Proceeds of Crime Bill

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Mr. Grieve: I listened carefully to the Minister. I am glad that he accepted the point, but I am not entirely reassured that the system will get much better as a result of the vast number of authorised disclosures that he hopes will take place. If the Government's proposal is to work and disclosures are made before transactions take place, it is essential that the response is very quick. It is in NCIS's interest that that should be the case. The sort of transaction that will be of particular concern to it is the one in which a solicitor says that his client wishes to transfer £2 million to a bank in a country that has a reputation for being a haven for tainted money.

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That is an example of a transaction that escapes out of the jurisdiction and cannot be recovered. Obviously, the problem does not arise with the same force where a disclosure can be made subsequently. However, solicitors have a peculiar problem. Some of the stories that I was told had a humorous side, but there is a serious side, in that professional reputations are on the line, with a client who is metaphorically beating on the door and asking why his transaction is not going ahead. The solicitor is waiting to hear from NCIS whether he should say that he is not going ahead with the transaction without giving an explanation, or whether he should go ahead with it so that NCIS can follow it. The solicitor should not be left in limbo.

I hope that as a result of our discussions the Minister will take the opportunity to tell NCIS that the issue has caused concern. A delegation raised it with me, not just an individual solicitor. I therefore assume that unless it had been causing concern in the profession, it would have been dismissed as an isolated incident. I did not get that impression, although I may be mistaken, which is always possible. However, I got a clear impression that the profession at an official level regarded it as a potentially serious problem that had manifested itself on several occasions. I hope that NCIS and the Government can provide some reassurance that there will be rapid responses when disclosures are made.

4.15 pm

Mr. Ainsworth: I am told that that happens already. I do not know whether I said so earlier, but I am aware that NCIS officials met representatives of the Law Society recently and agreed to make a contribution to its training programme to ensure that this regulation is more fully understood. There is a framework for the Law Society and NCIS to work closely together to overcome the potential problems rightly raised by the hon. Gentleman.

Mr. Grieve: I am grateful to the Minister for that comment, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 328 ordered to stand part of the Bill.

Clause 329

Interpretation

Mr. Grieve: I beg to move amendment No. 509, in page 190, line 28, after 'an', insert—

    'indictable'.

This is another way of approaching the issue that we discussed under the de minimis clause. A number of organisations suggested that criminal conduct should be confined to indictable offences, rather than any offence. This takes us back to the early stages of this legislation. However, I would be grateful for the Minister's comments on such a proposal, although I can foresee what he is likely to tell the Committee.

Mr. Mark Lazarowicz (Edinburgh, North and Leith): On reading the terms of the amendment, I wonder whether the hon. Gentleman fully appreciates

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its consequences. As I see it, it would restrict criminal conduct to indictable conduct. Given that the proposed new section interprets criminal conduct for the purposes of that part alone, the effect of the amendment would surely be to restrict the exemptions available to officers of the law who undertake criminal acts as part of their normal duties. That would criminalise activity by law enforcement officers. We have already heard how the hon. Gentleman is soft on criminals, but being tough on law officers is perhaps going a bit too far.

Mr. Grieve: The brevity of my remarks in introducing the amendment reflected the fact that I could see, notwithstanding that perhaps I tabled it in a fit of enthusiasm at the behest of others, that it was not without some difficulty.

Mr. Lazarowicz: I suggest that the hon. Gentleman should think more carefully before acting so quickly at the behest of others.

Mr. Grieve: Much as I would like throughout my life to follow the hon. Gentleman's counsels of perfection, I have learned in the course of debating in this Committee that it may occasionally be wiser to try to fire a blunderbuss than to try to shoot a bullet. I apologise for that, but I would not wish issues to go by default and not be considered, however briefly, if only for an inadequacy in the amendment to be pointed out. I prefer to be humbled by his comments than to feel that a part of the Bill has passed without adequate scrutiny. I am sure that the Minister's comments will echo the hon. Gentleman's, and that we can then move on to other business.

The Minister of State, Scotland Office (Mr. George Foulkes): The hon. Gentleman may have been able to predict the reply to his amendment, but he was not able to predict who would give it.

As it is drafted, part 7 operates on the basis of the proceeds of any criminal conduct. No distinction is made between the proceeds of indictable offences or summary offences. As the hon. Gentleman is aware, this approach is consistent with that in parts 2, 3 and 4 in relation to the confiscation of proceeds following a conviction for a criminal offence. We believe that it is vital to have consistency across the Bill and that there should be no distinction between indictable or summary offences.

There are also real practical reasons why there should be no qualification to the type of offence caught by the provisions on money laundering. For example, at the stage at which a report would need to be made by someone in the regulated sector, he or she may suspect that the money used in a transaction was the proceeds of crime, without having any way of knowing the underlying predicate offence. The person would not know whether the initial offence that generated the laundered proceeds was an indictable or a summary offence. In addition, laundering the proceeds of a summary offence might be part of a larger pattern of other money laundering of which the person making the report was not aware. As we have said on many occasions, it is important that NCIS has as much information available to it as possible.

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Restricting the reporting offence would limit the information that it receives.

As far as principal money laundering offences are concerned, the amendment would take us back to the position where having to identify the predicate offence to prove that money laundering was taking place acted as a barrier against successful prosecutions. That would be a negative step. We find it unacceptable in principle that the proceeds of some offences should effectively be exempt from the money laundering provisions. If conduct constitutes a criminal offence, as does summary as well as indictable conduct, we should also be able to prosecute the offender for laundering the proceeds of his or her crime or crimes.

As I have said, the classification of an offence is not the determining factor of whether proceeds are laundered. Even some summary offences can generate large amounts of proceeds and the Government cannot see any reason why those proceeds should not be caught by part 7. As the hon. Gentleman conceded, we rehearsed much of the argument in our debate on part 2, but it may be useful to repeat some helpful examples. Summary offences such as possession of video recordings of unclassified work for the purposes of supply, use of unlicensed premises for exhibition requiring a licence and offences relating to sex establishments can generate substantial proceeds. We cannot see any good reason why such proceeds should not be covered by part 7.

The Government are satisfied that the Bill as drafted adopts the right approach by applying the three principal money laundering offences to the proceeds of all crime, and I hope that the hon. Gentleman will withdraw the amendment. He hinted that he would do so when he moved it, and he is presumably even more intent on doing so having heard my convincing arguments.

Mr. Grieve: The Minister has persuaded me that the amendment is unnecessary, and indeed possibly counter-productive. I am grateful to him for having given a complete and clear exposition of why that is the case. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Hawkins: I beg to move amendment No. 510, in page 190, line 39, leave out paragraph (c).

As we discovered in Committee a week or so ago, the shortest amendments often elicit the greatest debate on matters of principle. This amendment is a case in point, because it goes to the issue of retrospection. Ministers or members of the Committee of any party will not be surprised to learn that there are concerns of principle about legislation having retrospective effect. I anticipate that the Minister will accuse us of being soft on money launderers. I will listen carefully to what he has to say on the special reasons why retrospection is justified in this case. Despite that, and the fact that I understand that he may have more of a case for retrospection in that field of law than in others, it would not be right to the let the matter go through

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without at least discussing it, because it is rather like legal professional privilege.

Governments of all parties are always tempted to chip away at the traditional principle that provisions should not have a retrospective effect, and that is a danger. I am not making a partisan political point.

Vera Baird: Will the hon. Gentleman make it clear how the provision is an example of retrospective criminalisation? It does not matter whether the criminal property being dealt with has acquired its criminal status before or after the Bill has been enacted. In what sense does that retrospectively criminalise a person?

 
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Prepared 24 January 2002