|Proceeds of Crime Bill
Mr. Field: I support my hon. Friend the Member for Beaconsfield for having tabled the amendment, and I have grave concerns about the contribution of the hon. Member for Orkney and Shetland (Mr. Carmichael). I fully accept the Minister's accusation, and believe that the provision should be watered down. I accept the Government's underlying desire that stricter rules should apply to the regulated sector, but I am much concerned about the concept of wilful blindness, because suspicion would be part and parcel of the provision even if our amendment were accepted. We are worried about ''reasonable grounds'' and the objective sense of suspicion.
As for what is a regulated sector, I accept that my hon. Friend the Member for Beaconsfield was making an extreme point when he referred to cleaning and catering staff. However, I sensed from the Minister a simplistic idea of how the City works. Much as the grinning hon. Member for Glasgow, Pollok would not accept my view, the City is a club no more. It is now much more difficult to analyse it as a small inward-looking club that plays by its own rules. It is a far more regulated sector than it has been in the past.
The Minister referred to front-line staff. Let us imagine an average department of an investment bank, although my argument could apply to law firms and accountants, too. It will have front-line staff, who are freshly qualified and are likely to have taken professional examinations. I do not dispute that those individuals should be caught by the stricter regulation that would apply to the regulated sector. However, there are also middle-office and back-office staff. For example, let us consider the collapse of Barings in late 1994 and early 1995. Nick Leeson and others, who were clearly culpable, were middle-office and back-office staff. In a small operation, they had a high level of day-to-day knowledge and responsibility. That may not apply in a larger department, and to have strict rules for the regulated sectoróas opposed to those outside itówill be difficult.
Mr. Ainsworth: When I referred to front-line staff, I was pointing out that at times it is not necessarily senior staff who have access to relevant information. If staff are dealing with financial transactions, they ought to be covered by the same code and standards. If the hon. Gentleman believes, as the hon. Member for Beaconsfield appeared to, that the cleaner will be covered by the measure, I must tell him that that is not the case. He should table a separate amendment and read schedule 6, the first sub-heading of which is ''Business in the regulated sector'', alongside the clause to see the extent that it engages in such activities. People who work in the personnel or maintenance department, or who are cleaners, will not be covered by the provision.
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Mr. Field: Yes, but I am sure the Minister accepts that people who work in the back office deal with settlements, for example.
Mr. Ainsworth: Why should I not?
Mr. Field: I have no objection to that, but the matter is one of degree. I have cited the Singaporean example of Barings. It was a small operation, with half a dozen staff. Clearly, someone in the back office who may not have had professional qualifications would have had an understanding that money would be flowing in, and may have had direct contact with clients. However, at Canary Wharf where departments are staffed by 300 or 400 people, an individual in the back office may not have as much day-to-day involvement with such matters.
I have much sympathy with the level at which the Government are trying to pitch the clause. They want to ensure that there is a proper regulated sector. I am not sure whether I have the answer. I am just worried about the problems that I can envisage. It is clearly for the Minister and his civil servants to formulate an acceptable idea of a regulated sector. A large investment bank will have an enormous department. It will be a highly pressurised, stressful environment. Often, training will have been done on the job, and it probably was not that good. I am not making excuses for large financial services operations, but the Minister's comments about how front-line staff in the regulated sector should have direct responsibilities is a simplistic analysis.
My worry, looking at the matter from the Government's point of view, is that if we make a hard and fast rule that only people in the City with professional qualifications would be caught, unscrupulous banks would ensure that many of their back-office staff would not have the qualifications, so that they would not be caught by the provision.
Mr. Davidson: Will the hon. Gentleman clarify his point about training? He said that training would not be all that good in some back offices. I understand why that would be a defence for the individual, but it is not a defence for the company. In such circumstances, surely we should not make law on the basis of accepting that back-office training will be poor.
Mr. Field: I fully accept that. I want protection for the individual rather than the bank. It would be quite wrong if a financial organisation tried to use lack of training and a pressurised environment as a defence.
Mr. Carmichael: Surely, if the back-room individual were so lacking in training and expertise, the court must examine those factors when establishing whether there are reasonable grounds for suspicion or knowing.
Mr. Field: That may be the case, although the Minister will not be happy to learn it. It may apply to individuals, but not to organisations.
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Mr. Ainsworth: The hon. Gentleman is suggesting that the industry is ignoring the guidance that it receives, and that its current legal obligation to train staff is not adhered to. Does that not justify the need for the steps that we are taking?
Mr. Field: I am not suggesting that. Strict rules are in place, and the Minister rightly said that it is more difficult for large financial institutions to ensure that day-to-day training occurs, because of the increasing flexibility of the work force, which includes more and more temporary staff who go in and out for a handful of days at a time.
It is simplistic to refer to people as simply front-line staff. In the changed world of work, the Minister must appreciate the great pressures that might be on junior individuals who may not have professional qualifications. Such individuals could be ruined by the hint of going to court, let alone by being convicted on the objective suspicion test rather than on their knowledge or genuine suspicion.
Stephen Hesford: The Minister rightly emphasised that businesses to which the provision will apply should have trained their staff. It is a problem for the business if it is run with a turnover of staff who come in every other day. If a temporary member of staff were in the unfortunate position of being caught by the provision, would subsections (5)(a) and (6) not come to that person's rescue?
Mr. Field: The hon. Member for Wellingborough talked about subsection (5)(a). We may discuss that later.
Stephen Hesford: But is the answer not yes?
Mr. Field: The answer is maybe, as in many of these mattersóor yes and no, as the hon. Gentleman, as a lawyer, knows.
The offence is highly serious, and until now, the prosecution had to prove beyond reasonable doubt that an individual knew or suspected something. The phrase ''reasonable grounds'' represents a high hurdle for a professional to traverse. My worry about the thinking behind this clause, and others, is that there must be analysis after the event. People will piece together things after money laundering and criminality has come to light. A great burden will be placed on individuals. Indeed, the burden of proof will be almost reversed.
The objective test for suspicion represents more than the Government's desire for a greater duty of diligence. It is understandable for those in the professional sectoró
It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Four o'clock.
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The following Members attended the Committee:
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