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Mr. Davidson: I very much welcome that sign of adjustment from the Conservatives. They were giving the impression that they were in favour of minimising the penalties. I am reminded of prostitutes in Glasgow who consider fines a business expense. I can envisage lawyers, accountants and others regarding a small fine of £5,000 as simply a business expense, so the penalty needs to be a great deal higher. No doubt accountants would write it off against tax.
I now turn to credit unions and the like. The idea that someone would come into a credit union with a plastic bag containing £500,000 and say, "I would like to lodge this." and the people at the credit union would not think, "There's something a trifle peculiar going on here", leaves me cold. I take a similar view of the excuse that has often been mentioned of the baby crying.
Vera Baird: It is surely my hon. Friend who has talked not only about getting the Mr. Bigs, but about taking the heat out of the drugs industry and other evils at whatever level it occurs. No one was seriously suggesting high-level trade through a credit union, but the money that goes through credit unions in Redcar represents people's maximum savings and can equally represent big gains from drugs. The people who work in credit unions are subject to the same rules as the high fliers whom my hon. Friend detests so much and he will know that there are credit unions in Pollok, too.
Mr. Davidson: Indeed there are, and I can tell my hon. Friend that if a Nigerian chief turned up with an address in Arden and a plastic bag with £2,000, never mind £2 billion, they would immediately be suspicious. So I have no qualms about the way in which the provision will apply to credit unions.
We asked earlier how we could discover what went through people's minds when all these transactions were taking place. I have a pretty good idea of what is in the minds of accountants, lawyers, bankers and others who handle these ill-gotten gains. It is money, money, money. They do it for the money. We should be in no doubt whatsoever about it. We would be much better served in the Houseand we would have been in Committeeif the Conservatives were prepared to accept that some people involved in those industries are corrupt, dishonest and guilty of offences. Instead, the Conservatives adopted the stonewall defence of trying to pretend that the problem did not exist.
I am glad to hear that the hon. Member for Beaconsfield (Mr. Grieve)I apologise to him if I have misunderstood himis in favour of collaborators of crime going to prison for substantial periods if they are caught. That is his position, as I understand it. Perhaps he is not quite as soft on crime as I previously understood him to be.
I was struck by the point made by the hon. Member for Spelthorne (Mr. Wilshire), who is no longer in his place, that if the regime were made too tough, people would launder their money elsewhere. That seemed to be his general point. In those circumstances, we have two alternatives. The first is to reduce our standards so as to attract such trade; the second, more reputable, option is to try to raise standards elsewhere in the world. The fact that the introduction of the highest possible standards might lose us some business is no reason whatever for allowing our standards to be watered down.
I accept the point made by the hon. Member for Beaconsfield (Mr. Grieve) that the amendments might not be perfectly drafted and that they are meant to be read as a whole. I do not want to descend into any nit-picking arguments about that; rather, I want to address the major issue that he has brought to the House, which we also discussed at great length in the Standing Committee.
The effect of the amendments taken together would be to split the failure to disclose offence into two separate offences. There would be different tests for each offence and a lower penalty for someone charged with having "reasonable grounds" to know or suspectbut not with actually knowing or suspectingthat money laundering was going on and thus needed to be disclosed.
The negligence test is one of the key proposals in the Bill. It reflects the Government's commitment to strong anti-money-laundering measures across the United Kingdom. Such measures, including the new negligence test, are fully justified against the background of several money-laundering cases that have taken place in the City and which were not reported to law enforcement. It is in the interests of the City and its financial reputation that we demand the highest standards of diligence.
In Committee, I gave a commitment that I would look again into the drafting to see whether there was any merit in having two different offencesthe issue that the hon. Member for Beaconsfield has raised again today. I considered the matter at great length with officials in the Department, but I remain of the opinion that the negligence test would be most effective in a single offence, as currently drafted.
An abundance of legal ability was available to me from members of the Committee. Some hon. Members suggested that the handling of the indictment could be strange and difficult. However, it has been explained to me that the indictment can be handled even if the offence contains all three mens rea elements of knowing, suspecting and having reasonable grounds to suspect. Everything that has been said in the debate confirms my belief that the indictment can be dealt with in that way.
An indictment may contain only one offence or more than one mental element. There is no difficulty in specifying both in the indictment. There are precedents elsewhere, as the hon. Gentleman knows better than me.
The standard indictment for rape is that the defendant knew that the victim did not consent, or was reckless as to whether she did. In criminal damage, the indictment states that the defendant damaged property criminally with intent, or was reckless as to whether it would be damaged. The same situation applies in various circumstances. Courts and prosecuting agencies are able to deal with them in drawing up indictments.
Vera Baird: I am concerned about the analogy with rape. Does my hon. Friend not agree that the same level of criminality is probably involved when a man rapes a woman recklessly and does not give a damn about whether she says yes or no, and when a man rapes a woman knowing that she has not said yes? It would therefore be perfectly straightforward to charge the cases as alternative states of mind. We are talking in the Bill about two levels of criminality. Is it not difficult to see how a jury could inform a judge about the level of criminality of which it had found a person guilty?
I shall move on to how the matter will be dealt with in sentencing. As I said, the indictment could be particularised, or it could state that the defendant knew or suspected, or had reasonable grounds to know or suspect.
The key argument against splitting the offence is that the prosecution would then have to decide whether to risk basing an indictment on knowledge, or suspicion. That is the problem with the current regimeit is very difficult to prove subjective knowledge. It is highly likely that prosecutors would go for the lesser offence if the proposed single offence were split, as the offence containing the subjective tests would be used only rarely, if at all.
Mr. Grieve: I confess that I do not see that. The new clause is drafted in a way that allows indictments to include alternative counts. For instance, a prosecutor may say to a jury, "Our view is that the accused acted wilfully. However, if you conclude that he did not act wilfully, we shall say that the evidence is that he acted negligently." So I simply do not see the problem with having two separate offences. Both can appear as two counts on the same indictment.