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Standing Committee B
Tuesday 22 January 2002
[Mr. John McWilliam in the Chair]
The Chairman: The Committee will wish to know that shortly before this sitting, the Programming Sub-Committee met and agreed a resolution proposing to amend the programming order agreed by the Committee at its first sitting. Copies of the resolution agreed by the Programming Sub-Committee are available on the Table in the Room.
When the Committee's proceedings on amendment No. 487 to clause 324 have been disposed of, I will invite the Minister to move a motion in the same form as the resolution agreed by the Programming Sub-Committee.
Failure to disclose: regulated sector
Amendment proposed [this day]: No. 487, in page 187, line 27, leave out from 'suspects' to end of line 28.—[Mr. Grieve.]
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are discussing amendment No. 524, in page 187, line 28, leave out 'suspecting' and insert 'reasonably believing'.
May I remind members of the Committee that the issue before them is extremely narrow? It concerns the difference between reasonable grounds for knowing or suspecting and reasonably believing. That is all.
Mr. Mark Field (Cities of London and Westminster): We are also speaking to amendment No. 487, which has a slightly broader interpretation, Mr. McWilliam. Our return to the Room three and a half hours after commencing the debate reminds me of our shenanigans on clause 321. I think that that took almost four hours to debate.
I was coming to the end of my comments when we rose this morning, but I want to express to the Minister our worry about an objective test for suspicion. No one would want professionals who genuinely suspect that money laundering is taking place to get off scot-free. However, providing for an objective test of reasonable grounds is more than a statement of the Government's desire for the greater duty of diligence to which the Minister referred.
This is a matter of degree, and there must be respect and a balance of judgment. I worry—particularly when dealing with professionals in financial services or the legal world—about a provision in respect of money laundering. There will no doubt be similar provisions in other areas of regulation that will, in effect, bar professionals from using their judgment. Above all, a person who asks for advice from a professional—
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particularly a legal professional—wants a judgment. Such a person would not necessarily receive the right answer, because as we all know, such matters are open to interpretation. It would be a retrograde step for people in the financial services industry to be debarred from using their judgment because of fear, and have to take a restrictive and negative view.
I want to talk briefly about the provision being seen as a wildly anti-European statement.
Mr. Ian Davidson (Glasgow, Pollok): There is nothing wrong with that. [Interruption.]
The Chairman: Order.
Mr. Field: I fear that what lies behind much of part 7—and it goes back to angst on the part of the European Union about the grand international movement of moneys—is, in part, a worry about state control. I expect that that issue will be raised by my hon. Friends.
The Chairman: Order. I think that the hon. Gentleman is trying to introduce into the debate issues that are far broader than the import of the amendments, and I shall have to take a view when I decide whether we should have a clause stand part debate. If he wants to do that, that is fine, but he knows what the consequences may be.
Mr. Nick Hawkins (Surrey Heath): On a point of order, Mr. McWilliam, I am sure that you have been briefed by Mr. O'Brien, who was in the Chair this morning. The debate was wide, and my hon. Friends and I know that it will have an impact on whether there is a separate clause stand part debate; indeed, my hon. Friend the Member for Beaconsfield (Mr. Grieve) and I will not seek much of a stand part debate. However, it is fair to point out that this morning we talked about some of the European implications that arise from seemingly minor amendments.
The Chairman: That may be so, but I have to deal with the selection list in front me, on which are two amendments that are narrow in scope, as they merely deal with the test. I would be obliged if hon. Members would stick to that subject.
Mr. Field: I apologise, Mr. McWilliam, and I will say no more, as I appreciate that the Committee has to deal with seven groups of amendments under clause 324, and that other hon. Members wish to speak.
Mr. Hawkins: On point of order, Mr. McWilliam. It would be helpful if Hansard were to record that a few moments ago, in response to my hon. Friend's powerful contribution expressing his sceptical approach to European matters, the hon. Members for Glasgow, Anniesland (John Robertson) and for Glasgow, Pollok (Mr. Davidson) both loudly stated that there was nothing wrong with such an approach. To record that would be especially helpful, as the hon. Member for Glasgow, Pollok has made an appearance in today's press.
The Chairman: I fail to understand what opinions expressed in today's press by the hon. Member for Glasgow, Pollok—or by any other hon. Member—have to do with these two amendments. They are narrow in scope; they merely deal with the test of negligence.
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Mr. Field: I thank my hon. Friend the Member for Surrey Heath (Mr. Hawkins) for his comments, and I will say no more, other than urging the Minister to give serious thought to agreeing to the amendments.
Mr. Paul Stinchcombe (Wellingborough): I rise to speak to the clause and the amendments—
The Chairman: Order. We are dealing only with this narrow group of amendments. I treat all Committee members in the same way, so the admonition that I gave to the hon. Member for Cities of London and Westminster (Mr. Field) applies to the hon. Gentleman, too.
Mr. Stinchcombe: I rise to speak on this amendment to this clause, because, unlike the hon. Member for Cities of London and Westminster, I do not believe that it merely raises points of degree. I believe that it raises both a point of principle and a drafting point, and I wish to bring both of them to the Committee's attention.
Although the clause creates a single offence of failure to disclose, that offence can be committed in one of two ways. The first condition is that a person
''(a) knows or suspects, or
(b) has reasonable grounds for knowing or suspecting,
that another person is engaged in money laundering.''
The first of those alternatives is a subjective test; someone would have to know or suspect that another person was engaged in money laundering. However, the second alternative is an objective test; someone would simply have to have reasonable grounds for knowing or suspecting—and that alternative would not be engaged at all if he did know or suspect, because that would be covered by the first alternative.
Therefore, we are now contemplating the creation of an offence of negligence whereby someone can be convicted of failure to disclose the information that another person is engaged in money laundering, when he did not know or suspect that to be the case, although objectively he should have been aware of it.
The purpose of the amendment is to remove that objective offence of negligence not only from this clause, but from the entire Bill. That raises a question about drafting: is it right to exclude that offence from the section? It also raises a question of principle: is it right to exclude it from the entire Bill? I wish briefly to take the Committee through both those issues in turn.
As for the pure drafting point, I believe that it would be a massive improvement if the clause were to cover only the offence of knowing or suspecting that another person was engaged in money laundering and failing to disclose the information that gave rise to that knowledge or suspicion. It should not cover the objective offence as well.
I say that for several reasons. If the words to which the amendment refers were deleted, and various other consequential amendments were made, that would leave a perfectly explicable, clear and certain offence of failing to disclose information when one knew or suspected that the person was engaged in money laundering. Essentially, the offence would have four elements. First, one would have to know or suspect that the person was engaged in money laundering, and
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it would be irrelevant whether there were reasonable grounds for that knowledge or suspicion. Secondly, the information that gave rise to that knowledge or suspicion would have to have come to one's attention in the course of one's business within the regulated sector. Thirdly, one would have had to fail to disclose that information, even though one knew or suspected that the person was engaged in money laundering. Fourthly, there would have had to be no reasonable excuse for that failure to disclose. That would seem to create a sensible criminal offence, which would be perfectly clear and better worded than that in the Bill, which, by incorporating the objective offence within the same provision, creates inherent unnecessary confusion.
Taking those four elements in turn, the first condition of the objective offence is not that one knew or suspected but that one should have known or suspected that the person was engaged in money laundering. The second condition is that the information came to one's attention in the course of one's business, and the third that one never alerted anyone to that information. Of course one would not have alerted anyone to that information, because one would not be suspicious and one would not have known its importance. My hon. Friend the Member for Wirral, West (Stephen Hesford) and I had a discussion earlier about whether that meant that the condition could never be fulfilled. The fact is that it is never engaged, and is inevitably fulfilled. If one is not aware of the significance of the information, one will, of course, not disclose it—unless one routinely discloses all information whether one is suspicious or not, which would be absurd.
The fourth condition is also inherently difficult if we seek to define the objective offence within a single clause, as you would be exempt if you had a reasonable excuse for not disclosing the information. Intuitively, if the reason why you have not disclosed is that you did not realise that it was important, that is a reasonable excuse. However, that cannot be right, for all the reasons given by the Minister and by my hon. Friend the Member for Redcar (Vera Baird), because that would remove the offence altogether. You would automatically have a defence when you did not know or suspect, as that would be the reason for not disclosing, so the offence could not be established.