Mr. Mark Field (Cities of London and Westminster): I suspect that there will be a blossoming of consensus on this matter—if not on my hon. Friend's amendment, perhaps on the Government's amendment.
One fact that we must bear firmly in mind, particularly with the fast growing array of independent financial advisors, is that many of them are either self-employed or employed in a network consultancy arrangement. Therefore, it is important to find the right form of words with regard to nominated officers. I suspect that when the Bill is enacted, and the full implications of the money-laundering provisions are made clear to the financial services profession, some sort of network will have to be put in place to accommodate new and complex forms of employment.
We must be more imaginative, so that we can address more modern work environments than those of traditionally organised firms and partnerships. The world of employment is changing fast, and it is clear that networks will be put in place to ensure that nominated officers can be appointed, even if they are not employees or employers—or have no direct working relationship at all with individuals who might fall foul of the provisions.
Mr. Ainsworth: In principle, I agree that the legislation could be improved by allowing for internal reporting to a nominated officer by employers as well as employees, and by providing for immunity from any legal or other proceedings relating to disclosure where a report is made voluntarily. We have met several organisations that have expressed concerns about Part 7, and we have also received representations. I have already indicated that I would table amendments to deal with those concerns—and in response to the little comment by the hon. Member for Beaconsfield, may I add that although he may have tabled his amendment first, we may have thought of ours first?
The Opposition's amendments are commendable, but they fail to achieve what the industry is looking for. With regard to reports to a nominated officer, it appears that the amendments that relate to a firm, company or voluntary organisation might exclude some of the sort of bodies that we want to include, and
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on the immunity point, further adjustments would be necessary to clause 327 to cast the immunity wider than the regulated sector. Therefore, the Government have tabled three amendments that offer a more effective means of answering the industry's concerns.
Amendments Nos. 512 and 513 provide protection from charges of breach of confidence if a person outside the regulated sector reports suspicions of money laundering. Amendment No. 514 addresses internal reporting, and will allow employers as well as employees to report to a nominated officer within a firm, company or voluntary organisation.
Amendments Nos. 512 and 513 remove the references to the regulated sector in clause 327, so that the protected disclosure provision would no longer apply only to those conducting a business in the regulated sector. Instead, the amendments extend it to cover information that came to someone in the course of their
''trade, profession, business or employment.''
That is intended to cover those who exercise their profession in a voluntary capacity, such as solicitors working in law centres, or accountants giving free advice for organisations such as TaxAid. However, it would not catch professionals who were doing voluntary work unrelated to their profession.
Amendment No. 514, which inserts new subsection (10A) into clause 329, has the effect of applying the protected disclosures provision to people who are not technically employees, but who exercise functions for an organisation in which there is some sort of nominated officer scheme in place. That means that directors, volunteers, partners in traditional firms and members of limited liability partnerships will all be able to make a report to a nominated officer, if their organisation has one.
Because amendment No. 514 applies to the whole of part 7, and clarifies what is meant by references to employers and employment, non-employees can report to a nominated officer in all three of the situations envisaged under part 7 in order to avoid committing one of the principal money laundering offences, in order to avoid committing the failure to disclose offence and voluntarily with the protection offered under the clause.
When such a report is made to a nominated officer, the onus will fall on him to make the report to a constable, if he thinks it appropriate. Therefore, if the transaction is in the regulated sector, the liability for the failure to report an offence under the clause will be transferred to the nominated officer. If the transaction is outside the regulated sector and a report is made voluntarily or in order to avoid committing one of the principal money-laundering offences, under clause 322, the nominated officer could be guilty of becoming concerned in an arrangement that facilitates money laundering if he does not take appropriate action.
We consider that we have dealt in a wider way with part 7 and with the worries that have been expressed by the industry—the same worries that the hon. Member for Beaconsfield (Mr. Grieve) has mentioned. I commend the Government's
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amendments to the Committee, and ask the hon. Gentleman to reconsider his amendments.
Mr. Grieve: I am grateful to the Minister for what he has said. He has made this clear, but will he confirm that the change from the regulated sector to any trade or profession does not place a greater burden in terms of failure to disclose on individuals outside the regulated sector? I see his officials nodding. He will be aware that, under the Drug Trafficking Offences Act 1986, the duty to disclose extends precisely to that category of people who can make a protected disclosure.
Mr. Ainsworth: I suppose that, for the sake of the Hansard report, I had better confirm those nods.
Mr. Grieve: In that case, the Minister will not be surprised to know that we do not intend to oppose the Government amendments. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 324 ordered to stand part of the Bill.
Regulated sector and
Mr. Ainsworth: I beg to move amendment No. 515, in page 265, line 3, leave out from beginning to end of line 43 on page 266 and insert—
Business in the regulated sector
1 (1) A business is in the regulated sector to the extent that it engages in any of the following activities—
(a) accepting deposits by a person with permission under Part 4 of the Financial Services and Markets Act 2000 (c. 8) to accept deposits (including, in the case of a building society, the raising of money from members of the society by the issue of shares);
(b) the business of the National Savings Bank;
(c) business carried on by a credit union;
(d) any home-regulated activity carried on by a European institution in respect of which the establishment conditions in paragraph 13 of Schedule 3 to the Financial Services and Markets Act 2000 (c. 8), or the service conditions in paragraph 14 of that Schedule, are satisfied;
(e) any activity carried on for the purpose of raising money authorised to be raised under the National Loans Act 1968 (c.13) under the auspices of the Director of Savings;
(f) the activity of operating a bureau de change, transmitting money (or any representation of monetary value) by any means or cashing cheques which are made payable to customers;
(g) any activity falling within sub-paragraph (2);
(h) any of the activities in points 1 to 12 or 14 of Annex 1 to the Banking Consolidation Directive, ignoring an activity described in any of sub-paragraphs (a) to (g) above;
(i) business which consists of effecting or carrying out contracts of long term insurance by a person who has received official authorisation pursuant to Article 6 or 27 of the First Life Directive.
(2) An activity falls within this sub-paragraph if it constitutes any of the following kinds of regulated activity in the United Kingdom—
(a) dealing in investments as principal or as agent;
(b) arranging deals in investments;
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(c) managing investments;
(d) safeguarding and administering investments;
(e) sending dematerialised instructions;
(f) establishing (and taking other steps in relation to) collective investment schemes;
(g) advising on investments.
(3) Paragraphs (a) and (i) of sub-paragraph (1) and sub-paragraph (2) must be read with section 22 of the Financial Services and Markets Act 2000 (c. 8), any relevant order under that section and Schedule 2 to that Act.
2 (1) This paragraph has effect for the purposes of paragraph 1
(2) ''Building society'' has the meaning given by the Building Societies Act 1986.
(3) ''Credit union'' has the meaning given by the Credit Unions Act 1979 (c. 34) or the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)).
(4) ''European institution'' means an EEA firm of the kind mentioned in paragraph 5(b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000 (c. 8) which qualifies for authorisation for the purposes of that Act under paragraph 12 of that Schedule.
(5) ''Home-regulated activity'' in relation to a European institution, means an activity—
(a) which is specified in Annex 1 to the Banking Consolidation Directive and in respect of which a supervisory authority in the home State of the institution has regulatory functions, and
(b) if the institution is an EEA firm of the kind mentioned in paragraph 5(c) of Schedule 3 to the Financial Services and Markets Act 2000 (c. 8), which the institution carries on in its home State.
(6) ''Home State'', in relation to a person incorporated in or formed under the law of another member State, means that State.
(7) The Banking Consolidation Directive is the Directive of the European Parliament and Council relating to the taking up and pursuit of the business of credit institutions (No. 2000/12 EC).
(8) The First Life Directive is the First Council Directive on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance (No. 79/267/EEC).
3 A business is not in the regulated sector to the extent that it engages in any of the following activities—
(a) the issue of withdrawable share capital within the limit set by section 6 of the Industrial and Provident Societies Act 1965 by a society registered under that Act;
(b) the acceptance of deposits from the public within the limit set by section 7(3) of that Act by such a society;
(c) the issue of withdrawable share capital within the limit set by section 6 of the Industrial and Provident Societies Act (Northern Ireland) 1969 by a society registered under that Act;
(d) the acceptance of deposits from the public within the limit set by section 7(3) of that Act by such a society;
(e) activities carried on by the Bank of England;
(f) any activity in respect of which an exemption order under section 38 of the Financial Services and Markets Act 2000 (c. 8) has effect if it is carried on by a person who is for the time being specified in the order or falls within a class of persons so specified.
4 (1) Each of the following is a supervisory authority—
(a) the Bank of England;
(b) the Financial Services Authority;
(c) the Council of Lloyd's;
(d) the Director General of Fair Trading;
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(e) a body which is a designated professional body for the purposes of Part 20 of the Financial Services and Markets Act 2000 (c. 8).
(2) The Secretary of State is also a supervisory authority in the exercise, in relation to a person carrying on a business in the regulated sector, of his functions under the enactments relating to companies or insolvency or under the Financial Services and Markets Act 2000 (c. 8).
(3) The Treasury are also a supervisory authority in the exercise, in relation to a person carrying on a business in the regulated sector, of their functions under the enactments relating to companies or insolvency or under the Financial Services and Markets Act 2000 (c. 8).'.
The amendment would bring schedule 6 into line with the amendments that have been made to the Money Laundering Regulations 1993, as a result of the coming into force of the Financial Services and Markets Act 2000. The relevant amendments to the regulations were made formally on 9 November 2001 and are contained in the Money Laundering Regulations 2001.
Our policy is that the definition of a
''business in the regulated sector''
under the Bill should be the same as that under the money laundering regulations, so that the same group of people will have obligations relating to money laundering imposed on them. Members of the Committee will have noticed that the text that the amendment would substitute is the same as parts 1 and 2 of the schedule 3A that was inserted into the Terrorism Act 2000 by paragraph 5(6) of schedule 2 to the Anti-terrorism, Crime and Security Act 2001.