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Lord Clinton-Davis: I support the argument advanced by the noble Lord, Lord Renton—not for the first time. The situation at present is left at large. That is not satisfactory from the point of view of the banks, or from the point of view of the person who is affected by the notice. My noble friend the Minister

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ought to consider some appropriate provision between now and Report. This is far too important a matter to leave.

4.15 p.m.

Lord Filkin: The amendment would make it an offence for a financial institution to fail to comply with a requirement imposed by a customer information order "within the specified period".

We consider the amendment to be unnecessary. The process in the Bill is exactly the same as that used under the Proceeds of Crime Act. If a time limit is one of the requirements imposed by the customer information order, the current drafting provides that a financial institution will be guilty of an offence if it fails to comply, without reasonable excuse, within that time limit.

Clause 32(5) makes it explicit that an order may include a time limit, and investigators would be expected to impose reasonable deadlines. If they do so, then the financial institution,


    "must provide the information . . . to the applicant for the order in such manner, and at or by such time, as the applicant requires".

To go further than that would seem to present difficulties. There are two variables: one is the degree of urgency and the other is the degree of difficulty in locating the account. Therefore, it is not reasonable to think that one can impose a standard time period: circumstances will arise where the urgency of the need for the information—I shall not talk at length again about terrorism—may clearly suggest that one wants a very rapid response from the responding financial authorities. In other circumstances there may be no particular urgency other than that one wants to speed the process, and a week or two weeks may be perfectly adequate.

I not sure whether there is an enormous differentiation in the ability of banks of different sizes—international, multinational or smaller financial institutions—to respond. I should have thought that all would have a similar challenge in terms of inspecting their accounts electronically to see whether an account was held by the person who was the subject of inquiry by the authority making the original request.

Investigations currently involve financial institutions, often with orders under PACE. There is always an element of discretion in relation to the operation of such orders. The circumstances of orders are so varied—from major multinationals to small organisations—that standard time limits would be unworkable, whereas there may well be cases where time limits are specified.

Current production orders under PACE do not operate within rigid and fixed time scales, whereas under the Bill is it possible to specify time limits that ought to be reasonable and within which the responding financial institution could be expected to respond unless it could demonstrate a good reason for

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not being able to do so. For the reasons that I have given, I believe that the flexibility in the legislation as drafted is exactly right.

Lord Clinton-Davis: Why does not this provision refer to the earlier one in order to make the situation clear? At present, it is not.

Lord Renton: The Minister has referred to the fact that financial institutions may vary greatly in size, importance and character. Therefore, instead of "the specified period"—the words in the amendment—the reference could be to "a specified period". That would need to be in accordance with the circumstances, but at least "a specified period" would be written on the face of the Bill.

To allow this heavy obligation to drag on indefinitely would be quite wrong. An attempt must be made to bring the matter to a head. That can be done only if the Bill contains a provision along the lines of "a specified period".

Viscount Bridgeman: I am grateful to my noble friend Lord Renton and to the noble Lord, Lord Clinton-Davis, for their support for the amendment. I venture to suggest that, whereas the noble Lord—

Lord Clinton-Davis: I am not entirely sure that I support this specific amendment. I was thinking of another situation entirely.

Viscount Bridgeman: I am most grateful to the noble Lord for his support for the spirit in which the amendment was put. Perhaps I may just make an observation. The Minister said rightly that there is probably little difference between the ability of various banks to comply, but there may be considerable difference in their willingness to comply. For that reason, we should like to revisit this issue at a later stage in the Bill. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Bridgeman moved Amendment No. 97B:


    Page 19, line 41, leave out paragraph (a) and insert—


"(a) knowingly makes a statement which is false or misleading in a material particular, or"

The noble Viscount said: In moving Amendment No. 97B, I shall speak also to Amendment No. 104A, which stands in my name and that of my noble friend Lady Anelay. I believe that paragraph (a) clumsily drafted. I am informed that the form of words in the amendment would be more pertinent. I beg to move.

Lord Monson: I prefer the paragraph as it stands. It is perfectly clear and unambiguous, whereas the wording suggested in the amendment could be interpreted in at least two different ways. For example, it could catch an institution which, in good faith, asserted that a statement was true, only for it to be discovered later that it was false.

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Lord Filkin: Not for the first time I find myself in agreement with the noble Lord, Lord Monson, for the reasons that he gave. We consider that while these amendments are essentially drafting points, the provisions as currently drafted have more clarity and less ambiguity. Furthermore, the current drafting is consistent with the Proceeds of Crime Act, which makes it an offence for a financial institution to make a statement it knows to be false or misleading. The offences attract exactly the same penalties as those under that Act.

The drafting in the amendment is such that it could mean that a financial institution in order to be guilty of the offence must knowingly make a statement, rather than make a statement that it knows to be false or misleading. Therefore, we need to maintain current drafting for those reasons. The need for such a provision is self-evident: I do not think that I need to go into detail on that.

There are two offences under this part of the Bill. The penalty for the first—failure to comply—is a fine not exceeding level 5, which is currently 5,000. The penalty for the second—for knowingly or recklessly making a false or misleading statement in relation to a customer information order—is a fine not exceeding the statutory maximum. That is currently unlimited. For those reasons, I hope that I have addressed the probing amendment raised by the noble Viscount, Lord Bridgeman.

Viscount Bridgeman: I am grateful to the Minister for that explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 34 shall stand part of the Bill?

Lord Renton: This is one of the most important clauses in the Bill because unless there is a clear provision in the Bill to enable its provisions to be enforced, we shall be enacting a nullity. It is very important to have the offences set out. We have already discussed several of the points that concern Clause 34. But, between now and Report stage, I implore the noble Lord, Lord Filkin, to consider generally whether, in the light of everything that he wants to have enforced in previous provisions of the Bill, Clause 34 describes adequately the offences and ensures that they will be adequate in enforcing the legislation.

Lord Filkin: I am very happy to give that undertaking to the Committee and to the noble Lord, Lord Renton. He is right. It is crucial that this Bill works. Adequate offences, which provide an adequate stimulus for compliance, are an essential part of so doing. I, with my officials, shall give further reflection to that. If the noble Lord, with his usual acuity, spots any further areas where there is any doubt, I should be most grateful if he would let me know of them and we shall test those further.

Clause 34 agreed to.

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Clause 35 [Account information]:

Lord Goodhart moved Amendment No. 98:


    Page 20, line 10, after "into" insert "serious"

The noble Lord said: In moving Amendment No. 98, I shall speak also to Amendments Nos. 101, 105, 107 and 111. I believe that I have the numbers correct this time. The amendments arise from the distinction between a customer information order under Clause 32 and an account monitoring order under Clause 35. A customer information order is triggered only where the customer concerning whom the information is sought is subject to an investigation into serious criminal conduct. An account monitoring order is triggered by an investigation into criminal conduct, whether the crime is serious or not.

Amendments Nos. 98, 101, 105 and 107 seek to limit account monitoring orders to investigation into serious crime. The purpose of Amendment No. 111 is to impose the same limit on the outward request. Amendment No. 112A, which stands in the name of the noble Baroness, Lady Anelay, and the noble Viscount, Lord Bridgeman, picks up a reference that I had not spotted, although it is to the same effect.

Why is there such a difference? A customer information order is wider than an account monitoring order. A customer information order requires more information to be disclosed. Both orders are highly intrusive and, on the face of it, should be subject to a requirement that the investigation be into serious criminal conduct. I assume that these amendments are intended to mirror the apparent differences between Articles 1 and 2 of the 2001 protocol; namely, that the customer information order mirrors Article 1 and the account monitoring order mirrors Article 3.

Article 1 specifically states that:


    "The obligation set out in this Article shall apply only if the investigation concerns:


    an offence punishable by a penalty involving deprivation of liberty or a detention order of a maximum period of at least four years in the requesting State and at least two years in the requested State".

There is a further reference to an offence in Article 2 of the Europol convention. Those definitions are incorporated into the definition in this Bill of a "serious criminal offence".

There are two questions that arise. First, what is the justification for the variance if they are differently treated under the protocol, because while there is a difference it does not appear to be substantial enough to justify the variance between serious and non-serious criminal conduct? Indeed, I think that it opens up the wider question as to whether there is a difference in the protocol.

Article 3 concerns:


    "Requests for the monitoring of banking transactions".

Article 3(1) states that:


    "Each Member State shall undertake to ensure that, at the request of another Member State, it is able to monitor, during a specified period, the banking operations that are being carried out through one or more accounts specified in the request and communicate the results thereof to the requesting Member State".

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At that stage there is no reference to a serious criminal offence or criminal conduct of any type.

Paragraph (2) states that:


    "The requesting Member State shall in its request indicate why it considers a request in information relevant for the purpose of the investigation into the offence".

There is no indication as to what the words "the offence" refer. It seems to be at least a credible interpretation that they are a reference to the same kind of an offence as would trigger a request for information under Article 1. I would like some explanation of why that is not the case.

Finally, if Article 3 does not require the test of serious criminal conduct, that might bind the United Kingdom and render us unable to insist on there being serious criminal conduct for an incoming request. However, there is no reason why the United Kingdom courts should not apply a higher standard—the test of serious criminal conduct—for outgoing requests made under Clauses 43 and 44.

I am sorry for raising these complex questions of interpretation, but I shall be interested to hear what the noble Lord has to say about them. I beg to move.

4.30 p.m.

Viscount Bridgeman: I shall speak to Amendments Nos. 101, 107, 111 and 112A. We are coming by a slightly different route to the question raised in considerable detail by the noble Lord, Lord Goodhart. My simple question is: does this mean that the Government want to extend the use of monitoring of banking transactions and other provisions to all criminal conduct, or is this merely an oversight and should "serious criminal conduct" be universal throughout this chapter? If the Government envisage all criminal conduct for some of these provisions, what is the justification?


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