Part 6: Amendments of Or Relating to the Terrorism Acts Commentary on Sections Section 42: Insurance against payments made in response to terrorist demands
220.Subsection (1) makes it an offence under the Terrorism Act 2000 for an insurer under an insurance contract to make a payment to an insured party where the insurer knows, or has reasonable cause to suspect, that the payment is made in respect of money or property that has been, or is to be, handed over in response to a demand made wholly or partly for the purposes of terrorism. “Terrorism” in these circumstances is defined in section 1(1) of the Terrorism Act 2000, as use or threat of action designed to influence the Government or to intimidate the public or a section of the public; and is done for the purpose of advancing a political, religious, racial or ideological cause.
221.“Insurance contract” is defined for the purposes of the offence and includes reinsurance. The definition follows that contained in International Financial Reporting Standard (IFRS) 4. IFRS is a single set of accounting standards, developed and maintained by the International Accounting Standards Board with the intention of those standards being capable of being applied on a globally consistent basis—by developed, emerging and developing economies. Consequently, IFRS 4 contains an industry accepted definition of “insurance contract” and extends to reinsurance contracts.
222.Liability for this offence arises in the case of a body corporate, where knowledge or suspicion is attributable either to the directing minds of the body corporate or to the person who authorised the payment. Additionally, individual liability arises in respect of any individual who aids and abets an offence by a body corporate, or in the case of senior officers, where they have consented to or connived in the offence, or the offence is attributable to any neglect on their part.
223.Section 63 of the Terrorism Act 2000 applies to this offence, which means that the offence will have extra-territorial application in the same way that the terrorist finance offences at sections 15 to 18 more generally have extra-territorial application. Consequently, arrangements made to conduct financial transactions outside the UK are liable to be caught.
224.If a person is found guilty of the offence and convicted on indictment the penalty is a prison term to a maximum of 14 years and/or a fine. If found guilty on summary conviction, the penalty is a prison term to a maximum of 6 months and/or a fine.
225.Subsection (2) provides that where a person is convicted of this new offence the court may order the forfeiture of the amount reimbursed by the insurer to the insured (as part of the contract between them). This subsection amends section 23 of the Terrorism Act 2000.
226.Subsection (3) provides that the offence will apply in respect of insurance contracts that had been entered into prior to Royal Assent. It also applies in respect of money (such as ransom payments) or other property that had been handed over before Royal Assent, subject to the proviso that it does not apply in relation to a ransom made before 27 November 2014, when the intention to legislate to this effect was announced publicly (subsection (4)).