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Draft Crime (International Co-operation) Act 2003 (Designation of Participating Countries) (England, Wales and Northern Ireland) Order 2008

The Committee consisted of the following Members:

Chairman: Mr. Edward O'Hara
Blunt, Mr. Crispin (Reigate) (Con)
Brake, Tom (Carshalton and Wallington) (LD)
Caborn, Mr. Richard (Sheffield, Central) (Lab)
Campbell, Mr. Alan (Lord Commissioner of Her Majesty's Treasury)
Cormack, Sir Patrick (South Staffordshire) (Con)
Cox, Mr. Geoffrey (Torridge and West Devon) (Con)
Gray, Mr. James (North Wiltshire) (Con)
Hillier, Meg (Parliamentary Under-Secretary of State for the Home Department)
Hodgson, Mrs. Sharon (Gateshead, East and Washington, West) (Lab)
Huhne, Chris (Eastleigh) (LD)
Kilfoyle, Mr. Peter (Liverpool, Walton) (Lab)
Levitt, Tom (High Peak) (Lab)
Lucas, Ian (Wrexham) (Lab)
MacShane, Mr. Denis (Rotherham) (Lab)
Reid, John (Airdrie and Shotts) (Lab)
Ruffley, Mr. David (Bury St. Edmunds) (Con)
Mark Oxborough, Committee Clerk
† attended the Committee

Eleventh Delegated Legislation Committee

Wednesday 2 July 2008

[Mr. Edward O’Hara in the Chair]

Draft Crime (International Co-operation) Act 2003 (Designation of Participating Countries) (England, Wales and Northern Ireland) Order 2008

2.30 pm
The Parliamentary Under-Secretary of State for the Home Department (Meg Hillier): It is a pleasure to serve under your chairmanship for the first time, Mr. O’Hara.
When the Crime (International Co-operation) Act 2003 came into force in April 2004, it streamlined and modernised the United Kingdom’s mutual legal assistance relations with the rest of the world. Today, in an effort further to improve international co-operation, we are seeking to designate the United States of America under various sections of the Act. The order reflects the fact that, on 25 June 2003, an agreement on mutual legal assistance between the USA and the European Union was concluded. As a result of the provisions in that agreement, it was necessary for the UK to amend its bilateral mutual legal assistance treaty with the US.
The terms of the amended bilateral treaty, which reflect the provisions of the EU-US agreement, relate to banking information and make provision for parties to make and execute requests for assistance in locating banking accounts and to provide banking information relating to criminal investigations. That is similar to the terms in European agreements aimed at tackling serious international crime and, in particular, economic crime and money laundering. The domestic powers to make and receive such requests are found in chapter 4, part 1 of the 2003 Act.
Designation of the USA under section 52(1)(b) of the Act for the purposes of sections 32, 35, 43, 44 and 45 will allow for requests for such orders to be executed in England, Wales and Northern Ireland, and for such requests to be made to the USA by certain judicial and prosecuting authorities in the UK.
Mr. James Gray (North Wiltshire) (Con): The Minister says that the provision applies under sections, 32, 35, 43 and 45 of the 2003 Act, but rather bizarrely the explanatory notes stipulate only sections 32, 43 and 45. Will she enlighten us on section 35?
Meg Hillier: I shall pick up on that point in my closing remarks.
Designation under sections 35 and 44, on account monitoring orders, is not required under the strict terms of the agreement, but the inclusion of such a designation would be sensible, especially given that the Secretary of State retains a discretion—this is important to highlight—over whether to issue directions under section 35. Likewise, no express provision has been made limiting the designation of terrorist and money laundering cases, as is permissible under the agreement. The Home Secretary retains that discretion.
Mr. Gray: I am not nit-picking, but the Minister has now referred to section 35, which is not covered in the explanatory notes. This is really quite important, because if her speech is to mean anything, the Committee should know what section 35 is. I appreciate that she might need help from the cavalry over the hill, as it were, but perhaps she could obtain that as quickly as possible.
Meg Hillier: I am always happy to expand on the issues, but it is important to stress that section 35 gives the Home Secretary discretion over whether to issue a direction, which is an important safeguard in the Act. It would be open to the Home Secretary to refuse to make a direction where a request is made in a non-terrorist or money laundering case. Of course, further protections are in place, in that once the Secretary of State has made her decision, it is referred to the Crown Court to decide whether it should proceed.
Mr. David Ruffley (Bury St. Edmunds) (Con): I hope that I can be of assistance to the Committee. I think that my hon. Friend the Member for North Wiltshire was driving at the distinction between a customer information order and an account monitoring order. The latter lies at the heart of section 35 and is different from a customer information order. For the benefit of the Committee, will the Minister flesh out that important distinction, which involves different threshold tests? What is the difference between those two orders?
Meg Hillier: Section 35 covers US requests to the UK for that account monitoring information—I hope that that answers hon. Members questions—and section 44 covers UK requests to the US. It is important, therefore, that both are covered. I apologise if the explanatory notes are not clear; I shall look into why that is.
In relation to outgoing requests, there is no such discretion. It would be up to the United States to decide whether to refuse a request, on the basis that it was outwith the treaty.
Overall, this order is an important step as there are currently no formal arrangements to obtain such evidence from the United States. The new arrangements will improve our ability to achieve justice for British citizens who are victims of serious crime, and they are a step that I hope all hon. Members will be keen to back. The amended treaty between the United Kingdom and the United States will provide both Governments with a sound framework for future co-operation. We are clear that criminals must not escape justice simply because the evidence required is located overseas, and it is right that the United Kingdom support other countries—our international partners—in the same way. I therefore invite hon. Members to agree that these designations are necessary to ensure that we comply with our international obligations. That is what this order seeks to achieve and I urge hon. Members to support it.
2.36 pm
Mr. Ruffley: It is always a pleasure, Mr. O’Hara, to serve under your watchful eye.
The order that we are discussing today reflects the fact that crime in the 21st century has no national borders. Particularly in the case of financial crime, organised criminals or terrorist groups can send money around the globe in an instant, in the furtherance of their evil trade. So we must be tough on terror and the means by which terror is prosecuted.
However, questions are raised by the order. I do not wish to detain the Committee unnecessarily, but there are civil rights issues that arise. Also, there are questions to be asked about what, in practice, the US authorities might do with the new powers that are, in effect, being conferred upon them by the order.
As the Minister said, and also for the sake of clarity, we need to understand the genesis of the order. An agreement on mutual legal assistance between the United States of America and the European Union was concluded in June 2003. As a result of the provisions of that agreement, it was necessary for the UK to amend its previous long-standing bilateral mutual legal assistance treaty with the United States. The terms of the amended bilateral treaty made provision for the parties to make and execute requests for assistance in obtaining customer information from financial institutions. That is the subject of the order before us.
The order will designate the USA as a participating country under section 51(2)(b) of the Crime (International Co-Operation) Act 2003, for the purposes of sections 32, 43 and 45 of the Act. The order will also designate the USA as a participating country for the purposes of sections 35 and 44 of the Act.
Section 32 confers on the Secretary of State a discretionary power to direct a police force or customs officer to apply for a customer information order when a request for such information is received from a participating country. That is different from a monitoring order, and I shall explain the distinction in a moment.
Customer information orders relate to instances where an individual or a corporate entity holds an account with a financial institution, and basic information about the individual or company is sought—for instance, account numbers, date of birth, current and recent addresses of individuals, company number, VAT number and registered address for companies, where applicable.
Requests for such customer information are to be received by the Secretary of State. The Secretary of State will then instruct a senior police or customs officer—at least a superintendent, or equivalent customs rank—to apply to a Crown court judge for a customer information order. Such an order requires the specified financial institution to provide any customer information that it has on the person specified. The information is passed to the Secretary of State for onward transmission to the requesting authority, which could be the United States or other participating countries.
Before granting a customer information order, a judge must be satisfied that the person specified is subject to an investigation in the requesting country and that the investigation concerns serious criminal conduct. I emphasise that point, because there is a different threshold for the other order. The judge must also be satisfied that the conduct would be an offence in the United Kingdom and that the order is sought for the purposes of investigation. It cannot be used for some kind of fishing expedition. A judge in the UK must be satisfied on those criteria when our Secretary of State makes such a request, following a request by an authority in another country.
Mr. Gray: My hon. Friend is being extremely clear, and I am learning a great deal from listening to him, but will he answer a query? Would the NatWest three have been extradited under the conditions that he describes for the order?
Mr. Ruffley: Seeking extradition for criminal offences for which a prima facie case has been made before a UK judge is different from merely seeking information on individuals. That case involved criminal offences, and a prima facie case was made in this country, which is why the extradition took place. We are dealing with the attempted acquisition of information by foreign authorities, prior to any charges being made in that country against individuals who are resident here that might lead to an extradition. They are two qualitatively different levels of criminal inquiry: one concerns a criminal inquiry, whereas the NatWest three case involved criminal proceedings.
Similar powers exist in domestic law under the Proceeds of Crime Act 2002, but for a narrower class of offences. The order that I have just described involves a threshold test of serious criminal conduct. If a financial institution in the UK does not comply with its obligations under a customer information order, it commits an offence carrying a maximum fine of £5,000. Section 43 of the 2003 Act will enable judicial and prosecuting authorities to make outgoing requests for customer information orders when the UK makes requests regarding individuals in other jurisdictions. Section 45 of the Act provides that such requests will be forwarded to the participating country by our Secretary of State.
The order that I described differs from, but is related to, the account monitoring order, which is subject to sections 35 and 44 of the Act. Customer information orders involve identifying accounts and providing static information about them, whereas account monitoring orders seek details of account transactions over a period of time. An account monitoring order could be sought once an account has been identified through a customer information order or, if the account has already been identified, a requesting authority could move straight to a monitoring order without needing to go down the customer information order route.
The mutual assistance agreement allows much greater discretion in the handling of requests for account monitoring. In the words of the EU’s explanatory report, because the measure is new, it only
“obliges Member States to set up the mechanism...but leaves to each Member State to decide if and under what conditions the assistance may be given in a specific case.”
That assistance involves monitoring over a period of time, whereas the customer information order is merely about identifying an account or accounts. The United Kingdom appears to have decided to allow account monitoring assistance on a fairly wide basis. I understand that that is because we already have quite a wide ambit under domestic disclosure laws.
The Act sets the higher test of serious criminal conduct for customer information orders, as I said. We can attribute that difference to the language of the protocol. Can the Minister share with us why she thinks the protocol uses a different threshold test? It is puzzling to most of us and we look forward to her reply.
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