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Mr. Paice: I endorse and support what the hon. Member for Somerton and Frome (Mr. Heath) said. I reminded myself that we debated the earlier version of amendment No. 6, which my hon. Friends and I tabled,
35 minutes after the Minister started her first day in Committee, having just taken up her responsibilities. She acquitted herself well, but she has had four months to reflect on her answer. I hope she realises that our case on the wide terminology of "financial institutions" has some validity.I do not want to repeat the arguments made in Committee or by the hon. Gentleman, but the hon. Gentleman was right to refer to the Minister's justification that all financial institutions may need to be considered in a major terrorism investigation. Nothing in the amendment would remove that possibility. The hon. Gentleman said that clause 33(3)(b) and (c) will allow such an investigation to be carried out. In addition, subsection (2) allows a further application to be made ex parte to a judge in chambers if it is later found that an institution or group of institutions was not covered in a previous application. There is a belt-and-braces approach even if it is necessary for a major investigation to cover every possible definition of the term "financial institutions".
I wholly endorse the argument that to allow the application to specify all financial institutions at the outset is a scatter-gun approach. It demonstrates a lack of clarity in relation to the person or people being investigated or the information being sought. There could also be a huge waste of resources if all financial institutions are approached. The Minister rightly said in Committee that people will not willingly waste resources—she perhaps has, a slightly higher opinion than me of some of the organisations that serve us—but we should ensure that that does not happen. The amendment is wise, and I hope that the Minister follows her earlier example and accepts it.
Amendment No. 12 relates to the issue of giving the Secretary of State—an interesting phraseology in the light of the earlier debate—the power
- "to give effect to any decision of the Council of the European Union under paragraph 6".
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The important point is the one that the hon. Gentleman made. It would not be right for the European Union by majority voting to support a proposal, with a British Government perhaps voting against it, and for Ministers to immediately translate something into a serious criminal offence to which all the Bill's provisions applied. There is a need for greater parliamentary scrutiny, and I wholly endorse the hon. Gentleman's amendment.
This is an important group of amendments. Many of them were covered to some extent in Committee, but they are worth reconsidering. In view of the time that the Minister has had to do so, I hope that she will give them a serious response and a fair wind, as she did in the case of those she accepted earlier.
Caroline Flint: As hon. Gentlemen said, there was discussion in Committee of the issues raised by the amendments. The substance of amendment No. 6 was
discussed at some length. I reiterate that we consider it essential to retain the provision to allow a customer information order to specify all financial institutions. Although I am happy to go on the record stating that the circumstances in which the provision might be used would be exceptional, there may be circumstances in which we would want to be able to make such an order.For example, as we heard, in a terrorism case in which there is no specific evidence pointing to an account at a particular institution, but in which the seriousness of the offence and the need to trace any accounts are such that we consider a search of all financial institutions to be justified, it may be considered appropriate to obtain an order under the provision.
On the comments about paragraphs (a), (b) and (c) of subsection (3), we need paragraph (a), which refers to all financial institutions, because paragraphs (b) and (c) refer to particular institutions. In its natural everyday meaning, "particular" is different from "all", so how can "particular financial institutions" be read as covering "all financial institutions"? That is why we need to include paragraph (a).
The ability to target an order at all financial institutions does not open the door to fishing expeditions, as I argued in Committee. There are safeguards, which were not mentioned by either of the hon. Gentlemen who spoke, unless I did not hear correctly. The Bill gives both the Secretary of State and the court discretion as to whether to make an order. The Secretary of State will consider whether a request meets the conditions of the protocol. If he is not satisfied and the request appears to be a fishing expedition, he may refuse it.
The order has to be made by a judge, who must act in accordance with the Human Rights Act 1998, thereby taking into account matters such as proportionality. The investigator and the judge must consider whether the number of financial institutions potentially covered by a customer information order balances against the tests set. The CIO application must also be approved by a senior officer, even before the investigator can apply to the judge. That creates yet another safeguard. Those are the steps that must be taken before an order allowing coverage of all financial institutions may be met, and that will occur in pretty rare circumstances.
As was noted previously, the clause is consistent with the Proceeds of Crime Act 2002. I understand that Opposition Members were against the provisions of that Act and made their views clear while the Bill was proceeding through the House, but we stand by our position as outlined in that Act, which contains the power to make an order specifying all financial institutions. If we can do that for overseas money-laundering investigations, it is logical by extension to make similar provision in the Bill so that we can do so in the case of other serious crimes. Although, as I acknowledged in Committee, I recognise the potential burden of complying with such a request, I am afraid that I must resist the amendment.
I turn to amendments Nos. 7 to 11. In Committee, the hon. Member for Somerton and Frome (Mr. Heath) asked why the Bill referred to "financial institutions" in respect of incoming requests and "banks" in respect of outgoing requests. I have written to him with an explanation, which I will repeat for the benefit of the House. The protocol obliges us to assist participating
countries in identifying whether a suspect holds bank accounts. It also allows us to receive assistance from other participating countries in relation to banks and bank accounts. Because the protocol does not define "bank", and because each participating country will define the term differently under its domestic law, as was confirmed by the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), we considered that the provisions on incoming requests must be drafted sufficiently broadly to enable us to assist with all properly made requests from participating countries. There is no single definition of "bank" in UK law. Even if there were, there is no guarantee that it would correspond with what another participating country considers to be a bank under its own domestic law. That is why we have adopted the term "financial institution", which is familiar in UK law and follows the provisions in section 416(4) and (6) and schedule 9 of the Proceeds of Crime Act 2002. There would be scope to limit a search in a particular case in view of the overriding discretion on the part of the Secretary of State to consider requests from other countries under chapter 4.In terms of outgoing requests, we are entitled to seek assistance under the terms of the protocol in relation to bank accounts that are held in establishments located outside UK jurisdiction, where the UK legal concept of "financial institution" will not necessarily have any meaning. If we were to use the expression "financial institution" in respect of outgoing requests, a UK judicial authority that requested assistance under clause 43 would have to be satisfied that an account was held at an overseas establishment conforming to the UK concept of "financial institution" and carrying on
- "business in the regulated sector".
Finally, let me deal with amendment No. 12. I am afraid that we cannot accept the deletion that it proposes. That would remove our ability to comply with article 1 of the protocol in the event that its scope was expanded at a future date. When the protocol was negotiated, a number of member states argued that the identification of bank accounts should be possible in relation to all crimes. As many member states do not have central registers of bank accounts, and because the measure was so new and was seen by some states, including the UK, as being potentially intrusive, it was agreed that the scope would be limited to serious crimes. However, member states agreed that it should be possible to extend the scope to allow for advances in technology and for the possibility that experience of the operation of the protocol might prove the value of the measure. Having agreed the terms and signed the protocol, we need to be in a position to comply with it, including the potential to apply article 1 to other crimes. We therefore require a mechanism to extend our legislation accordingly.
Any decision by the European Council to extend the scope of article 1 would be subject to the usual parliamentary scrutiny arrangements. The subsequent statutory instrument implementing the revised obligations would be subject to the negative resolution procedure, which we believe to be proportionate. The Delegated Powers and Regulatory Reform Committee did not comment on that power. Where it highlighted concerns about the level of scrutiny in relation to designation of non-EU countries as participating countries, we amended the Bill accordingly. We have listened and given further consideration to the concerns that have been expressed, but, for the reasons that I outlined, we cannot accept the amendment.
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