Proceeds of Crime Bill

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Mr. Ainsworth: The order-making power in clause 435(3) enables the Secretary of State to make regulations to disapply the offence of failing to disclose that another person is engaged in money laundering under clause 324 to any supervisors in schedule 6. They include persons employed by the Financial Services Authority and the Bank of England.

The amendment has caused us to reconsider the rationale for clause 435(3) and (4). The provision is not new. It is also in section 36B(1) to (5) of the Drug Trafficking Offences Act 1986 and section 93G(1) of the Criminal Justice Act 1988. There are also the Drug Trafficking Offences Act 1986 (Crown Servants and Regulators etc.) Regulations 1994, which were statutory instrument No. 1757. Broadly, that regulation disapplied section 26B of the 1986 Act, which was inserted by the Criminal Justice Act 1993, from a list of supervisors. It was needed, and was used to place an obligation on the director of National Savings. The provision was disapplied in respect of appropriate people.

The principle underlying the present regulations is that there is already a separate requirement under

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regulation 16 of the Money Laundering Regulations for supervisors to make disclosures to a constable. It was therefore appropriate that the offence of failing to report drug money laundering was not necessary. It was considered that it would be perverse to apply the offence to investigators who were also constables or persons authorised to undertake money-laundering investigations in the new law enforcement capacity.

The Money Laundering Regulations, which were amended last year, continue to place the same requirement on supervisors to report suspicions that another person is engaged in money laundering, so we can be satisfied that there is no loophole. It seems unlikely that a person falling within part 2 of schedule 6 who is acting in a supervisory capacity would be engaged in a business in the regulated sector, so clause 324 would not apply to such persons in any event.

That was a complicated run round all the existing legislation. In any event, there is some inconsistency in asking for reports to be made under regulation 16 of the Money Laundering Regulations and under the Anti-terrorism, Crime and Security Act 2001, but to exempt them under this clause by means of regulations.

As for investigators, where such officers know of or suspect money laundering, they may wish to act on that intelligence themselves, either through regulatory penalties or using their own prosecuting powers. In principle, however, the National Criminal Intelligence Service should still be apprised of such information, as it might be linked to other intelligence.

Having reconsidered the clause, I am not altogether convinced that there is a need to provide blanket immunity to law enforcement authorities in the way envisaged by the Bill. We are therefore grateful to the hon. Gentleman for giving us an opportunity to reconsider the clause, which raises several questions. The best that we can do is to offer to have further discussions with the supervisory authorities and NCIS to see whether the provision still serves a useful purpose. I thank the hon. Gentleman for moving the amendment, because he has highlighted a potential difficulty in the Bill. However, in the light of my comments about reconsidering the blanket exemption, I now ask him to withdraw it.

Mr. Grieve: I thank the Minister for his comments. I am glad that the matter has been highlighted and I will be happy to withdraw the amendment. When I first looked at the subsection, the thought that immediately came to mind was the old Latin tag, ''Quis custodiet ipsos custodes?''—who will guard the guards? On principle, I believe that exemptions are undesirable, although I am prepared to accept that there may be circumstances in which the situation would become absurd. I am glad that the matter will be considered further, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 435 ordered to stand part of the Bill.

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Clause 436

References to financial investigators

Question proposed, That the clause stand part of the Bill.

Mr. Hawkins: When I looked at the terms of clause 436 I had a distinct feeling of déjà vu and thought back to the scripts of ''Yes, Minister'' and ''Yes, Prime Minister''. The wording appears, if not circular—a term that I have used about other parts of the Bill and for which I have been criticised by some Government Members—then certainly elliptical. It says:

    The Secretary of State may by order provide that a specified reference in this Act to an accredited financial investigator is a reference to such an investigator who falls within a specified description . . . A description may be framed by reference to a grade designated by a specified person.

If the Plain English campaign examined clause 436, I do not think that it would be terribly happy. I always support that campaign, particularly on one of its recommendations, which is that there should always be an index to a Bill, with numbered footnotes to enable one to see exactly where else terms such as ''specified person'' and ''specified reference'' are referred to.

The current drafting means that it is difficult, particularly in a Bill as bulky as this one, to find out where the terms are defined. I can understand that categories of people must sometimes be referred to by reference to a grade, so I am less critical of subsection (2). However, subsection (1) should have been more tightly drafted to make it clear, even to a relatively experienced reader of such legislation, exactly what is meant. The clause will have to be pored over by experts in firms of tax advisers, accountants and solicitors who advise those in financial services. As I have said before, I used to examine legislation that affected the financial services industry to see how it affected the companies that I advised or worked for, and Parliament should be obliged to ensure that legislation is made clearer.

I could not see how to table an amendment that would not be considered a wrecking amendment, so I thought that it would be better to debate the principle of the drafting in the clause stand part debate. I hope that the Minister will be able to say that, as with his helpful response to my hon. Friend the Member for Beaconsfield on the last group of amendments, he will re-examine this clause in the same way, and see whether the school examiner's comment, ''Could do better'' could be applied to it, too. There may be a better way of drafting it, which would make it clearer to both the casual and the experienced reader, because it is not clear as it stands.

Mr. Wilshire: The Minister should address another issue before we decide whether the clause should stand part of the Bill. A few sittings ago, we debated the specific powers provided to the Inland Revenue with regard to Customs and Excise. My hon. Friend the Member for Beaconsfield tabled an amendment to the effect that the powers were sufficiently important to have to be exercised by someone of a senior grade. The amendment went on to suggest what grades were appropriate—a district tax inspector, or a collector

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within Customs and Excise. We believed that making provision for a senior person—

5.30 pm

The Chairman: Order. I recall that argument, as I was in the Chair at the time. We do not need to hear it again.

Mr. Wilshire: I understand your point, Mr. McWilliam, but the issue is relevant because the exact opposite is proposed here, although the circumstances appear to be much the same, requiring someone senior to be available. We were told at the time that such a solution was not practical, could not be done and did not commend itself to the Government. Yet in clause 436 the Government are attempting to implement what they were not prepared to countenance when we suggested it earlier. What on earth is the difference? Why should we accept now the precise reverse of what the Minister argued earlier? I look forward to hearing the Minister's response.

We should try to place on record what sort of grade is considered appropriate. The case is accepted in the notes on clauses, albeit in a rather elliptical or circular way. It is acknowledged that persons of senior standing should be involved, so we should know precisely which grades apply. What is the definition of ''senior'' and why specify one particular grade rather than another? The notes on clauses suggest that the simple designation of one grade may not be possible. Does the Minister intend one grade to apply in one department and a different one in others? What grade would he designate as appropriate for other departments? These are important issues, and they mark a reversal of the Minister's previous arguments. It is not enough to refer to a grade and leave it dangling in the air. In future, might we not find that the grade designated by the Minister is not high enough for the requisite work?

Mr. Ainsworth: The grounds mentioned by the hon. Member for Surrey Heath are insufficient for withdrawing or reconsidering the proposal, though I accept some of his points. It can be difficult to understand the purposes behind the drafting. We are now referring back to accreditation systems that we first debated on clause 3—a long time ago. The provision may not be wholly clear, but I hope that I can persuade the hon. Gentleman that it is necessary.

The hon. Member for Spelthorne is right to say that we debated the same issue earlier, but he will recall that we were talking about the Revenue, and he somewhat misrepresented my argument at that time. I felt that I had persuaded the Committee that the Revenue people themselves were the best to decide who should be designated as dealing with disclosures to and from the director.

The clause would enable the Secretary of State to specify by order the type of accredited financial investigators who may exercise restraint powers under part 2 or investigation powers under part 8. Such an order would be subject to the negative procedure. A system for the accreditation of financial investigators is, as I have said, provided under clause 3. The order-making power enables the Secretary of State to limit the use of restraint and investigation

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powers to financial investigators employed or engaged by law enforcement authorities, or those employed or engaged in a law enforcement capacity by Government Departments.

It will be possible, in an order, to include investigators working in specified organisations or Departments, or investigators who are not below a specified grade. It would thus be possible to designate investigators who may act as senior appropriate officers for the purposes of making an application for a customer information order. We want to lift the standard of financial investigation. That is why, under clause 3, we gave the director of the agency the right and duty to train financial investigators, to accredit them when they reach a certain standard, and to see to it that they maintain that standard. We need to lift our game.

We do not want to give every trained accredited financial investigator access to the powers in part 8. We want to limit them to particular grades of people within appropriate organisations. We have to do that by order, unless we try, in primary legislation, to identify every appropriate department and guess those that might change their status. The order will have to say what level of individual in any organisation will be given access to the powers. Only an accredited financial investigator, trained and maintained under the system set up by the director and employed at a specific grade in that organisation, will be entitled to have access to the powers.

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