Intelligence and Security Committee Russia report/Legislation

LEGISLATION

110. Given the difficulties inherent in seeking to counter Russian Hostile State Activity, it is essential that the Intelligence Community have the legislative powers and tools they need. However, the Home Secretary was quite clear that "we don't have all the powers yet".^[1]

Counter-espionage

111. The current legislation enabling action against foreign spies is acknowledged to be weak. In particular, the Official Secrets Acts are out of date – crucially, it is not illegal to be a foreign agent in this country.^[2] The Director-General of MI5 told us that:

… there are things that compellingly we must investigate, everybody would expect us to address, where there isn't actually an obvious criminal offence because of the changing shape of the threat and that for me is fundamentally where this doesn't make sense.^[3]

112. In 2017, the Law Commission ran a consultation which considered options for updating the Official Secrets Acts and replacing them with a new 'Espionage Act'. The outcome of the consultation is still awaited. In the meantime, the Prime Minister, in March 2018, asked the Home Secretary to "consider whether there is a need for new counter-espionage powers to clamp down on the full spectrum of hostile activities of foreign agents in our country".^[4]

113. In evidence to us, the Home Secretary accepted that the Official Secrets Acts were "completely out of date".^[5] The Director-General of MI5 echoed this, saying:

The purpose of [a potential new Espionage Act] is to be able to tighten up on the powers that have become, you know, dusty and largely ineffective since the days of the Official Secrets Act, half of which was drafted for First World War days and was about sketches of naval dockyards, etc., and then there was a 1989 … addition to it, but we are left with something which makes it very hard these days to deal with some of the situations we are talking about today in the realm of the economic sphere, cyber, things that could be, you know, more to do with influence.^[6]

114. One specific issue that a new Espionage Act might address is individuals acting on behalf of a foreign power and seeking to obfuscate this link. The US, in 1938, introduced the US Foreign Agents Registration Act (FARA), which requires anyone other than accredited diplomats – including both US and non-US citizens – who represents the interests of foreign powers in a "political or quasi-political capacity" to register with the Department of Justice, disclosing their relationship with the foreign government and information about related activities and finances. Additionally, US legislation requires agents, other than diplomats, performing non-political activities under the control of foreign governments or foreign officials, to notify the Attorney General (registration under FARA serves as the requisite notification).^[7] Anyone who should have registered but who has not done so can be prosecuted and, in the case of non-US citizens, deported.

115. The UK has no equivalent legislation to FARA – which would clearly be valuable in countering Russian influence in the UK. The Director-General of MI5 explained that FARA-type legislative provisions would create:

… the basis therefore of being able to pursue under criminal means somebody not declaring, thereby being undercover. So if somebody was a Russian illegal, or something like that, today it is not an offence in any sense to be a covert agent of the Russian Intelligence Services in the UK – just to be that, to be in covert contact, to be pursuing a brief – unless you acquire damaging secrets and give them to your masters.^[8]

116. We note that new powers to stop, question, search or detain any person entering the UK gained Royal Assent in February 2019; it is not necessary for there to be suspicion of engagement in hostile activity in order to use these powers.^[9] This is a good first step, but more than a year on from the Prime Minister's commission there is still no sign of broader legislation being brought forward. The Home Secretary explained:

It is, by definition, a complex area. The Law Commission has been doing work in this area as well, quite rightly independently and they will be reporting back and I think it makes sense to take into account what they have got to say as well before we rush out some legislative proposal.^[10]

117. We recognise the need to get legislation right. Nevertheless, it is very clear that the Official Secrets Act regime is not fit for purpose and the longer this goes unrectified, the longer the Intelligence Community's hands are tied. It is essential that there is a clear commitment to bring forward new legislation to replace it (and a timetable within which it will be introduced) that can be used by MI5 to defend the UK against agents of a hostile foreign power such as Russia.

Tackling crime

118. In terms of tackling the criminal activities of Russian expatriates and those who enable such activities, Unexplained Wealth Orders came into force in January 2018 through the Criminal Finances Act 2017.^[11] These require an individual with unexplained wealth in assets over £50,000 to provide information as to the legitimacy of these assets. Failure to respond or comply with the order may lead to a presumption that the assets are recoverable property in any subsequent civil recovery proceedings before the High Court.

119. The National Crime Agency (NCA) can obtain an Unexplained Wealth Order in relation to anyone who is either a Politically Exposed Person^[12] from outside the European Economic Area (EEA), someone involved in serious crime, or an individual or entity connected to such people. The Security Minister told the Committee that Unexplained Wealth Orders were acting as a deterrent:

We know from both intelligence and open source that people are approaching financial advisers about how to get their money out of Britain as a result of these Unexplained Wealth Orders, and I think you will see them being used more going forward.^[13]

However, the Director-General of the NCA cautioned that:

… unexplained wealth does have to be unexplained and, unfortunately … Russians have been investing for a long period of time … you can track back and you can see how they will make a case in court that their wealth is not unexplained, it is very clearly explained.^[14]

As a result, it appears that Unexplained Wealth Orders may not be that useful in relation to the Russian elite. Moreover, there are practical issues around their use, as the NCA explained:

We are, bluntly, concerned about the impact on our budget, because these are wealthy people with access to the best lawyers and the case that we have had a finding on … has been through every bit of court in the land, and I've got a very good legal team based within the National Crime Agency but they had a lot of resource dedicated out of my relatively small resource envelope on that work.^[15]

120. There appear to be similar concerns in relation to sanctions. The NCA told us that sanctions have "a powerful impact" on members of the Russian elite and their professional enablers, and "provide a significant primary disruption when imposed, and also open up a range of effective secondary disruptions through sanctions evasion offences".^[16] However, the NCA also underlined that there are several ways in which the Sanctions and Anti-Money Laundering Act 2018 is too restrictive. The NCA outlined changes that it would wish to see to the legislation:

• including serious and organised crime as grounds for introducing sanctions;^[17] and

• providing for Closed Material Proceedings to protect sensitive intelligence in the granting of, and any appeal against, sanctions (the Special Immigration Appeals Commission procedures offer a useful model for this).

We note that the Foreign Secretary stated that he is "quite enthusiastic about sanctions against individuals because we are all quite sceptical that sanctions against countries have a huge effect and they often hurt the very people that you are trying to help".^[18] We agree and strongly support the NCA's suggested amendments to the legislation.

121. The one remaining area raised with us as requiring action is in relation to the Computer Misuse Act 1990. The NCA explained:

The Computer Misuse Act … is very outdated legislation. It was designed for a time when we all didn't carry six phones and computers and let alone have criminals who do the same.^[19]

The Computer Misuse Act should be updated to reflect modern use of personal electronic devices.

Protecting democracy

122. The Digital, Culture, Media and Sport (DCMS) Select Committee has already asked the Government "whether current legislation to protect the electoral process from malign interference is sufficient. Legislation should be in line with the latest technological developments". We note that physical interference in the UK's democratic processes is less likely given the use of a paper-based system – however, we support the DCMS Select Committee's calls for the Electoral Commission to be given power to "stop someone acting illegally in a campaign if they live outside the UK".^[20]

123. Separately, there is the question of influence over our democratic processes. Questions have been raised over whether electoral law is sufficiently up to date, given "the move from physical billboards to online, micro-targeted political campaigning".^[21] We note – and, again, agree with the DCMS Select Committee – that "the UK is clearly vulnerable to covert digital influence campaigns".^[22] In this respect, we have already questioned whether the Electoral Commission has sufficient powers to ensure the security of democratic processes where hostile state threats are involved; if it is to tackle foreign interference, then it must be given the necessary legislative powers.

124. We also emphasise the need to ensure that the focus is not solely on national events and bodies. It is important to include local authorities ***.^[23] We were encouraged that this issue seems to have been recognised and that action is being taken.

1. Oral evidence – Home Secretary, 31 January 2019.
2. There are four separate Acts: 1911, 1920, 1939 and 1989.
3. Oral evidence – MI5, *** February 2019.
4. Oral evidence – Home Secretary, 31 January 2019.
5. Oral evidence – Home Secretary, 31 January 2019.
6. Oral evidence – MI5, *** January 2019.
7. Title 18 of the United States Code (Crimes and Criminal Procedure), paragraph 951.
8. Oral evidence – MI5, *** January 2019.
9. The provisions in the Counter-Terrorism and Border Security Act 2019 are closely modelled on the 'Schedule 7 port stop' power under the Terrorism Act 2000.
10. Oral evidence – Home Secretary, 31 January 2019.
11. Contained in the Proceeds of Crime Act 2002, as amended by the Criminal Finances Act 2017.
12. A Politically Exposed Person (PEP) is a term used in financial regulation to denote an individual who has been entrusted with a prominent public function. In the UK, this includes any foreign person who has held at any time in the preceding year a prominent public function outside the UK in a state or international institution: ambassadors; high-ranking military officers; Members of Parliament; members of the boards of central banks and members of supreme courts. PEP status also extends to relatives and close associates.
13. Oral evidence – Security Minister, 31 January 2019.
14. Oral evidence – NCA, 24 January 2019.
15. Oral evidence – NCA, 24 January 2019.
16. Written evidence – NCA, 6 November 2018.
17. While the current sanctions regime does not encompass serious crime, it does allow for gross human rights violation as a reason for imposing sanctions on a person or entity. These provisions in the Sanctions and Anti-Money Laundering Act 2018 were introduced following the attack in Salisbury. The Proceeds of Crime Act 2002 was also amended by the Criminal Finances Act 2017 (this provision coming into force in January 2018) to expand the definition of 'unlawful conduct' to include gross human rights abuse (such that proceeds of crime, including gross human rights abuses, may be confiscated). These provisions are sometimes referred to as the UK's 'Magnitsky' legislation: the so-called US 'Magnitsky Act' was passed in 2012 in order to punish Russian officials responsible for the death of Russian tax accountant Sergei Magnitsky in a Moscow prison in 2009. This has provisions allowing the US government to act globally to freeze the assets of individual human rights offenders, and to ban them from entering the US. Since then a number of other countries, including Canada and the Baltic states, have implemented analogous legislation.
18. Oral evidence – Foreign Secretary, 7 February 2019.
19. Oral evidence – NCA, 24 January 2019.
20. DCMS Select Committee, Disinformation and 'Fake News', HC 1791, 18 February 2019.
21. DCMS Select Committee, Disinformation and 'Fake News', HC 1791, 18 February 2019.
22. DCMS Select Committee, Disinformation and 'Fake News', HC 1791, 18 February 2019.
23. Oral evidence – GCHQ, *** February 2019.

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