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Standing Committee Debates
Proceeds of Crime Bill

Proceeds of Crime Bill

Column Number: 1009

Standing Committee B

Thursday 17 January 2002


[Mr. John McWilliam in the Chair]

Proceeds of Crime Bill

Clause 321

Concealing etc

Amendment proposed [this day]: No. 426, in page 186, line 11, after 'he', insert 'knowingly'.—[Mr. Hawkins.]

2.30 pm

Question again proposed, That the amendment be made.

The Chairman: I remind the Committee that with this we are taking amendment No. 428, in clause 323, page 187, line 2, after 'he', insert 'knowingly'.

Mr. Ian Davidson (Glasgow, Pollok): I want to continue with the points that I was making this morning. I regret that the hon. Member for Surrey Heath (Mr. Hawkins) was not here to hear me start. I see that he has now arrived. Better late than never, I suppose.

Mr. Alistair Carmichael (Orkney and Shetland): Will the hon. Gentleman reconsider that judgment?

Mr. Davidson: It is better never late, I suppose. I am particularly glad to see the hon. Gentleman. He was not able to join us in our deliberations this morning. Only one of the three Liberals was present this morning and only one is present this afternoon. I wonder why they did not accede to the Scottish National party's request to have a Member on the Committee.

Mr. Carmichael: Perhaps I can assist the hon. Gentleman. The reason is that we could not accede to a request that was not made.

Mr. Davidson: Goodness me, I find that difficult to believe. Are you seriously telling me that the SNP did not ask for a place on this serious Committee?

The Chairman: Order. As the Chairman of the Selection Committee, it would be improper for me to tell you that.

Mr. Davidson: Goodness me, who can I ask in those circumstances? The hon. Member for Orkney and Shetland (Mr. Carmichael) is telling me that the SNP did not ask for a place on the Committee and the Chairman is telling me that he cannot say.

Mr. Nick Hawkins (Surrey Heath): The hon. Gentleman was referring to my fractional lateness. I understand from my hon. Friend the Member for Beaconsfield (Mr. Grieve) that I missed only about

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three words of the hon. Gentleman's opening remarks. I am probably no later than he and I both are when we try to catch passes when we play for the Lords and Commons rugby team.

The Chairman: Order. Before we continue in that strain, the question of whether it is better to be late, even ''knowingly'', is not in order, as the amendment applies only to the words in the Bill.

Mr. Davidson: That is an excellent point, Mr. McWilliam.

Mr. David Wilshire (Spelthorne): I shall be exceedingly helpful to the hon. Gentleman. He asks whom he should contact regarding vacancies on the Committee. The system has changed and the Whips Office now looks after the minor parties, so he should address his question there.

Mr. Davidson rose—

The Chairman: Order. That is not about the amendment.

Mr. Davidson: Thank you, Mr. McWilliam. I thought that I was being called to order before I had even spoken, which would have been a record even for me.

I should like to consider the point about the SNP not having asked for a place on the Committee. That seems scandalous, and hon. Members may wish to return to the subject in due course.

I was speaking about the fact that the Conservative party's position on such matters is a disgrace. While it mouthed that it was opposed to money laundering, its actions did not indicate that it took the issue seriously. We must ask whether that is a serious problem that must be addressed. Lawyers, accountants and bankers face a major difficulty that professional organisations have so far been unable to cope with through their internal mechanisms. I was struck by the fact that the hon. Member for Beaconsfield referred to the proposals as tyrannical, which seems a trifle over the top. We must remember that we are dealing with professions that pride themselves on their standards of professional ethics and schemes of self-government. [Interruption.] It must be absolutely clear that when huge sums are under account such schemes of self-government are effectively worthless. [Interruption.]

The Chairman: Order. There seems to be more than one meeting going on in the Room this afternoon. I should be obliged if hon. Members would listen to the person who has the floor.

Mr. Davidson: Thank you, Mr. McWilliam. None of the conversations that were taking place involved the Liberal Democrats, as there is only one of them.

Mr. Carmichael: I can have a conversation with myself.

Mr. Davidson: Indeed. Wherever two Liberals gather, there are four opinions, three press releases and four cracks in the road.

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Those schemes of professional ethics are effectively worthless when huge amounts are dangled in front of those involved. Lawyers, bankers and accountants cannot be trusted to police themselves. In the past few years, they have spent more time in self-congratulation than self-investigation, and in such circumstances the Government must act.

I read the other day that

    ''solicitors are considered a soft target by fraudsters and money launderers because they lend legitimacy and respectability to illegal transactions''.

[Interruption.] Am I being heckled by the Liberal, or is he just talking to himself? I am disappointed to interrupt that dialogue.

Dr. Howard Stoate (Dartford): Monologue.

Mr. Davidson: No, there are two of them—he is schizophrenic—and that was probably Orkney talking to Shetland, having a vicious internal dispute.

The Chairman: Order. As long as the hon. Gentleman does that in English and not Norse, we are all right.

Mr. Davidson: Either way, I suspect that we would have difficulty understanding him.

That quotation is from the Law Society's website, which issues several instructions to lawyers that are clearly not honoured in every case in practice.

Mr. Hawkins: Is the website to which the hon. Gentleman refers that of the Law Society of England and Wales or the Law Society of Scotland?

Mr. Davidson: The Law Society of England and Wales, but it is described as ''the Law Society'', in the same way as the Rugby Football Union describes itself as such even though it is only the English one. That is an egotism of the English that the rest of us are prepared to tolerate on occasion. The Football Association is another example.

On several occasions, the website has said that lawyers should take certain measures. It states that clients should be sent standard phrases in a client care letter, such as

    ''For the protection of our clients we operate a money-laundering reporting procedure. In certain circumstances, information will be revealed by us to the appropriate authorities in relation to any suspicion of money laundering.''

That seems to be good practice. The problem is that lawyers are not abiding by it.

The website goes on to advise lawyers about things that might cause ''fleeting suspicions''—not the Law Society's phrase, but that of the hon. Member for Henley (Mr. Johnson). The Law Society's advice to solicitors is to ''be alert'' to anything unusual, such as unusual settlement requests, for example by cash or third party cheque, unusual instructions, such as no discernible reason for using the firm, or large amounts of cash, for example holding cash in a client account pending instructions or merely in order to forward to

Column Number: 1012

a third party, or a secretive client who is reluctant to give details of his identity or answer questions about the deal.

The fact that the Law Society must advise its members that the presence of any of those factors should give cause for suspicion suggests that even the society does not trust its own members to reach the right judgment in circumstances in which chunks of money are dangled in front of them.

Mr. Hawkins: The Law Society's website rightly and properly deals with the issue, and its alternative interpretation is that it wants to ensure that all proper steps are taken to deal with questions about the funding of organised crime and money laundering. I know that the hon. Gentleman is suspicious of all lawyers, but that is an equally acceptable and proper interpretation of the website. The society is simply trying to ensure that the law—even as it stands under the Bill—is followed properly.

Mr. Davidson: Some people may believe that, but I am not one of them. The implication is that the Law Society believes that its members cannot be trusted to act properly unless they are told what to do. The society also suggests to its members—and I will return to the matter in another context—that they should be ''alert to anything unusual'', such as

    ''suspect territory (for example, countries where drug trafficking or drug production may be prevalent, or where the banking systems are less sophisticated than in the UK).

    If any unusual factors give cause for concern, solicitors should explore the unusual nature with the client to allay concerns or ensure the transaction proceeds as normal.''

The instructions and advice being issued to solicitors are clear, but they are not being abided by. The society advises solicitors to

    ''Consider adopting a policy. The firm may wish to agree a policy that says sums of more than a fixed amount will not be accepted in cash unless previous authorisation is given. In this way, should cash be offered or if cash is desirable, the circumstances can be explored in good time and the circumstances considered in advance.''

The fact that it has issued those instructions to its members suggests that it is unhappy with the existing arrangements.

As I was reading in bed last Sunday, as I am prone to do, the Journal of Money Laundering Control 1999, volume 3, several sections leapt out at me as being relevant to the provision. Of particular relevance is a piece by Andrew Campbell, who cites Bosworth-Davies and says:

    ''The activities of professional advisors, particularly lawyers has, in the past, caused considerable concern in the field of money-laundering activities, due in no small part to the existence of the secrecy generated by the attorney-client privilege.''

I hope that we shall discuss that issue at a later stage, because it is absolutely clear that the existing arrangements are unsatisfactory. The journal, which made interesting Sunday reading, went on to mention that

    ''The NCIS received 14,000 reports of suspicion of money laundering in 1997 but only 236 of these came from solicitors. In 1996, 300 reports from solicitors had been received.

Column Number: 1013

The National Criminal Intelligence Service has made it clear that it is disappointed by the attitude of solicitors in respect of what it describes as their ''legal and moral'' obligations. While it is of the opinion that solicitors are failing to report suspicious circumstances, the Law Society takes a more generous view and puts a spin on it by suggesting that the reason why the number of reports is falling, or is not particularly high, is

    ''an indication that criminals are finding that solicitors' firms are providing a 'more hostile environment for money laundering'''.

That is a justifying description. A particularly helpful observation from Bosworth-Davies is that

    ''many lawyers are of the opinion that the money-laundering laws do not apply to them,''

I have heard nothing from Opposition Members to persuade me that they believe that money laundering regulations should apply to them or their friends. It strikes me that they are consistently trying to defend the indefensible and implying that everything is hunky dory.

2.45 pm


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Prepared 17 January 2002