Documents considered by the Committee on 28 November 2018 Contents

15Improving cross-border law enforcement access to financial information

Committee’s assessment

Legally and politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Home Affairs Committee and the Justice Committee

Document details

Proposal for a Directive laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences and repealing Council Decision 2000/642/JHA

Legal base

Article 87(2) TFEU, ordinary legislative procedure, QMV


Home Office

Document Number

(39666), 8411/18 + ADDs 1–2, COM(18) 213

Summary and Committee’s conclusions

15.1The European Commission has proposed a Directive which is intended to make it easier to gather the evidence needed to advance a criminal investigation or prosecution by improving access to financial information for law enforcement purposes. Our earlier Reports (listed at the end this chapter) provide a detailed overview of the proposal and the Government’s position. In summary, the proposed Directive would require Member States to:

15.2As the proposed Directive is a criminal law measure, it is subject to the UK’s Title V (justice and home affairs) opt-in and will only apply to the UK if the Government decides to opt in. In his Explanatory Memorandum of 12 June, the Minister for Security and Economic Crime (Mr Ben Wallace) indicated that the proposal was “broadly in line with existing UK legislation and practice on the sharing of financial information” but expressed concern that it might compromise the operational autonomy of national Financial Intelligence Units (FIUs) and questioned whether a request from a FIU in another EU Member State should be handled with greater urgency than a request from a FIU in a non-EU country. In his letter of 24 July 2018, he told us that “all other Member States have similar concerns to the UK” and that he was “hopeful that the changes we wish to see made to the text will be made”. He confirmed that the three-month deadline for notifying the Council of the UK’s opt-in decision would expire on 17 August.

15.3The Minister informed us in his letter of 20 September 2018 that the Government had decided to opt into the proposed Directive as participation would “bring benefits to the UK through ensuring that our operational agencies are able to seek and receive financial intelligence, including bank account details, where appropriate, in order to tackle both money laundering and wider criminality”. In our response, we noted that the Government’s opt-in decision meant the UK would be under an obligation to implement the Directive if (as seemed likely) it had to be transposed into domestic law during the post-exit transition/implementation period envisaged in the draft EU/UK Withdrawal Agreement. We inferred that the Government’s decision to opt in at this late stage in the negotiations on the UK’s exit from the EU was intended to demonstrate a commitment to maintaining close cooperation in tackling cross-border financial crime within the framework of a new post-exit internal security treaty with the EU. We requested regular reports on the prospects for such a treaty and the progress being made in negotiations.

15.4We noted the Government’s intention to seek amendments to prevent any encroachment on the decision making autonomy of Financial Intelligence Units (“FIUs”), so that they would have the final say in deciding whether to share information, and to ensure that requests for information made by FIUs outside the EU were given the same priority as those made by FIUs within the EU. We asked the Minister to provide a further update on the progress made in securing these amendments ahead of any Council or COREPER meeting which might be asked to agree a general approach or mandate to open negotiations with the European Parliament.107

15.5In his latest letter of 19 November 2018, the Minister reiterates that the Government “strongly supports the intention behind the Directive of improving the sharing of financial information, including bank account details, and financial analysis, to support law enforcement investigations and prosecutions”. He continues:

While we, along with all other Member States, had some concerns with the original draft of the text, particularly regarding the proposed mandatory sharing of information by Financial Intelligence Units, which the UK believed contravened the Fourth Money Laundering Directive, and the timeframes for sharing information, which the UK believed was contrary to existing international standards, these issues have now been negotiated out of the text. The mandatory requirement for the Financial Intelligence Units (FIU) to share information and analysis has been removed from all sections of the text where such a requirement occurred. Any such sharing is now a matter for the FIU.

15.6The Minister informs us that the Presidency intends to seek a “General Approach” which the Government would like to support at a meeting of Member States’ Permanent Representatives to the EU (COREPER) on 21 November. He invites us to clear the proposed Directive from scrutiny or to grant a scrutiny waiver to enable the Government to vote for the proposal, failing which the Government will abstain.

Our Conclusions

15.7The Government’s decision to opt into the proposed Directive, and the pace of negotiations, suggest that the Directive is likely to be adopted and take effect during the post-exit transition/implementation envisaged in the draft EU/UK Withdrawal Agreement, meaning that the UK will be bound by and required to implement the Directive until the end of transition. We understand why the Minister wishes to support the General Approach while the UK is still able to influence and vote on the outcome of negotiations. It is nonetheless wholly unrealistic to expect scrutiny clearance or a scrutiny waiver to be granted with only two days’ notice of the meeting at which the Presidency will seek to secure a General Approach.

15.8We remind the Minister that our scrutiny reserve applies to decisions taken by Ministers within the EU’s Council of Ministers, not to decisions taken by officials within COREPER. Nonetheless, where (as in this case) the political agreement is to be reached at COREPER level, the Government should provide as much notice as possible and sufficient detail on the content of any Presidency compromise text to enable the scrutiny committees in both Houses to express a view ahead of the COREPER meeting. It is deeply regrettable that the Minister has not done so in this case.

15.9We note the Minister’s assurance that the compromise text to be considered by COREPER addresses the Government’s concern to preserve the autonomy of Financial Intelligence Units and to mitigate the risk that requests for information from a Financial Intelligence Unit within the EU would be treated with greater urgency than requests from a Financial Intelligence Unit in a non-EU country. We ask him to provide a copy of any compromise text agreed by COREPER, once the meeting has taken place, along with details of how the UK voted. We also ask him to provide details of any changes proposed by the European Parliament once it has agreed its position. Meanwhile, the proposed Directive remains under scrutiny. We remind the Minister that we have requested regular reports on the prospects for concluding a new post-exit internal security treaty with the EU and would welcome an update once the final text of the Political Declaration setting out the framework for the future relationship between the EU and the UK has been agreed. We draw this chapter to the attention of the Home Affairs Committee and the Justice Committee.

Full details of the documents:

Proposal for a Directive laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences and repealing Council Decision 2000/642/JHA: (39666), 8411/18 + ADDs 1–2, COM(18) 213.

Previous Committee Reports

Thirty-seventh Report HC 301–xxxvi (2017–19), chapter 17 (5 September 2018) and Thirty-third Report HC 301–xxxii (2017–19), chapter 6 (27 June 2018).

106 Whilst it would be for each Member State to designate the relevant national law enforcement authorities, they must include the National Europol Unit.

107 See the letter dated 10 October from the Chair of the European Scrutiny Committee to the Minister for Security and Economic Crime (Ben Wallace).

Published: 4 December 2018