|10LONDON263||2010-02-04 17:24:00||CONFIDENTIAL//NOFORN||Embassy London|
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C O N F I D E N T I A L LONDON 000263
1. (C/NF) Summary: The British Supreme Court on February 4
denied a request from HM Treasury to stay the court's January
27 decision to quash part of the UK's terrorist finance
regime. Most UK banks have agreed to HMT requests to
maintain a freeze until temporary fast-track legislation is
in place; possibly by the week of February 8. In the worse
case scenario, this action could affect the assets of only 13
"home-grown" Islamic extremists, none with Al-Qaeda links or
listed by the U.S., we were told, which fall well under GBP
50,000. End summary.
2. (C/NF) The Supreme Court denial of HMG's request to stay
last month's decision against part of the UK's domestic asset
freezing regime has created a fluid situation. HMT has
drafted temporary fast-track legislation to be voted upon by
Parliament, possibly as early as the week of February 8. The
lack of parliamentary approval for a regime that froze
people's assets was the key argument in the justices'
decision against the regime (Ref A and B). HMT officials are
seized at the highest levels, they tell us, and Chancellor
Darling and several ministers are leading strategy and
lobbying efforts with opposition party members. HMT
officials expect broad political support for maintaining an
asset-freezing regime. Technical questions regarding sunset
clauses (future reviews of the continued need for the regime)
and other issues remain unresolved, and HMG has not yet
received full support for the temporary bill from opposition
3. (C/NF) The temporary legislation, if approved, would
essentially be a parliamentary-vetted version of the current
regime, and would remain in place until the end of this year.
By that time HMT hopes to have a new, "fuller" regime in
place, which would go through Parliament's normal scrutiny.
The temporary legislation would also be retroactive.
Importantly, it would cover the gap period between today's
court decision and the date when the bill is approved,
protecting UK banks which agree to HMT's pleas to not
unfreeze the designees' assets.
4. (C/NF) If HMT's plan does not work, at most thirteen
individuals' assets (out of approximately 147) could be
unblocked, HMT officials told us. These are domestic,
AQ-inspired Islamic extremists, but do not have any known
links to AQ. HMT officials tell us none of them appear on
U.S. asset freeze lists. Most of the people named under the
UK's various asset freezing regimes are already covered
through the EU's autonomous listings or the EU's
implementation of UN 1267 listings.
5. (C/NF) The situation is still in flux. HMT officials
warned us their game-plan could change quickly depending on
how discussions go with the opposition or if the court
decides to intervene. We are concerned whether the court
will allow the banks to maintain an asset freeze in this
interim period before temporary legislation is in place, or
will it issue a contempt order to the banks and force them to
release the funds. The USG would do best to keep a low
public profile at this time so as to avoid becoming part of
the political debate HMG officials will let us know if our
private intervention with the opposition could help. We
agree with HMG analysis that in this political run up to
spring elections, no political party wishes to be seen as
soft on terrorism.
The full HMT Financial Sanctions Notice can be found at:
http://www.hm-treasury.gov.uk/fin sanctions 2010.htm
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