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Following is the English translation of the speech by the Secretary for Security, Mrs Regina Ip, in moving the Second Reading of the United Nations (Anti-Terrorism Measures) Bill in the Legislative Council today (April 17):

President,

I move that the United Nations (Anti-Terrorism Measures) Bill be read the second time.

The Bill seeks to implement, through a minimalist approach, resolution 1373 of the United Nations Security Council, which was passed on September 28, 2001, and certain recommendations of the Financial Action Task Force on Money Laundering (FATF).

UNSCR 1373 aims at combating international terrorism on various fronts, including the adoption of effective measures against terrorist financing. It requires, amongst other things, the prevention and suppression of terrorist financing, and criminalizing direct, indirect and wilful provision or collection of funds for terrorist acts and freezing of terrorist assets. By virtue of Chapter VII of the Charter of the United Nations, UNSCR 1373 is binding on all Member States. In accordance with Articles 13(1) and 48(8) of the Basic Law, the Central People's Government gave instructions to the Hong Kong Special Administrative Region in October 2001 to implement the resolution.

Hong Kong has been an active member of the FATF, and is also the incumbent President of this international body specializing in recommending standards and best practices in countering money laundering. Following the September 11, 2001 attacks in the United States, the FATF expanded its mission to cover terrorist financing and made eight wide-ranging Special Recommendations to tackle the issue. Such Recommendations overlap to a certain extent with UNSCR 1373. FATF members are expected to implement the Special Recommendations by mid-2002.

Hong Kong's existing laws and administrative arrangements can already effectively deal with most activities typically associated with terrorists, such as kidnapping, murder, unlawful use of explosives causing injury to life and damage to property, etc. UNSCR 1373 and the FATF Special Recommendations however deal principally with the financing of terrorism and new legislative measures will be required in this regard. We intend to adopt a two-staged approach to implement the relevant requirements. In stage one, the mandatory elements of UNSCR 1373 as set out in its paragraphs l(a), (b), (c), (d) and 2(a) and Recommendations II, III and IV of the FATF Special Recommendations will be implemented. In stage two, Security Bureau will conduct further research into legislative amendments or proposals to implement the other non-mandatory elements of the resolution, to apply in HKSAR other international conventions against terrorism, e.g., the International Convention for the Suppression of Terrorist Bombings and the International Convention for the Suppression of the Financing of Terrorism, and to give full effect to the FATF's Special Recommendations.

President, as I have explained earlier, we are adopting a minimalist approach in implementing UNSCR 1373 and the special recommendations of the FATF against the financing of terrorism.

We have to strike a balance between protecting personal freedoms and human rights and ensuring public safety. Any increase in enforcement powers must be strictly in accordance to the need to ensure public safety. Hong Kong has always been one of the safest cities in the world, and has traditionally not been the subject to threats of terrorism. This is the reason why we have not followed the anti-terrorism laws of many major jurisdictions in seeking to extensively increase enforcement and investigative powers such as interception of communications or detention. The powers to seize and detain suspected terrorist property in the Bill are no more stringent than what is already provided under the Dangerous Drugs Ordinance and the Drug Trafficking (Recovery of Proceeds) Ordinance.

The most important clause in the Bill is the definition of terrorist act. This definition is based on the definition of terrorism under the United Kingdom Terrorism (United Nations Measures) Order 2001. The definition follows the international trend by requiring that to constitute a "terrorist act" there must be the use or threat of action to influence a government or intimidate the public, and that the use or threat be for the purpose of advancing a political, religious or ideological cause. In addition to these two criteria, the action must also involve serious violence, serious damage to property or serious risk to public health or safety, etc. Our definition is similar to those adopted in other major common law jurisdictions.

The Bill also empowers the Chief Executive to specify in the Gazette that a person or property is a terrorist, terrorist associate or terrorist property when he has reasonable grounds to believe so. In order to maintain transparency and facilitate compliance with provisions of the Bill, lists of terrorists, terrorist associates or terrorist property which have been specified in the Gazette will be made available to the public. The Secretary for Security will be empowered to direct the holders of funds not to make those funds available to any person when she has reasonable grounds to suspect that the funds are terrorist property. These measures are essential in ensuring that the enforcement agencies are able to deal with terrorist activities effectively and expeditiously, especially in the freezing of terrorist funds to minimise the chance that they could be withdrawn or transferred.

In order to comply with UNSCR 1373 and the FATF Special Recommendations, the Bill stipulates that it shall be an offence for anyone to collect funds with the intention that the funds be used to carry out terrorist acts, and prohibits making funds, financial assets or economic resources or financial services available to terrorists. The Bill also prohibits the supply of weapons to terrorists, and bans the recruitment of persons to serve with bodies which have been specified by the Chief Executive as terrorists or terrorist associates.

President, the LegCo Panel on Security had earlier expressed its concern on the proposed powers for the CE to specify terrorists and for S for S to freeze terrorist funds. I would like to reiterate the need to enable the enforcement agencies to take timely action against terrorist activities, including the use of effective administrative measures.

The Bill provides effective measures to prevent the abuse or wrongful use of enforcement powers. Any person affected by the Chief Executive's specifications or directions by the Secretary for Security to freeze terrorist property may apply to the Court of First Instance to have the specifications or directions revoked.

We have also included in the Bill additional safeguards for such applications, by requiring the Chief Executive or the Secretary for Security to bear the burden of proof in proceedings in the Court of First Instance. We consider that the Bill is in full compliance with the International Covenant on Civil and Political Rights, effectively protecting the rights and interests of affected parties, and preventing the abuse of enforcement powers. All specifications regarding terrorists, terrorist associates or terrorist property will lapse after three years.

President, enforcing against the financing of terrorism is complex, as the funds may be derived from both criminal activities or legitimate sources. The fight against international financing of terrorism depends not only on effective policing by the enforcement and supervisory bodies, we are also heavily reliant on the cooperation and support of financial institutions.

Hong Kong, being an international financial centre, has in place comprehensive anti-money laundering laws. In combatting the financing of terrorism, the reporting by financial institutions of suspicious movement of terrorist funds is an indispensable part in any effective enforcement regime.

We consider it imperative that our laws against terrorist financing should at least follow the best international standards on anti-money laundering measures. The Bill requires that financial institutions and relevant bodies should report transactions if they "know or have reasonable grounds to suspect" that the funds are linked to, used, or intended for terrorist acts. The mental element of "having reasonable grounds to suspect" complements one of the FATF's special recommendations against terrorist financing.

Moreover, as hoaxes of terrorist attacks are likely to cause panic and confusion in densely-populated Hong Kong, the Bill therefore provides that it shall be an offence for anyone to communicate any information that he knows or believes is false, with the intention of inducing in any other person a false belief that a terrorist act has been, or will be, carried out.

Hong Kong is a responsible member of the international community, and is obliged to implement the requirements of UNSCR 1373 and the FATF's special recommendations. I hope that Members could quickly complete the scrutiny of the Bill and enact it.

Thank you President.

End/Wednesday, April 17, 2002

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