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Mr. Hawkins: I hear what the Minister says—we understand that such an offence would be committed only by the institution. The point that the banking unions were making to me and other members of the all-party committee on insurance and financial services is that junior members of staff worry about the burdens on them. I see the Minister nodding, so she understands my point. Pressures are created if junior members of staff know that a mistake that they might make could lead inadvertently to their bank being prosecuted.
I shall not pursue the matter further, although we shall return to it when we discuss other amendments. We have expressed worries on behalf of financial institutions. As the Minister is aware, several matters raised in another place by my noble Friend Viscount Bridgeman were inspired by the British Bankers
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Association. It is not as though the Government can say that they are taking the financial institutions with them each step of the way. The institutions are worried that the Bill is too wide in its application and too draconian. However, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 39 ordered to stand part of the Bill.
Clause 40
Account information
Question proposed, That the clause stand part of the Bill.
Mr. Heath: I have a simple question. I understand how the Scottish parts of the Bill relate to the English. This part relates to banking transactions in England and Scotland, but there are not separate incorporation banks working in both jurisdictions. Does anything in the Bill restrict the requests of the procurators fiscal to only those transactions that take place in Scotland, as opposed to a financial institution working in Scotland that also works elsewhere and transactions that may take place elsewhere? I am not sure that that is the case.
I hope that I am making myself clear to the Minister. As I understand it, there is no territorial restriction on the English, Welsh or Irish parts of the Bill, save for the italic title above clause 37. I am not clear whether there is a restriction on the position of the procurators fiscal and Lord Advocate in respect of Scotland or the Secretary of State and prosecuting authorities in respect of England and Wales.
Caroline Flint: The clause is the Scottish equivalent to clause 35. It fulfils the same function as that clause in the rest of the United Kingdom, making provision when needed to reflect Scottish procedures, such as that in respect of political orders made by the procurators fiscal to a sheriff. I will follow up the question and give the hon. Gentleman a fuller answer over the next few days.
Question put and agreed to.
Clause 40 ordered to stand part of the Bill.
Clause 41 ordered to stand part of the Bill.
Clause 42
Offence of disclosure
Mr. Hawkins: I beg to move amendment No. 149, in
The Chairman: With this it will be convenient to discuss amendment No. 150, in
Mr. Hawkins: The amendment deals with an issue that I raised earlier. For the avoidance of doubt, we seek to bring into the Bill the matter of the guilty mind—the mens rea. It should be made clear that an offence committed by a financial institution would have to be dealt with on the basis that there had been a
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deliberate or reckless act. There is no such restriction in the clause. In respect of the clause that we debated previously, the Minister was at least able to refer to words that made that reasonably clear, and we seek only to introduce an avoidance of doubt provision. We want to include ''deliberately or recklessly''.
Amendment No. 150 would deal with a slight variant of a similar point. There must be consequences, such as a financial institution facing criminal prosecution, for there to be an offence. Surely the prosecution would have to establish that there had been difficulty caused in proceedings, either in the UK or elsewhere. Returning to first principles of the law, if no harm has been done and there are no adverse consequences, why should a financial institution face prosecution?
Stephen Hesford rose—
Mr. Hawkins: I will give way to the hon. Gentleman in a moment. Before I do, perhaps I may elaborate briefly.
In civil law—a different field—if a party is at fault they would normally have to pay damages only if they were seen to have caused some financial loss or other damage. A court might, even in contempt proceedings, make an order that a party that caused the problem should pay what are called the costs thrown away. Normally, in most areas of the law, some adverse consequence should be shown—for example, before a criminal prosecution or before any damages are awarded in civil cases. If no harm is done, why should there be a prosecution? I hope that the Minister understands the serious point we are making.
Stephen Hesford: I am obliged to the hon. Gentleman for giving way. He is generous in debate.
On amendment No. 150, the hon. Gentleman referred to ordinary, general principles and asked whether those ought to apply. One would not know in advance whether damage would be caused down the line. If, by the time somebody was prosecuted, it turned out that no damage had been caused, that would be substantial mitigation and it would go towards the correct penalty. If the information that no damage had been caused came sufficiently early in proceedings, it might affect the decision on whether to prosecute. Those are the ordinary, general principles. With respect, his amendment is unnecessary.
Mr. Hawkins: I understand the hon. Gentleman's point about the Bill remaining unamended. No doubt, the decision on whether to prosecute might be influenced if it were shown that there had been no damage, but there would be no guarantee that there would not be a prosecution, even if no damage were caused. There would be nothing in the Bill to say, ''Do not prosecute if no damage was caused''.
The hon. Gentleman and I take a different view on the matter. He is right to say that if there were to be a prosecution and the defence was saying, ''Well, there was no consequence from this—there was no damage,'' that would be a point put in mitigation. We stick to our approach, however, which is that it would be far better if it were clear in the Bill that if no damage is caused and there are no adverse
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consequences to the mistaken information supplied, there should be no question of prosecution. If that were in the Bill, institutions and their staff, who worry about such things, would be better protected.
Mr. Heath: There are two amendments in the group. The first relates to a matter that we have already dealt with, and I suspect that the Minister's answer will be the same.
I do not agree with the hon. Member for Surrey Heath on his second amendment. In fact, I am slightly alarmed by it. We are talking about not only an inadvertent or incorrect disclosure, but blowing the gaff on the investigation. It is impossible to work out what the difficulties in the proceedings would be because, as a result of the disclosure, the action that would have been taken might not go ahead. Therefore, the financial transaction that might have been made, and that might have produced substantial evidence in pursuit of an investigation, would not take place. One cannot prove that, however. It is impossible to do so, because it means proving a negative in the absence of evidence.
Although I do not like absolute offences, in this instance there are equivalents elsewhere in law. It must be made absolutely clear that proceedings on the basis of disclosure of the fact that an investigation is taking place, and therefore the jeopardising of it, should not rely on the extent of the damage and proving the offence. I think that the hon. Gentleman is wrong in this instance.
Caroline Flint: I welcome the views of the hon. Member for Somerton and Frome and those of my hon. Friend the Member for Wirral, West. They have demonstrated the problems with the amendments. The clause would ensure that financial institutions did not disclose the existence of a customer information or account monitoring order, or a request for banking information made under article 2 of the protocol, to any party in any circumstances. Clause 42(3)(a), (b) and (c) define what information should and should not be provided. We had a debate about those involved in the process, and we have to be clear on this aspect of it. It would totally undermine the point of seeking the customer information and account monitoring orders if we alerted a potentially dangerous criminal to our activities. To that end, we cannot accept the amendments.
The provision is designed to implement article 4 of the protocol, which requires member states to
''take the necessary measures to ensure that banks do not disclose to the bank customer concerned or to other third persons that information has been transmitted to the requesting State in accordance with Articles 1, 2 or 3 or that an investigation is being carried out.''
Committee members have made the point that it is often not clear at the outset what information may be pertinent to a later inquiry. We know how sophisticated, technical and complicated financial information is.
We are satisfied that the drafting, which will impose a specific ban on disclosure, represents the most appropriate and effective means of implementing the protocol obligation. Under the protocol, it does not
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matter whether or not the disclosure is deliberate or reckless. Disclosure must be prevented. If we are not clear about the matter, people could form their own interpretation of what is reckless or deliberate. We need clarity. Nor can we restrict the liability to when disclosure causes difficulty in UK proceedings.
It is imperative that information is not disclosed that could hinder overseas proceedings, or indeed an investigation here or elsewhere. For example, if a bank employee informed a customer who was a suspect in a money laundering investigation that their account was subject to a monitoring order, that would negate the purpose of the monitoring—obtaining evidence of the offence—as they would know not to use the account during the monitoring period. It is essential that the Bill has strong and effective safeguards, but also that we are clear about the fact that there is no room for misunderstanding. That would be particularly beneficial to those serving in banks who may be asked to get involved in such an order and gaining information.
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