Proceeds of Crime Bill

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Mr. Stinchcombe: Will the Minister answer the question that I asked him earlier: how could someone disclose information if he did not know or suspect it to exist? If he cannot disclose information, as he has no knowledge or suspicion of it, why is it not reasonable for him not to disclose it?

Mr. Ainsworth: If that person does not know anything, he cannot disclose anything. However, what if someone has guidance on how he should do his job and on the vigilance that he should apply, but he ignores that guidance and so fails to notice and report a suspicious transaction? Are we saying that we should accept that he has a defence, and that under no circumstances can he be prosecuted? I should think that, as guidance had been issued, a level of conduct is to be reasonably expected of him because he works in the financial sector. It should be no defence that he did not follow the guidance and failed to report money laundering when he should reasonably have suspected that it was occurring. The authorities should be able to consider whether to prosecute such a person.

Mr. Stinchcombe: I am obliged to the Minister for that helpful answer. I appreciate the force of his arguments in favour of creating an offence of negligence. I am worried about creating two offences within a single clause: one of knowledge and suspicion and one of negligence. Both offences require that three conditions are satisfied, but under the second offence, the third condition can never be satisfied.

Mr. Ainsworth: I am not sure of the point that my hon. Friend is making, but if he is worried, let us continue with the debate. We are saying that people working in that sector should potentially be subject to prosecution if they should have had reasonable grounds to suspect a suspicious transaction and fail to report it. If an employer fails to provide proper notice to employees of the guidance under which they were reporting, that employer is guilty. In such a case, the standards of the employer would need to be raised. However, when it is clear that an employee operated outwith that guidance, the prosecution should be able to bring a case against him.

If a person can show that he neither knew nor suspected that a transaction involved money laundering and that he was operating within his understanding of the guidance, that would be a defence. In all probability, that would deter the prosecution from making a case against that person, and instead the person who was responsible for that front-line employee's lack of knowledge might be pursued. My hon. Friend is saying that that is unreasonable, and that we should not expect people to apply themselves in that way.

Mr. Stinchcombe: I am not saying that. The Minister may have a good case for creating an offence of negligence. My point is that two separate offences should be created under two separate provisions: that of knowledge or suspicion and that

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of negligence. Including the offence of negligence under the same provision requires satisfying a third condition that can never be satisfied.

Mr. Ainsworth: Is this to do with the way that the Bill is drafted?

Mr. Stinchcombe: It is a drafting point.

Mr. Ainsworth: Right. I understand that my hon. Friend believes that the provision could be made clearer if it was drafted in another way.

Mr. Stinchcombe: The third condition deals with a person who has not disclosed information. A person can never disclose that information if he does not know of, or suspect, its existence. The provision makes sense only if a person's lack of knowledge or suspicion does not amount a reasonable excuse under subsection (5)(a). It strikes me that, ordinarily, such lack of knowledge or suspicion would be a reasonable excuse not to say something.

Mr. Ainsworth: I am more than happy to look at whether the provision can be drafted in a way that makes it clearer, and I give my hon. Friend a commitment that I will look into that matter.

Mr. Field: Dare I say that the hon. Member for Wellingborough (Mr. Stinchcombe) has hit the nail on the head? That shows the draconian nature of the provisions. I presume that the Government's intention under subsection (5) is that a person who has no knowledge or suspicion about a particular case of money laundering, but who could reasonably be expected to know about it, would be perceived as not having a reasonable excuse for not making the disclosure. That is absolute nonsense in any normal use of the English language. However, it is evident that the Government intend that not knowing will not be accepted as a reasonable excuse for not disclosing.

Mr. Ainsworth: I am not trying to be obscure, and I do not believe that the hon. Gentleman is making the same point as my hon. Friend. If he is, no doubt he will clarify that matter. Let me explain the provision, and I am sorry if the hon. Gentleman thinks it draconian.

We are not advancing the proposition that not suspecting is a reasonable defence. A negligence test should be applied to the regulated sector. It would be possible for a prosecution to be brought against someone whereby it was said that it was reasonable to suspect money laundering and that the particular individual should have known. He should not have an automatic defence of saying, ''But I didn't suspect.'' We do not accept that such a statement should be a defence. There should be a negligence test that requires people to be trained in the appropriate measures and to be mindful of the guidance in how they undertake their job. When there are reasonable grounds to suspect that a particular transaction involves criminality, they are potentially at risk of breaking the law if they do not disclose it.

Vera Baird: I am anxious to receive some information so that I can fully understand the clause. The Minister has accepted that there will not be a defence under subsection (2)(b) that the person did not know. Those involved might not know or suspect, but

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they would still be guilty. It would not be a reasonable excuse that they did not know. It was almost suggested that the defence under subsection (5) could be used if a person followed the guidance referred to under subsection (6). However, a person may have followed the guidance but, because of carelessness or a preoccupation, still failed to see what was happening. Following guidance is not a defence: it is only practice to be taken into account.

Mr. Ainsworth: It is not an absolute defence—that is right—but the factor to be taken into account in the defence is if the person said that, in doing his job, he was mindful of the guidance and applied it. I accept that it would not defend the person in all circumstances. The provision is worded as it is intentionally.

Stephen Hesford (Wirral, West): With respect to my hon. Friend the Member for Wellingborough, I think that he has misunderstood subsection (4). He said that the third condition could not be satisfied if the person did not know about the money laundering. The person will have the physical information, but the fact that he did not realise that such information conveyed something in particular is not relevant. He should have realised what it meant, so he will have the information that he should have disclosed. It is not as though the person would never have had the information, but he may not have realised that he had it, so he will be prosecuted for that failing.

Mr. Ainsworth: Potentially, I am in trouble. Lawyers are at every corner. They are about to start arguing.

Mr. Hawkins: Will the Minister give way?

Mr. Ainsworth: No, I will not give way. I am not so sure that my hon. Friend the Member for Wirral, West (Stephen Hesford) can dismiss the argument of my hon. Friend the Member for Wellingborough. Of course, the person will have a lot of information in front of him. It will mainly be about financial transactions that are about to happen. The matter is about whether he should have identified and reported a suspicious transaction.

Mr. Stinchcombe: The infelicity of my argument was when I said, ''can never be satisfied.'' I meant, ''will inevitably be satisfied.'' The person can never disclose the information because he does not realise its importance or significance. That is my point, but I used the wrong word.

Mr. Ainsworth: The person obviously has the information passing through him. The question is whether he identifies that information and reports it as suspicious in the way in which we expect.

12.30 pm

Mr. Ian Davidson (Glasgow, Pollok): I hope that the Minister will not be too soft on this matter and will not be tempted to make unnecessary concessions. I hope that he will remember that enormous sums may be involved in these crimes, and many ingenious minds will look for loopholes in order to avoid prosecution and punishment. I hope that he will not accommodate

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some members of the Committee by making concessions that would make criminals with white collars more likely to avoid prosecution.

Mr. Ainsworth: I do not disagree with my hon. Friend. That is the precise dilemma with which the Committee must wrestle and with which I have wrestled for the past few months. Not only lawyers—I do not say that because of my hon. Friend's huge prejudice against lawyers as a breed—have made representations about the matter. All financial institutions have raised concerns, as have some trade unions that represent the institutions' staff. We should think seriously before we put people in these potential situations, but we have little choice but to do that if we want standards to be raised to the level that we want. As I said, companies are already under an obligation to train their staff and bring them up to requirements. Some companies have done that admirably, while others have not.

Should we be happy to stay broadly as we are and hope that other measures will be effective in reducing the problems of money laundering and associated organised crime? Alternatively, do we need a real change in the standards that apply? We must wrestle with that problem and consider whether the powers will be justified.

 
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