in relation to a direction, means any of the persons to whom the direction is given.
(3) A direction may make different provision in relation to different descriptions of relevant person.
4 (1) Any reference in this Schedule to a person operating in the financial sector is to a credit or financial institution that—
(a) is a United Kingdom person, or
(b) is acting in the course of a business carried on by it in the United Kingdom.
(2) This is subject to the exceptions in paragraph 6.
5 (1) “Credit institution” means—
(a) a credit institution as defined in Article 4(1)(a) of the banking consolidation directive, or
(b) a branch (within the meaning of Article 4(3) of that directive) located in an EEA state of—
(i) an institution within sub-paragraph (a), or
(ii) an equivalent institution whose head office is located in a non-EEA state,
when it accepts deposits or other repayable funds from the public or grants credits for its own account (within the meaning of the banking consolidation directive).
(2) “Financial institution” means—
(a) an undertaking, including a money service business, when it carries out one or more of the activities listed in points 2 to 12 and 14 of Annex 1 to the banking consolidation directive, other than—
(i) a credit institution;
(ii) an undertaking whose only listed activity is trading for own account in one or more of the products listed in point 7 of Annex 1 to the banking consolidation directive where the undertaking does not have a customer,
and for this purpose “customer” means a person who is not a member of the same group as the undertaking;
(b) an insurance company duly authorised in accordance with the life assurance consolidation directive, when it carries out activities covered by that directive;
(c) a person whose regular occupation or business is the provision to other persons of an investment service or the performance of an investment activity on a professional basis, when providing or performing investment services or activities (within the meaning of the markets in financial instruments directive), other than a person falling within Article 2 of that directive;
(d) a collective investment undertaking, when marketing or otherwise offering its units or shares;
(e) an insurance intermediary as defined in Article 2(5) of Directive 2002/92/EC of the European Parliament and of the Council of 9th December 2002 on insurance mediation (other than a tied insurance intermediary as mentioned in Article 2(7) of that Directive), when it acts in respect of contracts of long-term insurance within the meaning given by article 3(1) of, and Part II of Schedule 1 to, the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);
(f) a branch located in an EEA state of—
(i) a person referred to in any of paragraphs (a) to (e), or
(ii) a person equivalent to a person within any of those paragraphs whose head office is located in a non-EEA state,
when carrying out any activity mentioned in that paragraph;
(g) an insurance company (as defined by section 1165(3) of the Companies Act 2006 (c. 46));
(h) the National Savings Bank;
(i) the Director of Savings, when money is raised under the auspices of the Director under the National Loans Act 1968 (c. 13).
6 (1) For the purposes of this Schedule the following are not regarded as persons operating in the financial sector when carrying out any of the following activities—
(a) a society registered under the Industrial and Provident Societies Act 1965 (c. 12), when it—
(i) issues withdrawable share capital within the limit set by section 6 of that Act (maximum shareholding in society); or
(ii) accepts deposits from the public within the limit set by section 7(3) of that Act (carrying on of banking by societies);
(b) a society registered under the Industrial and Provident Societies Act (Northern Ireland) 1969 (c. 24 (N.I.)), when it—
(i) issues withdrawable share capital within the limit set by section 6 of that Act (maximum shareholding in society); or
(ii) accepts deposits from the public within the limit set by section 7(3) of that Act (carrying on of banking by societies);
(c) a person within any of paragraphs 1 to 23 or 25 to 51 of the Schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001 (S.I. 2001/1201), when carrying out an activity in respect of which the person is exempt;
(d) a person who was an exempted person for the purposes of section 45 of the Financial Services Act 1986 (c. 60) (miscellaneous exemptions) immediately before its repeal, when exercising the functions specified in that section.
(2) A person who falls within the definition of “credit institution” or “financial institution” solely as a result of engaging in financial activity on an occasional or very limited basis is not regarded for the purposes of this Schedule as operating in the financial sector.
(3) For the purposes of sub-paragraph (2) a person is regarded as engaging in a financial activity on an occasional or very limited basis if—
(a) the person’s total annual turnover in respect of the financial activity does not exceed £64,000,
(b) the financial activity is limited in relation to any customer to no more than one transaction exceeding 1,000 euro (whether the transaction is carried out in a single operation or a series of operations which appear to be linked),
(c) the financial activity does not exceed 5% of the person’s total annual turnover,
(d) the financial activity is ancillary and directly related to the person’s main activity,
(e) the financial activity is not the transmission or remittance of money (or any representation of monetary value) by any means,
(f) the person’s main activity is not that of a credit or financial institution, and
(g) the financial activity is provided only to customers of the person’s main activity.
7 In this Part of this Schedule—
“the banking consolidation directive” means Directive 2006/48/EC of the European Parliament and of the Council of 14th June 2006 relating to the taking up and pursuit of the business of credit institutions;
“the life assurance consolidation directive” means Directive 2002/83/EC of the European Parliament and of the Council of 5th November 2002 concerning life assurance;
“the markets in financial instruments directive” means Directive 2004/39/EC of the European Parliament and of the Council of 12th April 2004 on markets in financial instruments.
8 (1) The Treasury may by order amend paragraphs 4 to 7.
(2) Any such order is subject to affirmative resolution procedure.
9 (1) A direction under this Schedule may impose requirements in relation to transactions or business relationships with—
(a) a person carrying on business in the country;
(b) the government of the country;
(c) a person resident or incorporated in the country.
(2) The direction may impose requirements in relation to—
(a) a particular person within sub-paragraph (1),
(b) any description of persons within that sub-paragraph, or
(c) all persons within that sub-paragraph.
(3) In this Schedule “designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given.
(4) The kinds of requirement that may be imposed by a direction under this Schedule are specified in—
paragraph 10 (customer due diligence);
paragraph 11 (ongoing monitoring);
paragraph 12 (systematic reporting);
paragraph 13 (limiting or ceasing business).
(5) A direction may make different provision—
(a) in relation to different descriptions of designated person, and
(b) in relation to different descriptions of transaction or business relationship.
(6) The requirements imposed by a direction must be proportionate having regard to the advice mentioned in paragraph 1(2) or, as the case may be, the risk mentioned in paragraph 1(3) or (4) to the national interests of the United Kingdom.
10 (1) A direction may require a relevant person to undertake enhanced customer due diligence measures—
(a) before entering into a transaction or business relationship with a designated person, and
(b) during a business relationship with such a person.
(2) The direction may do either or both of the following—
(a) impose a general obligation to undertake enhanced customer due diligence measures;
(b) require a relevant person to undertake specific measures identified or described in the direction.
(3) “Customer due diligence measures” means measures to—
(a) establish the identity of the designated person,
(b) obtain information about—
(i) the designated person and their business, and
(ii) the source of their funds, and
(c) assess the risk of the designated person being involved in relevant activities.
(4) In sub-paragraph (3)(c) “relevant activities” means—
(a) terrorist financing;
(b) money laundering; or
(c) the development or production of nuclear, radiological, biological or chemical weapons or the facilitation of that development or production.
(5) A direction may not impose requirements of a kind mentioned in this paragraph on a person who is regarded as operating in the financial sector by virtue only of paragraph 5(2)(g) (certain insurance companies).
11 (1) A direction may require a relevant person to undertake enhanced ongoing monitoring of any business relationship with a designated person.
(2) The direction may do either or both of the following—
(a) impose a general obligation to undertake enhanced ongoing monitoring;
(b) require a relevant person to undertake specific measures identified or described in the direction.
(3) “Ongoing monitoring” of a business relationship means—
(a) keeping up to date information and documents obtained for the purposes of customer due diligence measures, and
(b) scrutinising transactions undertaken during the course of the relationship (and, where appropriate, the source of funds for those transactions) to ascertain whether the transactions are consistent with the relevant person’s knowledge of the designated person and their business.
(4) A direction may not impose requirements of a kind mentioned in this paragraph on a person who is regarded as operating in the financial sector by virtue only of paragraph 5(2)(g) (certain insurance companies).
12 (1) A direction may require a relevant person to provide such information and documents as may be specified in the direction relating to transactions and business relationships with designated persons.
(2) A direction imposing such a requirement must specify how the direction is to be complied with, including—
(a) the person to whom the information and documents are to be provided, and
(b) the period within which, or intervals at which, information and documents are to be provided.
(3) The power conferred by this paragraph is not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.
(4) The exercise of the power conferred by this paragraph and the provision of information under it is not otherwise subject to any restriction on the disclosure of information, whether imposed by statute or otherwise.
13 A direction may require a relevant person not to enter into or continue to participate in—
(a) a specified transaction or business relationship with a designated person,
(b) a specified description of transactions or business relationships with a designated person, or
(c) any transaction or business relationship with a designated person.
14 (1) A direction given to—
(a) a description of persons operating in the financial sector, or
(b) all persons operating in that sector,
must be contained in an order made by the Treasury.
(2) If the order contains requirements of a kind mentioned in paragraph 13 (limiting or ceasing business)—
(a) it must be laid before Parliament after being made, and
(b) if not approved by a resolution of each House of Parliament before the end of 28 days beginning with the day on which it is made, it ceases to have effect at the end of that period.
In calculating the period of 28 days, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
(3) An order’s ceasing to have effect in accordance with sub-paragraph (2) does not affect anything done under the order.
(4) An order to which sub-paragraph (2) does not apply is subject to negative resolution procedure.
(5) If apart from this sub-paragraph an order under this paragraph would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.
15 (1) This paragraph applies in relation to a direction given to a particular person.
(2) The Treasury must give notice of the direction to the person.
(3) The direction (if not previously revoked and whether or not varied) ceases to have effect at the end of the period of one year beginning with the day on which the direction is given.
This is without prejudice to the giving of a further direction.
(4) The Treasury may vary or revoke the direction at any time.
(5) Where the direction is varied or ceases to have effect (whether on revocation or otherwise), the Treasury must give notice of that fact to the person.
16 (1) This paragraph applies to an order containing directions under paragraph 14 (general directions given by order).
(2) The Treasury must take such steps as they consider appropriate to publicise the making of the order.
(3) An order—
(a) revoking the order, or
(b) varying the order so as to make its provisions less onerous,
is subject to negative resolution procedure.
(4) The order (if not previously revoked and whether or not varied) ceases to have effect at the end of the period of one year beginning with the day on which it was made.
This is without prejudice to the making of a further order.
(5) Where the order is varied or ceases to have effect (whether on revocation or otherwise), the Treasury must take such steps as they consider appropriate to publicise that fact.
17 (1) The following provisions apply where a direction contains requirements of a kind mentioned in paragraph 13 (limiting or ceasing business).
(2) The Treasury may grant a licence to exempt acts specified in the licence from those requirements.
(3) A licence may be—
(a) general or granted to a description of persons or to a particular person;
(b) subject to conditions;
(c) of indefinite duration or subject to an expiry date.
(4) The Treasury may vary or revoke a licence at any time.
(5) On the grant, variation or revocation of a licence, the Treasury must—
(a) in the case of a licence granted to a particular person, give notice of the grant, variation or revocation to that person;
(b) in the case of a general licence or a licence granted to a description of persons, take such steps as the Treasury consider appropriate to publicise the grant, variation or revocation of the licence.
18 (1) In this Schedule “enforcement authority” means—
(a) the Financial Services Authority (“the FSA”),
(b) the Commissioners for Her Majesty’s Revenue and Customs (“HMRC”),
(c) the Office of Fair Trading (“the OFT”), or
(d) in relation to credit unions in Northern Ireland, the Department of Enterprise, Trade and Investment in Northern Ireland (“DETINI”).
(2) In this Part of this Schedule “enforcement officer” means—
(a) an officer of the FSA, including a member of the staff or an agent of the FSA,
(b) an officer of Revenue and Customs,
(c) an officer of the OFT,
(d) an officer of DETINI acting for the purposes of its functions under this Schedule in relation to credit unions in Northern Ireland, or
(e) a local enforcement officer.
(3) A “local enforcement officer” means—
(a) in Great Britain, an officer of a local weights and measures authority;
(b) in Northern Ireland, an officer of DETINI acting pursuant to arrangements made with the OFT for the purposes of this Schedule.
19 (1) An enforcement officer may by notice to a relevant person require the person—
(a) to provide such information as may be specified in the notice, or
(b) to produce such documents as may be so specified.
(2) An officer may exercise powers under this paragraph only if the information or documents sought to be obtained as a result are reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule.
(3) Where an officer requires information to be provided or documents produced under this paragraph—
(a) the notice must set out the reasons why the officer requires the information to be provided or the documents produced, and
(b) the information must be provided or the documents produced—
(i) before the end of such reasonable period as may be specified in the notice; and
(ii) at such place as may be so specified.
(4) In relation to a document in electronic form the power to require production of it includes a power to require the production of a copy of it in legible form or in a form from which it can readily be produced in visible and legible form.
(5) An enforcement officer may take copies of, or make extracts from, any document produced under this paragraph.
(6) The production of a document does not affect any lien which a person has on the document.
20 (1) Where an enforcement officer has reasonable cause to believe that any premises are being used by a relevant person in connection with the person’s business activities, the officer may on producing evidence of authority at any reasonable time—
(a) enter the premises;
(b) inspect the premises;
(c) observe the carrying on of business activities by the relevant person;
(d) inspect any document found on the premises;
(e) require any person on the premises to provide an explanation of any document or to state where it may be found.
(2) An enforcement officer may take copies of, or make extracts from, any document found under sub-paragraph (1).
(3) An officer may exercise powers under this paragraph only if the information or document sought to be obtained as a result is reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule.
(4) In this paragraph “premises” means any premises other than premises used only as a dwelling.
21 (1) A justice may issue a warrant under this paragraph if satisfied on information on oath given by an enforcement officer that there are reasonable grounds for believing that the first, second or third set of conditions is satisfied.
(2) The first set of conditions is—
(a) that there is on the premises specified in the warrant a document in relation to which a requirement could be imposed under paragraph 19(1)(b), and
(b) that if such a requirement were to be imposed—
(i) it would not be complied with, or
(ii) the document to which it relates would be removed, tampered with or destroyed.
(3) The second set of conditions is—
(a) that a person on whom a requirement has been imposed under paragraph 19(1)(b) has failed (wholly or in part) to comply with it, and
(b) that there is on the premises specified in the warrant a document that has been required to be produced.
(4) The third set of conditions is—
(a) that an enforcement officer has been obstructed in the exercise of a power under paragraph 20, and
(b) that there is on the premises specified in the warrant a document that could be inspected under paragraph 20(1)(d).
(5) A justice may issue a warrant under this paragraph if satisfied on information on oath given by an officer that there are reasonable grounds for suspecting that—
(a) an offence under this Schedule has been, is being or is about to be committed by a relevant person, and
(b) there is on the premises specified in the warrant a document relevant to whether that offence has been, or is being or is about to be committed.
(6) A warrant issued under this paragraph shall authorise an enforcement officer—
(a) to enter the premises specified in the warrant;
(b) to search the premises and take possession of anything appearing to be a document specified in the warrant or to take, in relation to any such document, any other steps which may appear to be necessary for preserving it or preventing interference with it;
(c) to take copies of, or extracts from, any document specified in the warrant;
(d) to require any person on the premises to provide an explanation of any document appearing to be of the kind specified in the warrant or to state where it may be found;
(e) to use such force as may reasonably be necessary.
(7) Where a warrant is issued by a justice under sub-paragraph (1) or (5) on the basis of information on oath given by an officer of the FSA, for “an enforcement officer” in sub-paragraph (6) substitute “a constable”.
(8) In sub-paragraphs (1), (5) and (7), “justice” means—
(a) in relation to England and Wales, a justice of the peace;
(b) in relation to Scotland, a justice within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995 (c. 46) (interpretation);
(c) in relation to Northern Ireland, a lay magistrate.
(9) In the application of this paragraph to Scotland, the references in sub-paragraphs (1), (5) and (7) to information on oath are to be read as references to evidence on oath.
22 (1) This paragraph applies in relation to the powers conferred by—
(a) paragraph 19 (power to require information or documents),
(b) paragraph 20 (entry, inspection without warrant etc), or
(c) paragraph 21 (entry to premises under warrant).
(2) Those powers are not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.
(3) The exercise of those powers and the provision of information or production of documents under them is not otherwise subject to any restriction on the disclosure of information, whether imposed by statute or otherwise.
Counter-terrorism Act 2008