Explanatory Memorandum for Members

Issued by the Treasury

To The Hon Stephen Rodan MLC, and the Hon Council and Keys in Tynwald assembled

Tynwald – June 2021

1. TITLE OF MEASURE The Global Anti-Corruption Sanctions () Order 2021

2. CHANGES IN POLICY The ’s policy in relation to sanctions: “It is the policy of the Isle of Man Government to maintain the implementation of international sanctions measures in the Isle of Man in line with such measures as have effect in the United Kingdom from time to time.”

The policy was revised in July 2019 in part to align more closely with United Kingdom policy on sanctions, as a consequence of the United Kingdom’s departure from the European Union.

3. EFFECTS OF THE MEASURES The Global Anti-Corruption Sanctions (Isle of Man) Order 2021 (of UK Parliament), an Order in Council (the “modified Regulations”), extends, with modifications, the Global Anti-Corruption Sanctions Regulations 2021 (of UK Parliament) (“the Global Anti- corruption Regulations”) to the Isle of Man as amended from time to time, along with 3 specific sections of the Sanctions and Anti-Money Laundering Act 2018 (“the Sanctions Act”) so that the Global Anti-corruption Regulations operate correctly in the Isle of Man context.

The Global Anti-Corruption Regulations were made under Part 1 of the Sanctions Act to establish a sanctions regime for the purpose of preventing and combatting serious corruption.

The Global Anti-Corruption Regulations, as modified and extended to the Isle of Man by this Order (“the modified Regulations”), provide that a person designated by the Secretary of State for being, or having been, involved in such activities, is a designated person for the purposes of the modified Regulations. Designated persons may be

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Explanatory Memorandum for Tynwald Members

excluded from the Isle of Man and may be made subject to financial sanctions, including having their funds or economic resources frozen.

The modified Regulations provide for certain exceptions to this sanctions regime (for example to allow for frozen accounts to be credited with interest or other earnings and to allow acts done for the purpose of national security or the prevention of serious crime). The Isle of Man Treasury may issue a licence in respect of activities that would otherwise be prohibited under the modified Regulations. Schedule 2 sets out the purposes pursuant to which the Treasury may issue such licences. The modified Regulations also require the Treasury to publish an up-to-date list of designated persons.

The modified Regulations prescribe powers for the provision and sharing of information to enable the effective implementation and enforcement of the sanctions regime. The modified Regulations make it a criminal offence to contravene, or circumvent, any of the prohibitions in the modified Regulations and prescribe the mode of trial and penalties that apply to such offences.

This Order also extends to the Isle of Man for the purposes of the modified Regulations specific provisions of Part 1 of the Sanctions Act, namely provisions relating to guidance about prohibitions and requirements, protection for acts done for purposes of compliance and saving for prerogative powers.

4. REASONS FOR THE MEASURES

Following the departure of the United Kingdom from the European Union, financial and trade sanctions are implemented in the United Kingdom by Regulations under the Sanctions and Anti-Money Laundering Act 2018. The Isle of Man Government policy in relation to sanctions is:

“It is the policy of the Isle of Man Government to maintain the implementation of international sanctions measures in the Isle of Man in line with such measures as have effect in the United Kingdom from time to time.”

In the Isle of Man, EU sanctions law which had been applied to the Island under the European Communities (Isle of Man) Act 1973, was replaced by UK Regulations applied to the Island under the European Union and Trade Act 2019 (“EUTA2019”). There are, however, restrictions to the use of application provisions under the EUTA2019, which means that this provision can only be used where it relates to Brexit. Therefore, in order to ensure that the Isle of Man maintains alignment with the

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Explanatory Memorandum for Tynwald Members

United Kingdom on sanctions measures, the only current legislative option available is the extension of United Kingdom Regulations to the Island by an Order in Council made under the Sanctions and Anti-Money Laundering Act 2018. This type of legislation has been used previously in relation to sanctions concerning global human rights.

5. RESOURCE IMPLICATIONS There are thought to be no resource implications arising directly from these Regulations. New guidance has been published in relation to the Global Anti-Corruption Sanctions and is available on the Customs and Excise website.

6. TYNWALD PROCEDURE

The power to make the IOM Order is contained in section 63 of the Sanctions and Anti-Money Laundering Act 2018 (an Act of the United Kingdom Parliament). Manx law does not currently have any legal vires to make corresponding legislation relating to new sanctions regimes introduced by the United Kingdom.

Section 19 of the European Union and Trade Act 2019 contains provision to apply UK legislation which relates to the UK’s withdrawal from the EU, but as the Global Anti- Corruption Regulations are not related to the withdrawal of the UK from the EU, this section cannot be used to apply the Global Anti-Corruption Regulations to the Island using Manx law.

In July 2018 Tynwald approved the following Motion that was moved by the Treasury Minister:

“That Her Majesty be requested to direct by Order in Council that the provisions of Part 1 and Part 3 of the Sanctions and Anti-Money Laundering Act 2018 (an Act of the United Kingdom Parliament) and any regulations under Part 1 of that Act (whether made before or after the making of the Order in Council) shall extend to the Isle of Man with such modifications as appropriate.”

The IOM Order has been vetted by the Attorney General’s Chambers following the normal process and liaison with the UK’s Foreign and Commonwealth Office.

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