Proceeds of Crime Bill

[back to previous text]

Mr. Davidson: Will my hon. Friend give way?

Mr. Foulkes: What I am about to say is of particular interest to my hon. Friend the Member for Glasgow, Pollock and the other Scottish Members on both sides of the Committee. My hon. Friend the Under-Secretary said that provisional figures for 2000 showed 118 prosecutions in England and Wales for alleged money laundering offences, but that in Scotland there had been none to date, which is why there have been no convictions. That may be why those who represent Scottish constituencies feel strongly that the Bill needs strengthening to be more powerful and effective.

John Robertson: May I give my hon. Friend some information, again from Strathclyde police? They have tried to prosecute people but they consistently come up against brick walls in trying to get those people into court. I am greatly looking forward to the enactment of this Bill, so that they can at last address some of the problems in Scotland.

Mr. Foulkes: My hon. Friend is right. He and I attended a presentation by the Scottish Office of NCIS with the Scottish Drug Enforcement Agency. We

Column Number: 1035

heard about their plans for setting up a new money laundering unit in their offices in Paisley and we were very encouraged. We received a very positive response to the Government's proposals.

Mr. Mark Lazarowicz (Edinburgh, North and Leith): May I put it to my hon. Friend that there may be another explanation for the fact that there has been no necessity to use the money-laundering legislation in Scotland? Perhaps the standards of probity in the Scottish financial sector, much of which is located in my constituency, are much higher than those that, unfortunately, we have come to associate with some elements of the City of London.

Mr. Foulkes: If I represented Edinburgh, North and Leith I would put forward that argument too, and I can understand why my hon. Friend is doing so. As a Scotsman, I would like to think that it was true. However, there is no evidence that we can adduce for it. It would be naive and complacent of us to assume that there are not cases in Scotland that need to be pursued, as there are south of the border.

Mr. Davidson: May I ask the Minister to reflect on the point that he made when he mentioned that the Conservatives have yet again voted to weaken the legislation? Is he aware that of the three Liberals, only one is present, and with both his minds he, too, voted to weaken the legislation? That makes it even more unfortunate that the nationalists did not ask for a place on this Committee. We should have been able to see whether they would vote to weaken the legislation or to toughen it up.

The Chairman: Order. Before I call the Minister again, could we perhaps think about getting back to the amendment, because we seem to have moved rather a long way from it?

Mr. Foulkes: That is exactly what I am going to do, Mr. McWilliam. My hon. Friend's point was powerful, but he has made it and I do not need to reinforce it.

I can tell the hon. Member for Surrey Heath that we oppose the minimum threshold, and I can give him three reasons. I hope that they will convince, if not the hon. Member for Surrey Heath, at least other Committee members. First, there are no such thresholds in the existing money laundering offences, or in the existing offence of failing to report laundering of drug money. My hon. Friend the Under-Secretary and I have seen no evidence that the absence of monetary thresholds has resulted in unfair or oppressive prosecution of trivial cases. If Opposition Members have any evidence, I should like to hear it.

Mr. Hawkins: I said in opening that my hon. Friend the Member for Beaconsfield and I have had powerful submissions made to us to the effect that if this new Bill, which the Minister obviously hopes will soon become an Act, goes through without de minimis provisions, the consequences that I spoke of will flow. Those are not made lightly. A formal meeting was

Column Number: 1036

convened with us involving, as I mentioned, both leading representatives of the Law Society of England and Wales and leading practitioners in the field.

Mr. Foulkes: I accept that, and I know that those meetings have taken place. That does not answer my question. Did any of the people at those meetings give any evidence whatever that the absence of monetary thresholds in the existing legislation has resulted in unfair or oppressive prosecution in trivial cases?

Mr. Grieve: I think that the answer is yes. I touched on that earlier in the debate. The amount of disclosure to NCIS that may have to be made in relation to trivial matters is causing particular difficulties, especially because there is not an adequate response from that organisation as to what solicitors should do next.

Let us suppose that a solicitor is carrying out a property transaction and he notifies NCIS that he has suspicions about it. The value of that transaction may be above the £1,000 threshold—it may be a huge transaction—but the solicitor is unable to take the matter any further because he is not told what to do. He cannot tell his client what is going on because to do so would be tipping off. He is left in limbo. From the solicitor's point of view, if there is no de minimis provision, the situation will be much more difficult because the problem could apply to a huge number of transactions and activities. If the Minister can reassure us that telephone guidance as to the next step will always be available from NCIS, some aspects of the provision would cease to be such a problem. Otherwise, a de minimis rule would help to alleviate that difficulty. If—

The Chairman: Order. I shall introduce a de minimis rule on interventions.

4.15 pm

Mr. Foulkes: I was thinking that myself, Mr. McWilliam. You read my mind. Even though the hon. Gentleman's answer was long, it did not deal with the issue.

Mr. Grieve: Yes it did.

Mr. Foulkes: No, it did not. The hon. Gentleman dealt with the extra burden, concern and uncertainty for solicitors. However, my question was whether the absence of monetary thresholds had resulted in unfair or oppressive prosecution in trivial cases. We do not think that it has.

I want to deal with the particular point about the difficulties and volume of reporting. We accept that there is a compliance cost to the industry, but that can be exaggerated. A report could be sent electronically—by e-mail, for example— under systems that NCIS has developed in partnership with the industry. NCIS is very co-operative and collaborates with the industry to make reporting easier.

Mr. Grieve: The issue is not only about the cost of notification. There may well be e-mails and other methods of sending reports. However, there is also an economic cost, and ultimately a professional cost. Once that situation has arisen, the transaction or

Column Number: 1037

activity is sterilised until such time as a go-ahead is given, and the evidence that we were presented with was that those go-aheads are not given. The ball is thrown back into the court of the legal adviser or representative, who is told, ''It's your problem—you decide what to do.''

That state of affairs is unsatisfactory. By introducing a de minimis provision, at least the burden on NCIS would be alleviated, which may enable it to respond adequately to the problems with which it is presented.

Mr. Foulkes: A de minimis provision may alleviate the burden on solicitors, but it will not help NCIS when it gathers information. I will talk in a moment about the importance of information gathering in criminal intelligence work. It is vital in pursuing such matters.

Mr. Hawkins: Just before the Minister responded to the intervention by my hon. Friend the Member for Beaconsfield, he claimed that NCIS has already developed systems that work with the industry. We are being told, as a matter of fact, that reputable firms that make those reports are left in limbo because NCIS does not respond. Clearly the Minister's brief tells him something else, but we are telling him that that is the experience of City firms. They make a report to NCIS and answer comes there none. The firm is left in limbo and transactions are frozen in aspic. Will he talk to his officials and find out why that is happening?

Mr. Foulkes: It is not unknown for there to be two interpretations of what is happening. A solicitor may have a different interpretation about the speed of response and the way in which it is made from that of NCIS. When I visited the NCIS office in Scotland, I was impressed by the operation. My hon. Friend the Under-Secretary and his officials have been in very close contact with NCIS in relation to those procedures—but I will pick up the point that the hon. Gentleman has made.

It has also been argued that existing money laundering offences have a threshold of seriousness that the Bill would remove, and that a financial threshold is required to replace that. However, the fact remains that it is already an offence to launder the proceeds of minor offences such as shoplifting. The proceeds of such offences, and even of more serious offences such as drug trafficking, are sometimes very small amounts. Although the offences may be serious, the financial amounts involved may be relatively small. I therefore do not accept that the inclusion of the proceeds of additional summary offences within the scope of money laundering creates new circumstances that demand a financial threshold.

Secondly, the advice that the Government have consistently received from the law enforcement community is that criminals will inevitably exploit minimum thresholds, as my hon. Friend the Member for Glasgow, Pollok perceived in an earlier intervention. The inconvenience to such criminals of breaking down a sum of £20,000 or even £50,000 into slightly more than 20 or 50 packets that fall below the threshold is far outweighed by the benefit that they

Column Number: 1038

derive in terms of immunity from prosecution. [Interruption.] The Conservatives are chattering among themselves, not paying attention.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 17 January 2002