Fourth Standing Committee
on Delegated Legislation
Monday 3 February 2003
[Mr. Peter Pike in the Chair]
Draft Proceeds of Crime Act 2002
(Disclosure of Information) Order 2003
The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): I beg to move,
That the Committee has considered the draft Proceeds of Crime Act 2002 (Disclosure of Information) Order 2003.
The Chairman: With this it will be convenient to consider the draft Proceeds of Crime Act 2002 (Exemptions from Civil Recovery) Order 2003 and the draft Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of Practice) Order 2003.
Mr. Ainsworth: The exemptions from civil recovery order will prevent certain specified property from being the subject of a civil recovery order by either the director or by Scottish Ministers. Section 309 of the Proceeds of Crime Act 2002 provides that certain property is not recoverable or associated property if it is prescribed by order or disposed of in pursuance of a prescribed enactment. The intention is that where the criminal courts, the police or Customs officers permanently deprive people of property that is recoverable, that property is capable of being sold or otherwise dealt with without the possibility of it being recovered by the director.
Where property is prescribed by the order, or where property is disposed of under an enactment prescribed by the order, then anyone who receives the property will be able to hold it or deal with it without the risk of civil recovery proceedings being brought.
Part 1 of the order lists prescribed property. The only property we intend to prescribe at present is property that is forfeited under various powers of Customs and Excise. Part 2 lists prescribed enactments. When property is disposed of under one of those enactments, it will cease to be recoverable. The order sets out the provisions for each enactment in relation to which the exemption applies.
There are two main policies behind the property and enactments prescribed. First, we have excluded property disposed of under legislation that provides for the forfeiture of property in criminal proceedings to the police or other public bodies. That is because it would cause administrative difficulties if those buying or otherwise using forfeited property could not be sure that they had good title to the property. Secondly, we have excluded property where other proceedings have already played a proprietary or restitutionary role. In such circumstances the job of civil recovery has already been done and there is no need for civil recovery to take away the property.
The list of property and enactments is a result of a consultation exercise with other Departments. We are continuing to discuss the issue and anticipate that
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further orders will be needed as further exemptions come to light and the Assets Recovery Agency gains experience of operating the civil recovery scheme.
On the other order, I beg to move—
The Chairman: Order. So the Minister knows, I shall call him formally to move the other two orders, one by one, in the order that they are debated. You can debate them, but you cannot move them now.
Mr. Ainsworth: I take it that I can introduce them.
The Chairman: Yes, but you do not move them.
Mr. Ainsworth: I shall move them at a later stage. Thank you for that clarification.
On the Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of Practice) Order 2003, some hon. Members who served on the Committee considering the original legislation will recall that the 2002 Act contains a comprehensive package of measures—there's a phrase from the old trade union days—designed to make the recovery of unlawfully held assets more effective. They include a consolidation of existing powers and new powers of investigation into the extent and the whereabouts of the proceeds of crime.
The provisions for investigation are set out in part 8 of the Act. There are five investigation powers: production orders and search and seizure warrants, both of which exist in current legislation, and disclosure orders, customer information orders, and account monitoring orders, all three of which are new. The powers are strictly limited to confiscation investigations, civil recovery investigations and money laundering investigations, and are therefore not available for investigations into other proceedings under the Act, such as revenue collection under part 6 or criminal investigations more generally.
Section 377 of the Act requires the Secretary of State to prepare and publish a code of practice for use by those who exercise the powers in chapter 2 of part 8 in England and Wales and in Northern Ireland. Separate powers of investigation for Scotland are set out at chapter 3 of part 8. Section 4(10) requires a separate code to be issued by Scottish Ministers, which will be laid before the Scottish Parliament.
The powers of investigation contained in part 8 are fairly intrusive and go beyond what is permissible in present legislation in respect of investigations into the proceeds of crime. The Government believe that such powers are none the less fully justified. Without them, it is unlikely that the director of the new Assets Recovery Agency or law enforcement agencies would be able to make substantial improvements in the field of asset recovery.
The Government are committed to promoting the removal of proceeds of crime as well as convicting those who commit crime. We are aware that investigation schemes in other legislation have related codes of practice to ensure a measure of control and consistency as to how the relevant powers are to be used in practice. There is a code of practice in connection with the exercise of financial investigation powers and there are recently amended draft codes of practice under the Police and Criminal Evidence Act
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1984, which provides guidance on specific procedures. We have drawn heavily from these established precedents.
The code is intended to ensure best practice by those who operate the powers of investigation in the Act and to give an assurance that the use of the powers will be proportionate and consistent in relation to those people and organisations likely to be affected by the Act, notably the financial industry. An initial draft was published for public consultation on 11 October, and the consultation period ended on 3 January. We have revised the code in the light of comments received. A summary of responses to the draft code and our comments has been placed in the Library.
The introduction to the code provides a general overview of the provisions that appropriate officers need to follow. It provides best practice for appropriate officers in regard to making applications for serving warrants and orders. It also outlines the recording procedures and retention of documents and information processes that officers should follow. Police and Customs officers should seek to obtain internal authority before they make an application. Paragraph 18 of the code represents good practice and is in line with the new amendments to the PACE code B. It will also ensure that intelligence will be circulated to senior officers.
Such measures were debated during the passage of the Act. Section 357(4)(a) allows questioning to take place at once without the interviewee's having received any prior legal advice. Paragraphs 141 to 144 of the code provide an assumption that a person will have access to advice if required. They also provide safeguards regarding the questioning of people who do not have legal advice.
We are following heavily the PACE codes of practice, which have proven to be effective. It sets out best practice for recording an interview and storing the tape. The code also sets out best practice regarding persons attending the interview. The interviewee has the right to have a solicitor or qualified accountant present with them. Also, if the interviewee is under the age of 18 or the director believes the person to be under that age, the code sets out a requirement to have an appropriate adult present. It takes into consideration interviewees who have difficulty in understanding English, for whom an interpreter would be required, and physical disability.
The code provides a detailed step-by-step guide for appropriate officers to follow when exercising investigation powers under part 8. It is intended to be self-explanatory and easily understood and will form part of the training for financial investigators provided by the Assets Recovery Agency.
The draft Proceeds of Crime Act 2002 (Disclosure of Information) Order 2003 adds to the list of persons who may disclose information to the director and adds to the list of purposes for which the director will be able to disclose information himself—or herself, as we now have a female director.
It is essential that the director have access to relevant information held by other bodies if she is to carry out her functions effectively. Section 436 of the
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Act achieves that by allowing certain specified persons, known as ''permitted persons'', to disclose information to the director. Such people would not otherwise have power in law to disclose to the director.
Subsection (5) lists the permitted persons who would have information that is likely to be most useful to the director. It includes all those who are most likely to have been previously involved in a substantive way with the investigation of a case with which the director is dealing. They will have a clear ongoing need to disclose information to the director.
We made it clear during the passage of the Act that the list of permitted persons in subsection (5) was not definitive. In carrying out her functions, the director is likely to come across other persons from whom she may wish to request information. That is why, under subsection (6), the Secretary of State will have the power to designate additional permitted persons by order. Subsection (7) narrows the designation power to specific functions of a public nature. That would be important if designating as a permitted person someone with a wide remit, of which only certain functions would be justified for designation.
Although the agency will not become operational until the end of February, we have already identified several additional persons who will need to disclose information to the director. The additional permitted persons and the functions for which they are designated are set out in the schedule to the order.
Each permitted person designated by the order holds information that may be relevant to the director's functions. It may be information that was obtained during a criminal investigation, or it may be about the finances or property of the individual concerned. The explanatory memorandum that has been provided with the order sets out the relevant information held by each person who is listed in the order. Disclosure to the director will be permissive, rather than mandatory; no one will be forced to disclose information to the director under the provisions.
I shall move on to article 3, which covers the disclosure of information by the director. The background is as follows. The director requires statutory authority to enable her to disclose information. Section 438 provides that authority. It gives the director the power to disclose information for specified purposes, subject to restrictions that are also set out in the section. The director will have the power to disclose information to any person or body for any of the purposes set out in subsections (1)(a) to (i). Subsection (9) gives the Secretary of State the power to add to the list of disclosure purposes by order.
Article 3 adds two purposes for which the director will be able to disclose information. The first relates to protecting public health and allows the director to disclose information relating to illicit supplies of medicinal products. The second is to enable the director to assist the Financial Services Authority to exercise any of its public functions that are relevant to its regulatory function. That should assist other bodies to whom the information will be disclosed in the exercise of their functions. Overall, the order will help
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the director to exercise her functions more effectively by increasing the access to information relevant to the agency's work and enabling her to pass on a wider range of information to the agency's partner bodies, where that is appropriate.