Standing Committee B
Tuesday 22 January 2002
[Mr. Bill O'Brien in the Chair]
Amendment proposed [17 January]: No. 518, in page 186, line 39, at end add—
'(d) the amount of money involved in the arrangement or the value of the property does not exceed £1,000'.—[Mr. Hawkins.]
Question again proposed, That the amendment be made.
The Chairman: I remind the Committee that with this we are taking the following amendments: No. 519, in clause 323, page 187, line 14, at end insert—
'(e) the value of the property involved does not exceed £1,000'.
No. 520, in clause 324, page 187, line 41, at end insert—
'(c) the amount of money involved does not exceed £1,000'.
No. 521, in clause 325, page 188, line 40, at end insert—
'(d) the disclosure relates to money or property not exceeding the value of £1,000'.
Mr. Nick Hawkins (Surrey Heath): At the end of our previous sitting we were discussing the introduction of de minimis provisions. The Minister of State, Scotland Office, had just suggested that the amendment was completely at odds with the philosophy of the Bill.
The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): Hear, hear.
Mr. Hawkins: I hear the Under-Secretary agreeing with his hon. Friend. I am indebted to those in the Law Society of England and Wales who have carried out a great deal of work in the few days since our previous debate and have sent further information to my hon. Friend the Member for Beaconsfield (Mr. Grieve) and me. It turns out that, far from what the Minister of State so confidently asserted, there are already de minimis provisions that he failed to mention. I am sure that that was merely an error on his part, but let us consider the Money Laundering Regulations 1993 and the second European money laundering directive. Labour Ministers are keen on European directives now. I remember when the Labour party was the most Euro-sceptic party of them all, but it has done a 180 degrees volte-face since those days.
The Minister of State, Scotland Office (Mr. George Foulkes) rose—
Mr. Hawkins: I shall give way to the Minister later; no doubt he will wish to defend his European honour. I imagine that he will tell me that he was always pro-European, but I make an honourable exception about such matters in the case of the hon. Gentleman. In the
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days when his party was Euro-sceptic he used to be unorthodox, but now his party has come round to his traditional way of thinking.
Under the Money Laundering Regulations 1993, identity must be verified for the following one-off transactions: first, if
''payment is to be made by or to the applicant for business of the amount of ecu (euro) 15,000 or more'',
which under the regulations was roughly equivalent to £9,300. I am not sure whether the euro has fallen in value yet further so that that exchange rate is out of date. Perhaps I should not intrude on private grief, given that I read in my daily paper that the hon. Member for Glasgow, Pollok (Mr. Davidson) was leading the charge against his own Government on European matters. Unaccountably, he is not in Committee this morning. I am not sure whether the Whip has had anything to do with his absence.
Secondly, under the Money Laundering Regulations identity must be verified if it appears, at the outset, to a person handling any of the transactions:
''(i) that the transactions are linked, and
(ii) that the total amount in respect of all of the transactions, which is payable by or to the applicant for business is ecu 15,000 or more; or
(b) at any later stage, it comes to the attention of such a person that paragraphs (i) or (ii) of sub-paragraph (a) above are satisfied.''
I am sure that to those listening to me read them out, such provision are as clear as mud, but I would be happy to copy them for members of the Committee. The consequence of the requirements is that identity does not need to be verified when the amount involved is £9,300 or less in a one-off transaction or linked one-off transactions. Even though the Minister failed to mention it, we have had such de minimis provisions, and those in Europe to whom he refers so often have been happy with them. The provisions under the second money laundering directive are similar, and they were finalised as recently as October 2001.
We have picked a figure of £1,000 and Ministers have said that they will not enter into a Dutch auction on the appropriate level of the limit. We said that we would be happy if it was £500, or even £250. Ministers rejected those figures out of hand. Now we discover that in October 2001, the Government concurred with a second money laundering directive that had much higher de minimis thresholds. In the view of the Law Society of England and Wales, and in that of my hon. Friend the Member for Beaconsfield and myself, a combination of the provisions that the Government have already agreed to in Europe and what we have suggested would entirely address the Government's worries.
Although we have had a good and thorough debate, we may need to return to such matters. I have received from the Law Society some forms from the National Criminal Intelligence Service, which I will copy to any interested members of the Committee. I have not seen the forms before. They are blank and do not contain any confidential information, but they give guidelines. They are printed on the headed notepaper of the economic crime unit of NCIS, and at the top is the
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name of Mr. Abbott, QPM, BA (Hons), who is the director general of NCIS. The form provides notes on how disclosures are made, and there are blank spaces for all the details of the main subject, such as account details. Now that we know something about how NCIS operates, Ministers may be forced to provide more thorough responses to some of the worries that we have expressed.
When we come to amendment No. 520—the crucial part of the de minimis provisions—I shall press it to a Division, so we shall not press the lead amendment, No. 518, now. I am willing to withdraw that amendment, but only on the basis that we are sticking to our arguments in favour of the whole group. Although it is not the first amendment in terms of the order of the Bill, we believe that amendment No. 520 is the most appropriate one on which to divide the Committee. I shall not press the earlier amendments in the group, but I want to make it clear that I will seek a Division when we come to clause 324, to which amendment No. 520 refers.
Mr. Foulkes: Before you ask the Committee to give the hon. Gentleman leave to withdraw amendment No. 518, Mr. O'Brien, may I say that I thought that I had made some very convincing arguments last time we met—[Hon. Members: ''Hear, hear.''].
None of those arguments has been refuted by the hon. Gentleman. He spoke only about the fax that he has received the Law Society of England and Wales. However, that deals with money laundering regulations, which cover different grounds. The Bill is about criminalising people who are carrying out money laundering, whereas the regulations deal with procedures and good practice to avoid money laundering. That is an entirely different matter. De minimis provisions in regulations are for identification requirements. We could not ask for identification and record retention in an infinite number of tiny transactions. That would be ridiculous.
Mr. Hawkins: I did not think that there was any need to repeat all the arguments that we proposed at our previous sitting. Does the Minister not understand that the fact that in another area the Government have agreed to de minimis limits that also relate to reporting, reinforces our point? Although he says that those cover different ground, the concept of de minimis and the reasons for it are germane in both cases.
Mr. Foulkes: The hon. Gentleman may think that, but I do not believe that a de minimis provision would be germane. He is talking about something different from cases in which we report that we suspect that a crime has occurred. Regulations require banks to report suspicious transactions of any size. He has mixed up the issue. The Law Society of England and Wales has taken up an entirely different matter. That is an extra reason why the hon. Gentleman is wise to suggest that he will withdraw his amendment. I think that he would be wise not to press amendment No. 520, either.
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Mr. Hawkins: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 322 ordered to stand part of the Bill.
Acquisition, use and possession
Amendment proposed: No. 428, in page 187, line 2, after 'he', insert 'knowingly'.—[Mr. Grieve.]
Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 16.
Division No. 27]
Field, Mr. Mark
Grieve, Mr. Dominic
Hawkins, Mr. Nick
Tredinnick, Mr. David
Wilshire, Mr. David
Ainsworth, Mr. Bob
Clark, Mrs. Helen
David, Mr. Wayne
Davidson, Mr. Ian
Foulkes, Mr. George
Harris, Mr. Tom
Lazarowicz, Mr. Mark
McCabe, Mr. Stephen
McGuire, Mrs. Anne
Stinchcombe, Mr. Paul
Stoate, Dr. Howard
Watson, Mr. Tom
Question accordingly negatived.
Mr. Grieve: I beg to move amendment No. 486, in page 187, line 21, leave out from 'provision' to end of line 22 and insert
'of goods or services provided by a person who knows or suspects that they may help another to carry out criminal conduct is not consideration'.
Let us recollect the debate that we had in the previous sitting on the proper test of knowledge. That issue was tied in with clauses 321 and 323. Amendment No. 486 is particularly relevant in view of the Division that we have just had on amendment No. 428. I wish to concentrate specifically on amendment No. 486, as there may be a general debate thereafter when we discuss whether the clause should stand part of the Bill.
The Law Society suggested the amendment to me. When I first read the clause I had some difficulty in understanding the Law Society's point. However, now that I do, I am persuaded that there is an issue that the Committee must consider carefully. As clause 323 stands, it provides that a person commits a criminal offence if he
''acquires criminal property . . . uses criminal property''
''has possession of criminal property.''
As we said last week, because of the bizarre way in which the clause is drafted, the test of whether property is criminal property relies in part on the mens rea of the person who holds the property—that is, whether he knows or suspects that the property is criminal property when he receives it.
There are also provisions under subsection (2) that emphasise that there are circumstances in which a person would not commit such an offence. Apart from
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paragraph (a), which states that a person should make an authorised disclosure, paragraph (c) provides that a person does not commit the offence if
''he acquired or used or had possession of the property for adequate consideration''.
However, subsection (3)(c) provides that
''the provision . . . of goods or services which help''
''to carry out criminal conduct is not consideration.''
I see the logic behind that. Those who drafted the legislation wished to emphasise that if a person acquires property for adequate consideration, he does not fall within the scope of the clause. Oddly, although a person might acquire property in the full knowledge that it had a tainted origin, he would not be criminally liable under the clause provided that he paid good consideration for it. However, such a person may be liable for handling stolen goods if the property is stolen rather than the proceeds of crime.
What happens if a solicitor provides advice? That question has worried the Law Society, and it raises an interesting point. Clearly, solicitors whose clients come to them for advice are bound, as we have said, by legal and professional privilege. An exemption is provided so that a solicitor would not have to make any disclosure in such circumstances. Indeed, a solicitor would be prohibited from making a disclosure.
A problem arises if a solicitor discovers from information that he has received while providing advice that it is reasonable to suspect that he has been paid with money that is the proceeds of crime. That must happen frequently. If I apply my experience as a barrister, I can see that if one has a dodgy client who seeks advice, and one forms a view while providing the advice that he looks like a crook, when the subsequent payment comes through from the solicitor—although of course, legal and professional privilege prevents one from disclosing the information except in limited circumstances—one may think, ''I wonder where all that money came from.'' That has certainly happened to me, and I am sure that it happens to solicitors, too, during their daily practice.
On the basis of subsection (2)(c), the solicitor should have nothing to worry about if he provided proper consideration—the service—in return for the payment. A rather curious problem arises if the solicitor concludes after giving the advice that that advice could have been used by the client to help him to carry out criminal conduct. In such circumstances, he would fall foul of subsection (3)(c) and not have provided good consideration for his payment. He might be bound by legal professional privilege, but technically he would have committed the criminal offence, because under the clause, he would not have provided good consideration in return for the criminal property that he suspects has been pushed in his direction from the client.
As an illustration, let me try to give an example. From personal experience as a barrister—circumstances for a barrister might be slightly different, but a solicitor would have exactly the same problem—I can give a matrimonial case as an
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example. A solicitor's client comes along and says that she is seeking a divorce from her husband. In the course of providing instructions to the solicitor, the client informs the solicitor that her husband has been a criminal and has concealed assets—I have certainly had that experience when providing advice as a barrister. Clearly, in those circumstances—especially after the passage of the Bill—there are several things that I would be likely to tell the client. One of the things that I, or the solicitor, would tell the client to do would be to inform NCIS. However, because of legal professional privilege, neither I nor the solicitor could do that. Obviously, I would also seek to advise the client on how best to protect her interests.
The solicitor, or barrister, cannot be responsible for the client if her visit to him was a sham, and was made for the purpose of eliciting advice or information that might facilitate the carrying out of criminal conduct, and which was reported back to the other party afterwards. That would be a clear breach of the clause. It would take place without the solicitor's knowledge, but the solicitor would still be guilty of a breach of the clause. I accept that in practical reality, it is most unlikely that that information would emerge. After all, legal professional privilege normally means that the information provided in the course of the legal advice would not come to light, and the solicitor might know nothing about what had happened. Nevertheless, there might be circumstances in which the client was subsequently prosecuted, waived the privilege and explained the advice that the lawyer had provided. The lawyer would then be in breach of the clause. That is what the amendment is designed to address.
The amendment is simple, small and—as I hope the Minister will conclude—innocuous. It would rewrites subsection (3)(c) so that it said:
''goods or services provided by a person who knows or suspects that they may help another to carry out criminal conduct is not consideration''.
It would therefore introduce a test of knowledge or suspicion, which would tie in exactly with the test of knowledge or suspicion in clause 331. That would seem to meet the problem, and I find it difficult to see a downside in terms of interfering with the preventive effect of clause 323.
The Minister and I have debated whether the wording should be ''knowing or suspecting'' or ''knowing''. However, leaving that to one side, and addressing clause 323 as it is currently drafted, the amendment would meet the needs of the lawyer who provides advice, as well as those of other categories of individuals who could face similar problems. It would emphasise that people could not be guilty of a breach of the clause if they did not realise that they were helping someone to carry out criminal conduct when providing a service for consideration.