(1) The Secretary of State may not designate a person under regulation 5 (power to designate persons) unless the Secretary of State -

(a) has reasonable grounds to suspect that that person is an involved person, and

(b) considers that the designation of that person is appropriate, having regard to -

(i) the purposes stated in regulation 4 (purposes), and

(ii) the likely significant effects of the designation on that person (as they appear to the Secretary of State to be on the basis of the information that the Secretary of State has).

(2) In this regulation an "involved person" means a person who -

(a) is or has been involved in -

(i) the commission of a serious human rights violation or abuse in Nicaragua,

(ii) the repression of civil society or democratic opposition in Nicaragua, or

(iii) other actions, policies or activities which undermine democracy or the rule of law in Nicaragua,

(b) is owned or controlled directly or indirectly (within the meaning of regulation 7) by a person who is or has been so involved,