Proceeds of Crime Bill

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Mr. Davidson: I want to reinforce my hon. Friend's point. The cost of compliance must be balanced against that of non-compliance. In my constituency, and in those of other hon. Members, non-compliance has resulted in several deaths. If the City of London and others had not dealt with drug money with impunity, we would not be in that situation. I want to discuss later the reputation of the City of London in connection with the Abacha money from Nigeria. A host of banks and reputable professionals in the City were only too glad to take money from corrupt sources.

Ian Lucas: My hon. Friend has, as always, made his point very well.

The first aspect is suspicion. The second aspect is that positive action by the person is required. If I were in the position—and I have been in an analogous position—of suspecting that I had received such money, I would also have to have taken positive action, such as concealing, disguising, converting, transferring or removing it. That is an extremely important point, and we have not focused sufficiently on it.

Mr. Grieve: The hon. Gentleman is right about the amendment to clause 321. I, too, would like to speak about that and will try to catch your eye later, Mr. O'Brien. There is also an amendment to clause 323, and both clauses should be read together. Clause 323 relates to ''Acquisition, use and possession'' and is so widely drafted that the offence of handling stolen goods need never be proceeded with again once the Bill has been passed. That is because everybody could be prosecuted under clause 323, and thus be subject to a completely different standard test of guilt.

The Chairman: Order. Mr. O'Brien is now on his way to his constituency, for which I am sure we are all jealous of him. I am in the Chair now.

Mr. Hawkins: On a point of order, Mr. McWilliam. You and Mr. O'Brien have just effected a seamless transition of power that would be the envy of Governments throughout the world.

Ian Lucas: I was perhaps making a mistake by confining my remarks to amendment No. 426. An important point has been made, because if I had ever suspected that money in my possession was the proceeds of crime, what would I have done? I would not have dealt with that money. To have committed an

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offence under clause 321, I would have to have done something with the money that I suspected was the proceeds of crime.

Mr. Hawkins: I understand why the hon. Gentleman's argument is directed towards clause 321, but he must appreciate that my hon. Friend and I are discussing two amendments that have been grouped together, because we will not be allowed to return to amendment No. 428 when we discuss clause 323 at a later stage. We must have the debate now. Our argument is more powerful because the amendments were tabled to both clauses. That reinforces the point made by my hon. Friend the Member for Beaconsfield.

The Chairman: Order. It strikes me that the amendments are narrow, and the only point at issue is whether or not a person does something knowingly.

Ian Lucas: The two elements of the offence are first, the initial suspicion, and secondly, the fact that a person does something. If I had still been responsible for regulating financial services with a firm, what would I have done? The first thing would have been to call in the individual concerned. As a solicitor, not only was I representing an individual client, but as an officer of the court, I already had duties in respect of such matters, and not only under financial services legislation. If, having discussed with the client the money in my possession, I still had a suspicion that it was the proceeds of crime, it would not have unreasonable for me to have been required to make a disclosure.

I have been greatly assisted by the excellent debate this morning, and in particular by the comments of my hon. Friend the Minister. He has shifted my position and has satisfied me that in such circumstances, suspicion should be regarded as sufficient to require me to make a disclosure. As my hon. Friend the Member for Glasgow, Pollok asked, is that really too heavy a burden?

Mr. Ainsworth: My hon. Friend goes to the heart of the matter. The only defence put forward by Opposition Members is, ''Oh dear, we tabled two amendments and the clauses have to be taken together.'' They have not said in their defence that they did not have to table the amendment to clause 321, so my hon. Friend the Member for Wrexham is right to expose what the Opposition are trying to do to that clause.

Mr. Hawkins: That is nonsense.

Mr. Ainsworth: The hon. Member for Surrey Heath knows that what I said is true.

Ian Lucas: I hope that the benefit of my experience before I became a Member of Parliament has been of assistance to the Committee. On occasions I have criticised the Government's position, but I believe that they have achieved the right balance with the clause.

Mr. Hawkins: The Minister's intervention on the hon. Gentleman's serious and rational contribution to the debate cannot be allowed to pass unchallenged. I was saying to the hon. Gentleman that, when considering our amendments, clauses 321 and 323 have to be looked at together. That was not our only defence of the amendments, as the Minister

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pejoratively suggested. We have advanced a series of arguments that he has spent a long time seeking—wholly unsuccessfully—to rebuff.

Ian Lucas: I have finished speaking now.

Mr. Field rose—[Interruption.]

The Chairman: Order. There seems to be muttering in the Room. Will members of the Committee allow the hon. Gentleman to make his speech?

Mr. Field: Thank you, Mr. McWilliam, for protecting me.

We have had a long debate and I, like other members of the Committee, agree entirely with the general thrust of what the Government are trying to achieve with the money-laundering provisions. It is important to maintain the good name of the City. I was looking out for the facial expression of the hon. Member for Glasgow, Pollok when I said that, but he managed to keep a straight face. Over the centuries, the City of London has been an important part of this country's economy, and I hope that it will remain so for many centuries to come. As an integral part of that position, it must as far as possible be above reproach.

I want to be open with the Minister and the hon. Member for Glasgow, Pollok. During the past decade or so when I worked in the City of London, I was worried that, because of the large fees that were coming into law firms—even reputable law firms—a blind eye was being turned to the Maxwell affair and various others. As in the cases of Enron and the Bank of Credit and Commerce International, both of which had large, reputable auditors—Arthur Andersen and PricewaterhouseCoopers respectively—partners who were responsible for large streams of fee income turned a blind eye to certain things that were going on. I therefore fully appreciate that there is a need for certain money-laundering provisions. However, we must get the balance right. We shall discuss how draconian the provisions are at great length later.

10.45 am

John Robertson (Glasgow, Anniesland): May I ask the hon. Gentleman for clarification? He says that the Bill should take care of certain forms of money laundering. Does that mean that he thinks that certain other types of money laundering are acceptable?

Mr. Field: No. I am sorry if I articulated my point incorrectly. I meant that money laundering has to be taken seriously, particularly in a global economy in which large sums of money go daily into accounts through the internet. The City of London rightly plays an integral role in looking after international business.

I was concerned with what the Minister said about English law. There was a bit of banter about the perceived anti-foreigner stance taken by Conservative Members. English law has played an integral part in the development of international trade and commerce in the past two or three centuries. Many contracts are written in English law, even when they are between two parties that have nothing to do with England. A Bermudan shipping firm and a Portuguese wine exporter, for example, may wish to ensure that their

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contractual arrangements are handled under English law so that if their case went to arbitration, it would do so through an English court of law or a British arbitration organisation. That is healthy.

One reason why English law has maintained its pre-eminence is its sense of certainty, and because it is a fair system in the world of commerce. We have every reason to be proud that English law is used in that way. When Conservative Members express concerns about foreign legal jurisdictions, it is because we have cause to feel proud of the importance of English law. The knock-on effect of that importance has been the pre-eminence of the City of London.

It strikes me that the clause puts an unreasonable burden on the professional adviser. If it is shown that money or property has been the proceeds of crime, the clause almost reverses the normal burden. If the slightest hint of suspicion falls on any professional adviser under clause 321, it will be used to build a case on what may be the most flimsy of grounds. It is for that reason that we wish at least some sense of mens rea to be included.

Ian Lucas: If there is the slightest hint of suspicion, does the hon. Gentleman believe it unreasonable for the financial adviser to make investigations to satisfy himself about that suspicion?

Mr. Field: It is a matter of degree. My point is that the authorities' thinking will be almost reversed. Once a state of affairs that may have led to the use or misuse of the proceeds of crime is discovered, there will be a reverse burden. That means that when there is the merest hint of a suspicion, a professional adviser will fall foul of the clause. The question is, and must always be, one of degree.

Earlier, my hon. Friend the Member for Henley made the point, fairly forcefully, that someone might be caught under the provision if a particular client of theirs, with whom they had a long-standing relationship, suddenly wanted to transfer a larger amount of money than usual into an account. The professional might think, ''Gosh, that was rather odd,'' and then think no more of it. That was the merest hint. If we are to have reasonable commerce, the nature of that minor hint should not necessarily trigger the procedures in the Bill—yet under clause 329(3), there seems to be little doubt that that suspicion would in itself be enough to trigger all the other provisions.

 

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Prepared 17 January 2002