Proceeds of Crime Bill

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Mr. David Wilshire (Spelthorne): May I briefly seek your guidance, Mr. O'Brien? I wish to raise three matters, all of which I think may sensibly be debated in a stand part debate, but one of which relates to the amendment. It would be easier for me to raise all my points in a stand part debate, even though one refers to the amendment.

The Chairman: The amendment as outlined covers nearly everything in the schedule. Does the hon. Gentleman want to raise anything arising from the amendment?

Mr. Wilshire: If you want me to take them separately, I shall be brief, Mr. O'Brien.

New paragraph 1(1)(h), which the amendment would insert, does not change the wording that caused me concern in the original draft. As I said, this could be a matter to be debated on stand part. New paragraph 1(1)(h) contains the words:

    ''ignoring an activity described in any of sub-paragraphs (a) to (g)''.

It is worth asking the Minister why the Government should want to ignore something. That wording makes me a bit nervous. I have no disagreement with the attempt to set out what the regulated sector is and listing its activities; that is eminently sensible. However, we cannot allow certain activities to be ignored without explanation.

Mr. Ainsworth: We are not ignoring those activities. We are trying to make certain that they are not duplicated. Those that are picked up in other parts of

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the schedule are not double-counted. That is the only effect of new paragraph 1(1)(h).

Amendment agreed to.

Question proposed, That this schedule, as amended, be the Sixth schedule to the Bill.

Mr. Wilshire: With hindsight, the second of my queries could just as well have been raised in discussion on the amendment, but I shall raise it now as a substantive matter. Paragraph 3, headed ''Excluded activities'', contains sub-paragraph (e), which mentions

    ''activities carried on by the Bank of England''.

I am neither a lawyer nor a financial expert—

The Chairman: Order. I must draw the hon. Gentleman's attention to the fact that we are now discussing an amendment that has been approved. I consider it out of order to start a discussion on it again.

Mr. Wilshire: I was simply seeking clarification of the schedule as it now stands. I hope that you will allow me to ask why the activities carried out by the Bank of England—

The Chairman: Order. I advised the hon. Gentleman when we were discussing the amendment that it would be better to discuss the issues under the appropriate amendment. The question that he was going to put to the Minister would have opened up the debate again, and that is not in the best interests of the Committee.

Mr. Wilshire: I understand exactly what you say, Mr. O'Brien. Clearly, I must accept what you say. I simply register that it seems reasonable to me to have a stand part discussion. However, there will be other opportunities to raise that point, no doubt.

The last of my points, which is not covered by the Government amendment, relates to part 3 of the schedule, which we did not amend. It is entitled, ''Power to amend'', and it seems appropriate to consider it. It states:

    ''The Treasury may by order amend Part 1 or 2 of this Schedule.''

3.45 pm

We should not let that pass without asking the Minister what the Government have in mind. Why does the Treasury need the power? We are discussing things of importance such as draconian penalties and the reservations that my hon. Friend the Member for Beaconsfield has been, rightly, considering for a long time. If they are so important, why should we allow the procedure to happen by order rather than by allowing the House to consider legislation to amend the schedule? Why does the Treasury need the power in this way? I am no expert on parliamentary procedure, but will the order be made under the affirmative or the negative procedure? We need that information.

Mr. Ainsworth: Part 3 of schedule 6 contains the order-making power about which the hon. Gentleman is worried. The Treasury may use it to amend the definitions in parts 1 and 2. That could be used to keep the scope of the legislation in line with future extensions of regulations to other sectors that are not currently regulated. The provision will be used when

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we get to grips with the second European money laundering directive—I mentioned this in the previous debate—which will extend the money laundering regime to accountants and tax advisers. We will need order-making powers to amend the regulations because other pieces of legislation may impact on the Bill. That is not unusual, and the hon. Gentleman knows that.

Mr. Wilshire: I would be grateful if the Minister would tell us whether the procedure would be affirmative or negative.

Mr. Ainsworth: I apologise to the hon. Gentleman. I think that the negative procedure would be appropriate.

Schedule 6, as amended, agreed to.

Clauses 325 and 326 ordered to stand part of the Bill.

Clause 327

Protected disclosures

Amendments made: No. 512, in page 189, line 19, leave out 'a business in the regulated sector' and insert—

    'his trade, profession, business or employment'.

No. 513, in page 189, line 33, leave out subsection (6).—[Mr. Bob Ainsworth.]

Clause 327, as amended, ordered to stand part of the Bill.

Clause 328

Authorised disclosures

Mr. Grieve: I beg to move amendment No. 522, in page 190, line 2, leave out from 'act' to end of line 4.

This is a probing amendment that is designed to allow us to discuss the mechanisms through which consent is provided to enable a transaction to proceed. I am the first to accept that it does not make a great deal of sense in its purest form. The deletion of that part of the line would not add anything to the Bill and would look odd in the absence of further amendments.

The Minister may recollect that when we first discussed money laundering and part 7 we talked about professionals' problems under the existing system, such as being told whether they may go ahead with a transaction. Let me give the Committee some illustrations. Before I do so, however, I shall emphasise to the Committee what the clause is about.

Clause 328 provides for a system of authorised disclosure. It therefore requires that the individual concerned should make the disclosure to a constable, Customs officer or nominated officer, that the disclosure should be made before the alleged offender does the prohibited act, and that thereafter the solicitor, banker or whoever it may be does the act with the consent of a constable, Customs officer or nominated officer, as the case may be. On paper, that looks straightforward. A solicitor who is faced with the prospect of carrying out a conveyancing operation for a client, when he has reason to suspect that the money being brought into the country might have a tainted origin, rings up NCIS and says, ''Mr. Bloggs has come in to see me. He wants to carry out a

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conveyance for the purchase of a property for £2 million on Wednesday. I am tipping you off that I am concerned about the origin of these funds, which seem to come out of a Zurich bank account and to be vaguely connected with a Liechtenstein Anstalt. What do you want me to do about it?''

The anecdotal information that the Law Society and others have made available to me suggests that, when those requests are made to NCIS, they do not receive a speedy reply. Those who are involved in the transaction are therefore in a difficult situation. They do not know whether to proceed with the transaction. Moreover, because of the tipping off regulations, they cannot even tell the client why the transaction is being held up. One solicitor described to me an incident in his firm: after four days of delay, and a problem in the property chain, the client got so angry that he kicked down the office door and punched the solicitor in the face. That seems to put a burden on the solicitor that is over and above the call of duty or even that which the Bill should impose on him.

How will the system work in practice? I am worried that, as my hon. Friend the Member for Surrey Heath (Mr. Hawkins) has said on several occasions, it will lead to a huge increase in the amount of information given to NCIS. As a result, it will become even more difficult to obtain a clear answer from NCIS about whether one should proceed with a transaction.

Mr. Davidson: Given that the hon. Gentleman has just mentioned the hon. Member for Surrey Heath, will he clarify, first, where he is, secondly, when he is coming back, and thirdly, whether he will tell us, in great detail, what he had for lunch, whom it was with, what was said—

The Chairman: Order. The hon. Gentleman may wish to answer that question, but the Committee should move on and stick to the agenda.

Mr. Grieve: I shall stick to the agenda, which I was doing before the hon. Gentleman's attempt to divert me into an interesting sideline, which I would have been happy to pursue, although I cannot do so.

Mr. Davidson: You mentioned him.

Mr. Grieve: I mentioned my hon. Friend because he had previously raised the issue with the Minister. This is the correct opportunity for the Committee to discuss it.

The Minister will also recollect that my hon. Friend raised the issue of the level of disclosures. Further information has been provided, but it was predicted in the NCIS lecture that, on current trends, disclosures in the coming year would rise from 18,000—a figure mentioned by the Minister—to well in excess of 30,000. It seems likely that that may be a result of the events of 11 September. Nevertheless, there has been an exponential rise in the number of people contacting NCIS about difficult transactions.

I hope that the Minister will accept that that is a serious issue for those who are trying to discharge professional obligations. They are happy to inform NCIS if they are troubled by a transaction, but they need a rapid response as to what they should do next. The criminalisation provisions of the tipping off clause

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mean that they cannot tell their client what is going on, but they are prevented from carrying out a transaction that they are contractually bound to effect as quickly and correctly as possible. That is an onerous burden. I am not satisfied, on the basis of information given to me by those in the legal profession, including solicitors and the Law Society, that the system is operating well at the moment, and I am worried that it will not operate properly in view of the far greater number of disclosures that are likely to arise.

The amendment is probing. I want to have a discussion and debate on an important issue. I do not intend to delete the clause, and I hope that I made that clear through the rather odd way in which I drafted the amendment in the first place.

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