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Session 2000-01
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Northen Ireland Grand Committee Debates

Financial Investigations (Northern Ireland)

Northern Ireland Grand


Thursday 22 March 2001



[Mr. John McWilliam in the Chair]

Financial Investigations

(Northern Ireland) Order

The Chairman: I remind hon. Members that I have no power to restrict the length of speeches. The debate may continue until 4.30 pm. I call the Minister to move the motion.

2.30 pm

The Minister of State, Northern Ireland Office (Mr. Adam Ingram): I beg to move,

    That the Committee has considered the proposal for a draft Financial Investigations (Northern Ireland) Order 2001.

I think that most hon. Members present attended this morning's sitting of the Committee. To explain the background to this sitting, the Chairman of the Select Committee on Northern Ireland Affairs suggested that this Committee should consider the order. It is important, given the importance and the relevance of the measure, that we give it adequate consideration. I look forward to hon. Members expressing their views.

This is an important measure, which has rightly attracted much comment in Northern Ireland and has been considered in depth by the Assembly. The views of the Assembly, on which I will comment later, will assist my officials and me in finalising the content of the order, and the views expressed by this Committee will help me in similarly. I turn to the background and the purpose of the order.

In September, the then Secretary of State drew attention to the problem of organised crime in Northern Ireland. He said that although the focus of Government had rightly been concentrated on defeating terrorism, we must reach further and grip the organised crime that it has spawned. He recognised that that blight on our society is a many-sided problem which demands different answers from different agencies, united by a single purpose. The measures announced in September included the setting up of an organised crime taskforce, which my right hon. Friend asked me to chair, and important changes in legislation. This draft Order in Council represents one of those multi-agency approaches.

The troubles have left Northern Ireland with a sad legacy of organised criminality. However, dealing with that legacy is essential if Northern Ireland is to achieve the creation of a stable and truly peaceful society. The police and other agencies involved in law enforcement have done a great deal to meet that challenge and, working with professionalism, determination and skill, they have had considerable success.

However, criminals change and adapt. They are adept at seeking out new opportunities to prey on society, new ways of avoiding detection, and new ways of concealing their illegal gains. The Government recognise that there is no simple way of dealing with the problem, no single solution to the stranglehold of organised crime, so we are introducing, as part of a coherent strategy, a number of related initiatives.

One element of the Government's strategy is to pursue the proceeds of crime and to drain away the financial lifeblood of criminals. By preventing criminals from profiting from crime and by removing the profits of those who have committed crime, not only do we create a powerful deterrent to criminality, but we make it harder for organised criminals to commit further crime and sustain themselves through financing new initiatives. We also provide important reassurance to ordinary people who no longer see criminals flaunting their ill-gotten wealth. As a bonus, the money recovered can be used for the benefit of society rather than against it.

The proposals in the draft proceeds of crime Bill, which was announced by the Home Secretary on 5 March, are an essential part of the overall strategy. They follow the report of the Cabinet Office's performance and innovation unit, published last June. That report, commissioned by the Prime Minister in late 1999, showed that criminals and their associates are too often able to retain their ill-gotten gains, even if they have been successfully convicted and imprisoned. The report made a number of recommendations for change.

The draft proceeds of crime Bill, which extends to the whole of the United Kingdom, contains measures to improve the recovery of illegally obtained assets. Those include strengthened powers to confiscate assets where there has been a criminal conviction and new powers to tax criminal assets. It also contains significant new powers for the civil recovery of criminal assets—powers that can be used where it is impossible to secure a criminal conviction. The draft Bill also outlines plans to set up a criminal assets recovery agency empowered to investigate and recover property believed to be the proceeds of criminal conduct.

The structures envisaged in the Bill take special account of the needs of Northern Ireland. The Bill provides that the criminal assets recovery agency will include a senior official with special responsibility for Northern Ireland, and that the new agency's plans will specifically meet the needs of Northern Ireland. Those provisions mean that the agency will be able to co-operate fully with other enforcement bodies in Northern Ireland and work in a manner that fully takes into account the unique circumstances of Northern Ireland, including the presence of a land border and the legacy of paramilitarism.

The draft order before us is another element of the strategy to pursue the proceeds of crime. Currently, the main Northern Ireland legislation dealing with criminal finance is the Proceeds of Crime (Northern Ireland) Order 1996. That order updated and restated the law relating to the confiscation of the proceeds of drug trafficking and other serious crime. A key provision of the 1996 order, in article 49, was the introduction of additional investigative powers through the appointment of a financial investigator to assist the police in carrying out investigations into the proceeds of crime. The extensive powers of financial investigators are set out in schedule 2. Among those is the power to issue a general bank circular for the purpose of identifying accounts held by named individuals.

The powers provided in the 1996 order are in addition to the normal powers of investigation available to the police. They are used only in selected cases, following a determination of a county court judge that the appointment of a financial investigator could substantially enhance the investigation. Experience of operating the legislation has shown that it has worked well. Between August 1996 and December 2000, financial investigators were appointed in 28 cases. During that period, 23 general bank circulars were issued, resulting in the identification of more than 1,200 previously unknown accounts connected with people under investigation. However, experience has also shown that elements of the order need to be adjusted and strengthened.

Mr. William Ross (East Londonderry): The Minister says that more than 1,200 unknown accounts have been identified. Were all those accounts in Northern Ireland, were all of them in the United Kingdom or were some of them outwith the United Kingdom? If some of them were outwith the United Kingdom, how were they discovered?

Mr. Ingram: I do not have a breakdown of all of the accounts to hand, but if that can be made available, I shall write to the hon. Gentleman. He raises an interesting point, because of course accounts may be outwith the Northern Ireland jurisdiction, and an audit trail of any investigation may elicit such information. I will discover whether we can provide a breakdown of those 1,200 cases to show whether they were exclusively within the Northern Ireland jurisdiction or reached beyond it.

Having set out the success of the 1996 order, I was saying that we had identified various ways in which it could be adjusted and strengthened. The proposal for a draft order before us contains a number of practical proposals for improvement that have resulted from discussions with and between law enforcement agencies in Northern Ireland. It is a short order that makes several amendments to the 1996 order. It has four main provisions, which I shall briefly set out.

Article 3 enables Customs and Excise officers to apply for the appointment of a financial investigator to assist them with investigations into the proceeds of crime. That power is currently available only to the police. The article also permits court-authorised customs officers, like their police counterparts, to issue general circulars to financial institutions and solicitors.

Article 4 provides financial investigators with the same powers of access to material under a production order as are currently available to the police.

Article 5 effectively widens the range of financial institutions to which a general bank circular may be issued. As I have said, a general bank circular may be issued to banks, requiring them to identify accounts held by a named person. At present, the issue of such a circular is restricted to institutions involved in banking in the narrow sense, such as banks and building societies. However, as recognised in the report of the National Criminal Intelligence Service on the threat from serious and organised crime, there is a trend in money laundering away from use of banks and building societies towards greater use of securities, futures, options and insurance markets. The article is therefore designed to meet that perceived threat.

It is proposed that in future such circulars may be issued to institutions that provide a much wider range of financial and insurance services. Effectively, that means services subject to the Money Laundering Regulations 1993. That includes not only banks and building societies, but investment firms, insurance companies and others in the regulated financial sector.

Article 6 creates the power to issue a general solicitors' circular—an entirely new means of helping investigators establish the beginnings of an audit trail in the search for the proceeds of crime. In future, investigators will be able to issue a circular to all or any firms of solicitors, asking them to identify whether they have acted for a named client on certain matters that relate mostly to property and assets. When a person is identified as a client, the solicitor will be obliged to provide information about him, including the nature of the transaction in which the solicitor acted. The solicitor must say whether the transaction involved land, a business and so on.

That power will be especially helpful in tracing land transactions in the unique circumstances of Northern Ireland. Not only are there two systems for registration of land in Northern Ireland, but the registration of title is not at present generally compulsory. Moreover, any inquiry regarding ownership of land can be made only by reference to the property, rather than to the owner.

Article 7 introduces an exception to the standard period in which a prosecution of a summary offence should be brought. At present, the period is six months after the offence was committed. The exception is in relation to summary proceedings for an offence of failing to provide information, or of falsifying it. For such proceedings, the time limit for prosecutions will be three months from the date on which sufficient evidence to prosecute becomes available, or 12 months from the commission of the offence, whichever is later. It is often some time after a financial crime has been committed before the offence is discovered, such as when it comes to light through the examination of accounts.

On 21 November, the then Secretary of State laid the proposals before Parliament. He also referred them to the Northern Ireland Assembly for consideration, and launched a public consultation exercise. The Assembly has dealt with the issue in depth, having taken evidence from a wide range of key organisations with an interest, including the Royal Ulster Constabulary, the Law Society of Northern Ireland, the Northern Ireland Bankers Association, the Northern Ireland Human Rights Commission and the committee on the administration of justice. That evidence helped the Assembly's understanding of the extent and nature of the order, and we have received representations from those bodies as well. Our consideration of the order has been helped by the way in which the Assembly dealt with it.


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