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Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of Practice) Order 2003

8.30 p.m.

Lord Bassam of Brighton rose to move, That the draft order laid before the House on 16th January be approved [8th Report from the Joint Committee].

The noble Lord said: My Lords, in moving the Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of

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Practice) Order 2003, I wish to speak to the other orders in the name of my noble friend Lord Filkin. I shall speak to the orders together, starting with that regarding the code of practice, then that regarding disclosure information and finally that regarding exemptions for civil recovery. All the orders to be debated today were laid before this House on 26th January. They were debated in another place on 3rd February and formally approved there on 5th February.

I begin with the first order relating to the code of practice. I hope that your Lordships have had the opportunity to study the explanatory memorandum and the draft code of practice. Your Lordships will recall that the Proceeds of Crime Act contains a comprehensive package of measures designed to make the recovery of unlawfully held assets more effective. These include a consolidation of existing powers and new powers of investigation into the extent and whereabouts of the proceeds of crime.

There are five investigation powers. Production orders and search and seizure warrants, both of which exist in current legislation; disclosure orders; customer information orders; and account monitoring orders. Section 377 of the Act requires the Secretary of State to prepare and publish a code of practice for use by those exercising powers under Chapter 2 of Part 8 in England, Wales and Northern Ireland. There are separate powers of investigation for Scotland set out in Chapter 3 of Part 8, and Section 410 requires a separate code to be issued by Scottish Ministers.

The powers of investigation contained in Part 8 of the Act are fairly intrusive and go beyond what is permissible in present legislation in respect of investigations into the proceeds of crime. The Government believe that such powers are none the less fully justified since without them it is unlikely that either the director of the new Assets Recovery Agency or law enforcement will be able to make any substantial improvement in the field of asset recovery. The Government are aware that investigation schemes in other legislation have related codes of practice to ensure a measure of control and consistency as to how the relevant powers are used in practice.

This draft code is drawn heavily from these established precedents. The code is intended to ensure best practice by those operating the powers of investigation within the Act and an assurance that the use of the powers will be proportionate to those people and organisations likely to be affected by the Act, notably the financial industry.

An initial draft of the code was published for public consultation on 11th October and the consultation period ended on 3rd January. Interested groups have had three months to comment on the draft code. We have revised the code in the light of the many comments received. A summary of the responses to the draft code and our comments are in the Library.

The introductory part of the code provides a general overview of the provisions appropriate officers need to follow. It provides best practice for appropriate officers in regard to making applications for and the

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serving of warrants and orders. It outlines the procedures and for the retention of documents and information.

Financial investigators should now seek to obtain internal authority before making an application for an investigation order. This will ensure that senior officers will have a measure of control over the number of applications and will become aware of any intelligence arising from investigations.

The disclosure order was the subject of debate during the Bill's passage; in particular, Section 357(4)(a) which allows questioning "at once" without an interviewee receiving any prior legal advice. This concern was one of the reasons that the provision of a code of practice was introduced. Paragraphs 141 to 144 of the code provide an assumption that a person will have access to advice if required. The code also provides safeguards regarding questioning people who are without any legal advice.

The disclosure order section sets out the best practice for conducting an interview and recording and storage of the tape after interview. The code provides a detailed step-by-step guide for appropriate officers to follow when carrying out investigation powers under Part 8. It is intended to be easily understood. The code will form part of the training for financial investigators provided by the Assets Recovery Agency.

Due to the nature of the draft order, I have spoken more to the draft code rather than to the order itself. The only further point specifically on the order is that it brings the code of practice into operation on 24th February 2003. My honourable friend the Parliamentary Under-Secretary of State has signed a commencement order bringing Part 8 into force on that date. It is also the happy date when the Assets Recovery Agency will become operational.

I now turn to the draft Proceeds of Crime Act 2002 (Disclosure of Information) Order 2003. The order adds to the list of persons who may disclose information to the director and adds to the list of purposes for which the director will be able to disclose information.

It will be essential that the director has access to relevant information held by other bodies if she is to carry out her functions effectively. Section 436 achieves this by allowing certain specified persons, known as "permitted persons", to disclose information to the director. These people would not otherwise have the power to disclose to the director.

It was made clear during the passage of the Act that the list of permitted persons in subsection (5) was not definitive. In the course of carrying out her functions the director is likely to come across others from whom she may wish to request information. That is why, under subsection (6), the Secretary of State will have the power to designate additional permitted persons by order. Subsection (7) narrows the designation power to specific functions of a public nature. This would be important if, when designating as a

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permitted person someone with a wide remit, only certain functions justified designation. It would help to ensure that the power of disclosure was proportionate.

Although the agency will not become operational until 24th February, we have already identified a number of additional persons who will have a need to disclose information to the director. Each permitted person designated by the order holds information which may be relevant to the director's functions. Disclosure will be permissive rather than mandatory and no one will be forced to disclose information to the director under these provisions.

I now turn to Article 3 of the order, which covers the disclosure of information by the director. The background is as follows. The director requires statutory authority to enable her to disclose information. Section 438 provides that authority and gives the director the power to disclose information for certain specified purposes, subject to restrictions that are also set out in the section. The director will have the power to disclose information to any person or body for any of the purposes set out in subsection (1)(a) to (i). Subsection (9) gives the Secretary of State the power to add to the list.

Article 3 adds two purposes for which the director will be able to disclose information. The first is in relation to protecting public health, to allow the director to disclose information relating to illicit supplies of medicinal products. The second is to enable and assist the Financial Services Authority to exercise any of its functions, to allow the director to disclose information that might be relevant to the FSA's regulatory function. This should assist other bodies to whom the information will be disclosed in the exercise of their functions. Overall, the order will help the director to exercise her functions more effectively.

Part 10 of the Proceeds of Crime Act will come into force on 24th February.

Finally, I turn to the draft Proceeds of Crime Act 2002 (Exemptions from Civil Recovery) Order 2003. The order will prevent certain specified property being subject to civil recovery by the director or Scottish Ministers.

The background to the order is as follows. The civil recovery powers in the Act enable the enforcement authority to bring proceedings to recover property that is or represents property obtained through unlawful conduct. The Act contains certain exemptions to the civil recovery scheme—for example, in Section 308. Their general purpose, and the purpose of the order, is to ensure that the civil recovery scheme is both proportionate and fair.

Although Section 308 provides exemptions in respect of a number of specific criminal provisions, the Act does not make provision in relation to the wider powers of the criminal courts to make orders for the disposal of property.

Section 309 provides that certain property is not recoverable or associated property if it is prescribed by order or disposed of in pursuance of a prescribed enactment. Where property is prescribed by the order, or where property is disposed of under an enactment

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prescribed by the order, then anyone who receives the property will be able to hold it or deal with it without the risk of civil recovery proceedings being brought.

Part 1 of the order lists prescribed property. The only property we intend to prescribe at present is property which is forfeited under the various powers of Customs and Excise. Part 2 lists prescribed enactments. Where property is disposed of under one of these enactments it will cease to be recoverable.

There are two main policies behind the property and enactments prescribed. First, we have excluded property disposed of under legislation that provides for the forfeiture of property in criminal proceedings to the police or other public bodies. This is because it would cause administrative difficulties if those buying or otherwise using forfeited property could not be sure that they had good title to that property. Secondly, we have excluded property where other proceedings have already played a proprietary or restitutionary role. In such circumstances, the job of civil recovery has already been done and there is no need for civil recovery to take away the property.

The list of property and enactments is a result of a consultation exercise with other government departments. We are continuing to discuss the issue and anticipate that further orders will be needed as further exemptions come to light and the Assets Recovery Agency gains experience of operating the civil recovery scheme.

A commencement order has been signed to bring the civil recovery provisions of Part 5 into force on 24th February. Subject to your Lordships' approval, the order will be brought into force on that date.

I trust that noble Lords have followed my detailed explanation. I commend the orders to the House. I beg to move.

Moved, That the draft order laid before the House on 16th January be approved [8th Report from the Joint Committee].—(Lord Bassam of Brighton.)

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