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On Question, amendment agreed to.

3.15 pm

Clause 65 [Application to set aside financial restrictions decision]:

The Financial Services Secretary to the Treasury (Lord Myners) moved Amendment No. 5:

5: Clause 65, page 47, line 30, at end insert—

“( ) This section does not apply to any decision of the Treasury to make an order under paragraph 8 or 28(6) of Schedule 7 to this Act.

The noble Lord said: My Lords, I beg to move Amendment No. 5. I will speak also to government Amendments Nos. 8 to 10, and 15 to 19. Last week, we

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had a good discussion on the provisions to which these amendments relate. I thank your Lordships for the constructive and helpful manner of that debate which was particularly useful given the importance of these measures and the unfortunately brief time your Lordships have had to consider these provisions. As these amendments mainly concern issues outlined in our previous discussion, many of which were first raised by noble Lords on the Conservative and Liberal Democrat Benches, I will attempt to be brief.

Amendment No. 5 seeks to remove from the application of Clause 65 the order-making power in paragraph 8 of the schedule which enables the Treasury to alter the definition of persons operating in the financial sector, and to whom it could therefore give directions, and the order-making power in paragraph 28(6) of the schedule which provides for appeals to be made to the VAT, Financial Services and Markets, or Consumer Credit Appeals Tribunals rather than to the first-tier or upper tribunals to manage the transitional process here. The effect of this amendment is that challenges to orders made under paragraph 8 and paragraph 28(6) will be subject to the normal judicial review procedure rather than to the procedure in Part 6. I hope your Lordships will agree that this is a more appropriate procedure given the nature of such orders.

Amendment No. 8 seeks to address a point that was raised in the 15th report of this Session of the Delegated Powers and Regulatory Reform Committee in relation to these provisions. Specifically, the committee recommended that the order-making power provided for in paragraph 8 of the schedule should be more explicit in its intention to allow for purely technical adjustments of the definition or be made subject to the affirmative rather than the negative resolution procedure. I said on Report that I would give careful consideration to the committee’s recommendations. I appreciate the efforts of the committee to scrutinise our provisions at short notice as well as the useful part its members and ex-members played in our previous debate. This amendment seeks to address the committee’s recommendations by now providing for an affirmative order in this case. I thank my noble friend Lord Harris of Haringey for raising this matter.

Amendment No. 9 provides for an explicit requirement on the Treasury to apply these powers proportionately, according to the risks that they are seeking to address. This requirement was discussed on Report and the noble Baroness, Lady Neville-Jones, was keen to see it addressed in the Bill. As I have previously assured noble Lords, proportionality is an important requirement for the operation of any administrative order of this type and I am happy to recognise this explicitly in the legislation.

I will briefly take Amendment No. 18 out of order as it similarly addresses another matter that I consider essential to the proper and effective use of these powers— the production of guidance for industry on their implementation. Such guidance by industry bodies and supervisors plays a valuable role in our current anti-money-laundering regime. As with the previous amendment, the noble Baroness, Lady Neville-Jones, was rightly concerned that the Treasury should assist relevant bodies to produce this guidance. I have assured

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the noble Baroness that this would be the case—it is, after all, in our interests to ensure that it is as simple as possible for business to implement our directions—but I am happy to accommodate such a requirement directly in the Bill.

Amendment No. 10 substitutes “undertake” for “take” in line 18, thereby ensuring consistent terminology throughout the provisions. This reflects the point raised by the noble and learned Lord, Lord Mayhew, on Report. I thank him for his observation.

Amendment No. 15 simply leaves out lines 27 and 28 on page 101 of the Bill, thereby removing a typographical error which had made its way into the provisions.

Amendments Nos. 16 and 17 are moved in response to the issues which the noble Lord, Lord Thomas of Gresford, helpfully raised on Report on behalf of the Liberal Democrats and in relation to provisions in paragraph 34(1) of the schedule which replicated those of Clause 29 concerning jurisdiction over offences. As I undertook on Report, these amendments alter those provisions so that they now apply only to offences committed outside the United Kingdom.

The final amendment I am concerned with today, Amendment No. 19, is merely intended to clarify the situation regarding the use of any penalties received by the FSA in its supervisory role. As is standard, and as is the case for the FSA’s other supervisory actions under the money-laundering regime, this amendment provides for any penalties received to be applied against expenses incurred in connection with its functions. This provision also reflects the position in respect of penalties imposed by the FSA under its powers under the Financial Services and Markets Act 2000, which must be applied for the benefit of authorised persons.

I hope I have sufficiently explained all the amendments. I believe that, save the odd minor adjustment, they all reflect issues and concerns that were recognised on Report. I hope noble Lords agree that they will all usefully improve the provisions and that they can support them. I beg to move.

On Question, amendment agreed to.

Clause 81 [Control orders: powers of entry and search]:

Lord West of Spithead moved Amendment No. 6:

6: Clause 81, page 56, leave out lines 18 to 20 and insert—

“(b) other premises to which the controlled person is required to grant access in accordance with an obligation imposed by or under the control order;

(c) any premises—

(i) to which the controlled person has previously been required to grant access in accordance with an obligation imposed by or under a control order, and

(ii) with which there is reason to believe that the controlled person is or was recently connected.”

The noble Lord said: My Lords, on Report I mentioned that I proposed to table an amendment to what is now Clause 81 to deal with an issue raised in Committee by the noble Baroness, Lady Miller of Chilthorne Domer. Clause 81 strengthens police powers to enter and search the premises of individuals subject to a control order. It is intended to fill gaps in the powers of the

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police to investigate more effectively breaches of control order obligations and to ensure the police can more effectively monitor compliance with, and enforcement of, control order obligations.

The noble Baroness expressed concern about whether the definition of premises in the clause was sufficiently tightly worded and in particular whether the wording, at least in theory, gave the police powers to search premises that were no longer connected with the controlled individual in any way. Although the noble Baroness acknowledged that it did not seem likely that the police would undertake an inappropriate search, we agreed to see whether the drafting of the relevant powers could be improved to ensure the desirable clarity in the Bill.

We believe that Amendments Nos. 6 and 7 will deliver that clarity by amending the definition of premises in new Sections 7A and 7C of the 2005 Act. The new definitions will allow entry to three categories of property: the controlled person’s place of residence; other premises that the controlled person is required to grant access to as part of the control order obligations; and any premises to which the controlled individual was required to grant access to in the past and with which there is reason to believe that the controlled person is or was recently connected.

The key difference between this formulation and the one currently in the Bill is the addition of the explicit requirement that, for past premises, there must be reason to believe that there is or was a recent connection between the controlled person and the premises. That formulation will cover any premises which, for example, are still occupied or owned by a relative, friend or other associate of the individual or property that the controlled individual left only recently. However, it will not cover premises that were occupied by the controlled individual but which are now occupied by a member of the public with no connection whatever with the controlled individual. We think that this is a good amendment and we thank the noble Baroness for her intervention on that point. I beg to move.

Baroness Miller of Chilthorne Domer: My Lords, I thank the Minister for listening to me on that matter and for coming forward with an improving amendment.

On Question, amendment agreed to.

Lord West of Spithead moved Amendment No. 7:

7: Clause 81, page 57, leave out lines 6 to 8 and insert—

“(b) other premises to which the controlled person is required to grant access in accordance with an obligation imposed by or under the control order;

(c) any premises—

(i) to which the controlled person has previously been required to grant access in accordance with an obligation imposed by or under a control order, and

(ii) with which there is reason to believe that the controlled person is or was recently connected.”

On Question, amendment agreed to.

Schedule 7 [Terrorist financing and money laundering]:

Lord West of Spithead moved Amendments Nos. 8 to 10:

8: Schedule 7, page 89, line 29, leave out “negative” and insert

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9: Schedule 7, page 90, line 10, at end insert—

“( ) The requirements imposed by a direction must be proportionate having regard to the advice mentioned in paragraph 1(2) or, as the case may be, the risk mentioned in paragraph 1(3) or (4) to the national interests of the United Kingdom.”

10: Schedule 7, page 90, line 18, leave out “take” and insert “undertake”

On Question, amendments agreed to.

Lord Marlesford moved Amendment No. 11:

11: Schedule 7, page 94, line 28, leave out paragraph 20

The noble Lord said: My Lords, I am disappointed that the Government should treat Parliament in the way that they did last week when they added a massive amendment on Report. New Schedule 7, which my amendment relates to, consists of 23 pages of fresh legislation that is only tangentially related to the Bill. It is extremely technical and needs detailed discussion in Committee. That would have given the House a proper opportunity to hear representations from interested parties on the amendment. There was a mere one and a half hours of debate with six speakers, including the Minister and the two noble Lords from the opposition Front Benches. This is no way to legislate. It is an insult to the democratic process. I personally regret that those on the opposition Front Benches seem to have yielded to government pressure on the method that was used. I totally acquit the noble Lord, Lord West, on this action. The schedule was grafted on to his Bill and we all support his Bill, especially after the improvements which have already been made in your Lordships’ House.

This sort of thing will not happen in the United States under President-elect Obama. Among his other great qualities, he is a brilliant constitutional lawyer and has a huge respect for constitutional proprieties. Indeed, I was told last night by one of his Democrat colleagues that he places the maintenance of the American constitution second only to his wife and children in his priorities.

Playing fast and loose with the constitution has been one of the major failings of the Bush Administration; it is also one of the major failings of this Government. What could and should the Government have done? To delay this Bill would not have been sensible. The obvious alternative would have been to introduce a separate Bill. Twenty-three pages of complicated legislation is quite enough for a separate Bill. It could then have been given whatever priority the Government’s business managers thought appropriate.

What was the great rush? The Minister did not give a convincing explanation last week. He referred to a meeting of the financial action task force, a body which most people have never heard of. Those of us who serve on Sub-Committee F of the EU Select Committee, however, will learn a lot because we are about to embark on a detailed study of the problems of money-laundering in relation to EU directives.

The noble Lord, Lord Myners, wanted the 34 members of FATF to take further preventive action on money- laundering, terrorist-financing and what the Minister described as proliferation financing. He never actually

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explained what that meant and the great majority of those I have asked in your Lordships’ House have no idea what it means. It actually means finance which could be used to develop chemical, biological or nuclear weapons. It shows the attitude of the Treasury to your Lordships’ House that it did not think it necessary to put a clear explanation of it in the Minister’s speech last week.

I have now read the FATF statement on the 16 October meeting, which was put forward as the need for this hurry. It refers only to potential problems with Iran, Uzbekistan, Turkmenistan, Pakistan and Northern Cyprus. It is perfectly clear that there is no such urgency as to justify this treatment of Parliament. The real clue was when the noble Lord, Lord Myners, said:

“The UK has been and will continue to be at the forefront of the international call for action and efforts to protect the international system from these threats”.—[Official Report, 11/11/08; col. 579.]

For a cosmetic advantage, the Government are prepared to steamroller this schedule through Parliament. I wish they would adopt that old Latin tag, esse quam vidire—to be rather than to seem to be. There are probably many imperfections in this hastily drafted schedule, and indeed the Minister has been seeking to correct some of them this afternoon. The one I am putting forward is on the powers of entry.

Earlier this year my noble friend Lord Selsdon took through his excellent Bill to limit the greatly extended use of powers of entry without warrant. It received its Third Reading in your Lordships’ House on 17 July. The Government gave the impression that they were sympathetic to my noble friend’s Bill. Indeed, we were told that the Prime Minister himself was keen to correct the overuse of entry without warrant and that they would consider their own Bill for this purpose. Perhaps the Prime Minister is even considering including it in the gracious Speech. Well, in this schedule they have produced a prime example—perhaps I should say a sub-prime example—of the need for such a Bill. The power in paragraph 20 to enter without a warrant, which I seek to remove, demonstrates how this whole schedule has been hastily cobbled together from other bits of legislation. I shall give one example. Paragraph 18 lists those who have powers of entry into any business premises without a warrant—we should bear in mind what the object of the schedule is—including at sub-paragraph (2)(e), “a local enforcement officer”. For the avoidance of doubt, sub-paragraph (3)(a) states:

“A ‘local enforcement officer’ means ... an officer of a local weights and measures authority”.

I can imagine Mr Entry, a Suffolk County Council local enforcement officer, calling on my local butcher in Wickham Market and saying to him, “Mr Revett, I have not come to check the weight or shape of your excellent sausages this morning, but you have never revealed the secret formula which makes them so delicious and sought-after throughout East Anglia and beyond. Well, Mr Revett, some powerful people in Whitehall—I am not at liberty to mention their names, of course—have suggested that they might contain proliferation finance. I don’t rightly know what that

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means, but I am afraid I am going to have to open up some of your sausages to determine whether there could be any truth in the allegation”.

Let us improve the schedule in a small way by sweeping away paragraph 20 and leaving the Government with paragraph 21 which contains all the powers of entry they could possibly need, and probably many more. But at least they would have to use a magistrate to determine whether their desire for entry makes any sense under this law. I beg to move.

3.30 pm

Lord Selsdon: My Lords, as the noble Lord who introduced the Powers of Entry Bill after some 15 years’ work, it behoves me to intervene. I did not wish to do so in this Bill, but by some strange act of cunning, new powers of entry have suddenly appeared to go with the 1,137 powers of entry that have so far been identified. I thought that I had reached an agreement with the noble Lord, Lord West, that this Bill, which is passing through the House with great support, would not push this matter to the limit, but that jointly with the Home Office we would sit down and identify all the Bills that give powers of entry for an official to go into a person’s premises and search, seize and effectively spy without a warrant.

I have a problem in that I do not want to oppose the Bill, but the moral feeling within me says that I cannot possibly support yet another power of entry without warrant without going through the process that I thought we had agreed with the noble Lord, Lord West. I ought to declare an interest because with the help of the Home Office, we have set up a mixed public and private Bill team that is gradually identifying more and more powers of entry from different Ministries. Responses to the questions I have asked over time reveal that the problem is that government departments do not know what their powers of entry are. The Home Office team, a good one, is trying to find them out. I spoke to a member of the team the day before yesterday to say that I was going to be almost forced to intervene in this matter, and he said that the team was getting on but was still failing to get responses from various government departments about what those powers of entry are. I shall not repeat the concept of the Bill or its details, but I refer noble Lords to the enormous schedule that was produced jointly with the Government. All we said was that there should be a code of conduct when people seek to go into people’s premises, and that they should not go in without a warrant or a court order, except by agreement and during certain periods of the day.

It pleases me much that the President of the Board of Trade is in his place because he will be well aware that the original council of trade became the Board of Trade. In 1918, when there were certain rules for co-operation and regulation, these matters were discussed. In 1702, the Bishop of London became a member of the council of trade; he was later replaced by the Archbishop of Canterbury. I am proposing to introduce a new Bill to reintroduce the Board of Trade because it had within it all His—or Her—Majesty’s Secretaries of State, members of the Privy Council and others. When the Minister replies, will he urge all the Secretaries

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of State to whom I have addressed questions over the years to produce, as a matter of urgency, the schedules giving their departments’ powers of entry because surely they should know what their powers of entry are. I feel much more relaxed knowing that the President of the Board of Trade is in this House. He is the supreme arbiter and has the right to call upon those people to deliver the information we require. However, until that happens, I am obliged, with great regret, to support the amendment moved by my noble friend.

Lord Thomas of Gresford: My Lords, I follow the noble Lord, Lord Marlesford, in questioning what the local weights and measures authority has to do with terrorist-financing and money-laundering. I note that under Clause 20(3):

“An officer may exercise powers ... only if the information or document sought to be obtained as a result is reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule”.

For which enforcement authority does the officer of a local weights and measures authority act? Is it, under Clause 18(1), the Financial Services Authority? I would not have thought so. Is it the Commissioners of Her Majesty’s Revenue and Customs? I would not have thought the local weights and measures authority would have anything to do with them. Is it the Office of Fair Trading? Possibly, but in what circumstances is it envisaged that it would be involved in terrorist- financing and money-laundering? Is this not just a wide spread of powers without any thought about the circumstances those powers can be used in? I look forward to hearing an explanation from the Minister about exactly what the Government have in mind.

Lord Lloyd of Berwick: My Lords, I do not know whether the Minister will be able to provide an example of when an enforcement officer would need to make an entry under Clause 20 when it would not be possible for him to obtain a warrant under Clause 21. Unless he can give a solid example, I shall feel compelled to vote with the noble Lord, Lord Marlesford.

Lord Myners:My Lords, on Report, I explained in some detail why this amendment was tabled at a late point and gave context to the work of the financial action task force, the global body representing 34 national bodies and many bodies representing regional groupings. I drew attention to the minutes of the meeting of that task force in October and anticipated likely developments at its next meeting early next year. I pointed out that we felt that the change in the constitution and character of the group meant that, at times, we would not necessarily wish to await a decision by the FATF, but would want certain powers to move unilaterally.

We discussed at some length on Report why these amendments have been included in this Bill. It was an informed discussion. The Government listened carefully to the views of noble Lords and have reflected that in the amendments that we have tabled today.

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