Brokering (Weapons and Related Items) Controls Bill

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Brokering (Weapons and Related Items) Controls Bill

Government Bill

280—1

Explanatory note

General policy statement

This Bill establishes a regime to regulate the brokering of weapons and related items by New Zealanders and New Zealand entities.

Brokering involves negotiating, arranging or facilitating the international movement of arms and military equipment from one foreign country to another foreign country. It does not include imports, exports or internal movements of arms and military equipment within New Zealand, which are already regulated by the Arms Act 1983 and by the exports control regime under the Customs and Excise Act 1996. Weapons and related items covered are arms, military equipment, and civilian goods that may have a military end-use (dual-use goods) included on New Zealand’s strategic goods list. The purpose of the Bill is to prevent New Zealanders and New Zealand entities from engaging in brokering where there is a risk of the movement of weapons or related items to illegitimate users or undesirable destinations.

The Bill will require all New Zealanders and New Zealand entities wishing to engage in brokering to register with the Secretary of Foreign Affairs and Trade (the Secretary) and obtain a permit for each brokering activity. The Secretary may grant permits if satisfied that the activity is consistent with New Zealand’s international obligations and would not prejudice the security, defence, or international relations of New Zealand. The Secretary may impose conditions on the broker’s registration or permit, for example, to ensure that the transaction is consistent with New Zealand’s international obligations.

The regime will have extraterritorial effect and apply to New Zealanders and New Zealand entities operating abroad, given the globalised economy and the cross-border nature of brokering.

The Bill creates offences for engaging in conduct that contravenes its requirements, including engaging in brokering without being registered as a broker and having a permit, breaching the conditions of the registration or permit, failing to keep or produce records or to answer questions, and providing false or misleading information in connection with a registration or permit.

The Bill will support New Zealand’s commitments under the Arms Trade Treaty, which New Zealand ratified in 2014, and which requires all States Parties to take measures to regulate brokering taking place within their jurisdiction for conventional arms.

Departmental disclosure statement

The Ministry of Foreign Affairs and Trade is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact statement

The Ministry of Foreign Affairs and Trade produced a regulatory impact statement on 14 May 2015 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 provides that certain provisions of the Bill (including those provisions that relate to registration of brokers and permits for brokering activity) come into force on the day after the Bill receives the Royal assent. Most of the provisions of the Bill come into force 120 days later. This staggered commencement will enable persons whose activities will be regulated under the Bill to become registered and to obtain permits for brokering activity before the rest of the Bill comes into force.

Part 1Preliminary provisions

Clause 3 provides that the purpose of the Bill is to—

  • regulate the brokering of weapons and related items; and

  • support New Zealand’s commitments under the Arms Trade Treaty.

Clause 4 is the interpretation clause. Clause 4(1) defines several terms used in the Bill. In particular, clause 4(1) defines—

  • weapon or related item as meaning any goods that are specified in the strategic goods list. The strategic goods list is a list of weapons and related items that is maintained for the purpose of export controls under the Customs and Excise Act 1996:

  • dual-use goods as meaning goods that may have a civilian use but that are intended for military end-use or that may have a military application and that fall within a specified category of the strategic goods list. (A person who carries out brokering activity in relation to dual-use goods may come within an exception to the prohibition on carrying out a brokering activity without being registered as a broker and having a permit for the activity.)

Clause 4(2) provides for the Secretary to specify, by notice in the Gazette after consultation with the Minister, categories or parts of the strategic goods list for the purpose of the definitions of dual-use goods and military end-use. The reason that clause 4(2) provides for a Gazette notice to specify the relevant categories of the list for the purposes of those definitions is because the strategic goods list is subject to regular review. If the categories were specified in the Bill itself, the resulting Act may have to be amended each time the strategic goods list is amended.

Clause 5(a) provides that brokering activity means arranging, facilitating, or negotiating a transaction that involves the international transfer of weapons or related items from a place outside of New Zealand to another place outside of New Zealand. For example, a person in New Zealand who sells weapons or related items that are located in a foreign country for delivery to a person in another foreign country would be carrying out brokering activity.

Clause 5(b) provides that a person who acts as an agent for a person involved in the transaction or who acts as an intermediary between 2 or more persons involved in the transaction would be carrying out brokering activity, as would a person who acquires or stores weapons or related items in a place outside of New Zealand for the purposes of such a transaction.

Clause 5(c) provides that services that are merely ancillary to brokering activity are not included in the definition of brokering activity. Clause 5(c) contains some examples of services that are merely ancillary.

Clause 6 defines equivalent overseas regime. An equivalent overseas regime is an overseas regime that regulates brokering activity or that imposes export controls in relation to weapons or related items and that the Secretary is satisfied is—

  • substantially the same as the regime under the Bill; or

  • sufficiently equivalent, in relation to the regulation of brokering activity in accordance with the Arms Trade Treaty, to the regime under the Bill.

The definition is relevant to an exception to the prohibition on carrying out a brokering activity without being registered as a broker and having a permit for the activity. A person who is located overseas and who complies with an equivalent overseas regime may come within the exception.

Clause 7 and Schedule 1 provide for transitional, savings, and related provisions. (There are no such provisions at the time of the Bill’s introduction but if the Bill is amended in the future, any transitional, savings, and related provisions relating to the amendments will be located in Schedule 1.)

Clause 8 provides that the Bill binds the Crown.

Part 2Brokering activity, registration, and permits

Subpart 1—Main requirements and offences relating to brokering activity

Clause 9(1) provides that a person must not carry out a brokering activity unless the person is registered as a broker and has a permit for the activity.

Clause 9(2) to 9(4) sets out various exceptions to clause 9(1). The prohibition in clause 9(1) does not apply—

  • to a person who carries out a brokering activity in relation to a weapon or related item that is dual-use goods and who, at the time the person carries out the brokering activity, does not know (and cannot reasonably be expected to know) that the dual-use goods will or may be used for a prohibited use (clause 9(2)):

  • to a person who carries out a brokering activity from a place outside of New Zealand and complies with an equivalent overseas regime (clause 9(3)):

  • to anything done by a person, as an employee, for the person’s employer or by a department or by a person on behalf of a department (clause 9(4)).

Clause 10 provides that it is an offence to carry out a brokering activity in breach of clause 9 (that is, without being registered as a broker or without a permit for the activity in any case that does not come within an exception described in clause 9(2), (3), or (4)) if, at the time the person carries out the activity, the person knows or ought to know that the person needs to be registered and have a permit.

The penalty for the offence is, in the case of an individual, a term of imprisonment not exceeding 5 years or a fine not exceeding $100,000 (or both) and, in any other case, a fine not exceeding $1 million. If a court is satisfied that the offence occurred in the course of producing a commercial gain, and if the amount of the gain can be readily ascertained, the maximum amount of the fine is 3 times the value of that commercial gain (but only if that figure is higher than $100,000, in the case of an individual, or higher than $1 million, in any other case).

Clause 11 provides that a broker must comply with any conditions of the broker’s registration and any conditions of a permit held by the broker.

Clause 12 provides that it is an offence for a broker to knowingly or recklessly carry out any brokering activity in breach of clause 11.

The penalty for the offence is, in the case of an individual, a term of imprisonment not exceeding 5 years or a fine not exceeding $100,000 (or both) and, in any other case, a fine not exceeding $1 million. If a court is satisfied that the offence occurred in the course of producing a commercial gain, and if the amount of the gain can be readily ascertained, the maximum amount of the fine is 3 times the value of that commercial gain (but only if that figure is higher than $100,000, in the case of an individual, or higher than $1 million, in any other case).

Clause 13 provides that it is an offence for a broker to, without reasonable excuse and other than in the course of carrying out a brokering activity, breach clause 11. The penalty for the offence is, in the case of an individual, a term of imprisonment not exceeding 6 months or a fine not exceeding $10,000 (or both) and, in any other case, a fine not exceeding $20,000.

Subpart 2—Registration of brokers

Subpart 2 of Part 2 provides for the registration of brokers as follows:

  • applications for registration are made to the Secretary of Foreign Affairs and Trade (the Secretary) (clause 14):

  • the Secretary may register a person as a broker only if the Secretary is satisfied that the person is a fit and proper person (clause 15):

  • if the Secretary refuses to register a person as a broker, the Secretary must give the person notice of the refusal (clause 16):

  • the Secretary must enter details of every broker on a public register (clause 17):

  • the Secretary may impose conditions on a broker’s registration (clause 18):

  • a broker’s registration lasts a maximum of 3 years (although it can be renewed for periods of up to 3 years at a time) (clause 19):

  • a broker’s registration can be cancelled by the Secretary (if the Secretary is no longer satisfied that the broker is a fit and proper person) or surrendered by the broker and, if the registration is cancelled or surrendered, any permits held by the broker are automatically cancelled (clause 20).

Obligation to keep and produce records and to answer questions

Clause 21 obliges brokers to keep prescribed records for 5 years and, when required by the Secretary or a constable, to make the records available, to provide copies of the records, and to answer any questions in respect of the records.

Clause 22 provides that it is an offence to, without reasonable excuse, fail to comply with clause 21. The penalty for the offence is, in the case of an individual, a term of imprisonment not exceeding 6 months or a fine not exceeding $10,000 (or both) and, in any other case, a fine not exceeding $20,000.

Subpart 3—Permits for brokering activity

Subpart 3 of Part 2 provides for permits for brokering activity as follows:

  • applications for permits are made to the Secretary (clause 23):

  • the Secretary may give a broker a permit for a brokering activity if, having had regard to criteria prescribed under regulations and to any other matters that the Secretary considers appropriate, the Secretary is satisfied that the activity—

    • is consistent with New Zealand’s international obligations (for example, the activity does not breach any measures adopted by the United Nations Security Council); and

    • would not prejudice the security, defence, or international relations of New Zealand (clause 24):

  • if the Secretary refuses to give a broker a permit, the Secretary must give the broker notice of the refusal (clause 25):

  • a permit must specify a period, not longer than 3 years, for which the permit is valid (clause 26):

  • the Secretary may impose conditions on a permit (clause 27):

  • the Secretary may cancel a permit if no longer satisfied of the matters set out in clause 24 (clause 28).

Subpart 4—Civil enforcement

Subpart 4 of Part 2 provides for the Attorney-General to take certain steps in relation to a breach or a potential breach of any of the prohibitions and requirements imposed by the Bill. The subpart applies to a person if the person has breached clause 9, 11, 21, or 36(1) or there are reasonable grounds to believe that the person is likely to breach any of those clauses.

Clause 30 provides that the Attorney-General may seek an enforceable undertaking from a person in connection with the person’s compliance with any of those provisions.

Clause 31 provides that, if the Attorney-General considers that a person who gave the enforceable undertaking has breached the undertaking, the Attorney-General may apply to the court for—

  • an order directing the person to comply with any of the terms of the undertaking:

  • an order directing the person to pay to the Crown an amount up to the amount of any financial benefit that the person has obtained directly or indirectly from, and that is reasonably attributable to, the breach:

  • any order that the court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach.

Clause 32 provides that the court may grant an injunction restraining a person from breaching clause 9, 11, 21, or 36(1).

Part 3Miscellaneous provisions

Extraterritorial application

Clause 33 sets out the extraterritorial jurisdiction for offences under the Bill. This clause mirrors section 7A of the Crimes Act 1961.

Attorney-General’s consent

Clause 34 provides that the Attorney-General must consent to any prosecution under the Bill. This is often the position for legislation that has an international dimension.

Applications for registration and permits

Clause 35 provides for matters relating to applications for registration as a broker or for a permit.

Clause 36 provides that a person must not, in relation to an application for registration or a permit, supply any information that the person knows or ought to know is materially false or misleading. A person who does so commits an offence. The penalty for the offence is, in the case of an individual, a term of imprisonment not exceeding 6 months or a fine not exceeding $10,000 (or both) and, in any other case, a fine not exceeding $20,000.

Appeals against decisions about registration and permits

Clause 37 provides for a person who has applied for registration as a broker or been registered as a broker, or who has applied for a permit or been given a permit, to appeal to the District Court against certain decisions by the Secretary.

Regulations and further miscellaneous provisions

Clause 38 provides for regulation-making powers.

Clause 39 enables the Secretary to disclose any information held by the Secretary to an overseas authority for the purpose of assisting the authority to carry out its functions related to, or involving,—

  • the regulation or monitoring of brokering activity:

  • the prevention, detection, investigation, prosecution, or punishment of offences that are, or if committed in New Zealand would be, offences under the Bill.

Clause 40 provides for the Secretary to keep and maintain a register of brokers on the Internet.

Clause 41 makes a consequential amendment to the Privacy Act 1993 to make the register of brokers a public register under that Act. This has the effect of applying the public register privacy principles set out in section 59 of that Act. Those principles govern the way in which personal information on public registers may be made available, among other things.