22. CO-OPERATION BETWEEN FINANCIAL
INTELLIGENCE UNITS OF THE MEMBER STATES IN RESPECT OF EXCHANGING
INFORMATION RECEIVED UNDER THE PROVISIONS OF THE COUNCIL DIRECTIVE
ON PREVENTION OF THE USE OF THE FINANCIAL SYSTEM FOR MONEY LAUNDERING
(CRIMORG 141 REV 2)
Letter from Lord Tordoff, Chairman of
the Committee, to Barbara Roche MP, Minister of State, Home Office
Sub-Committee E (Law and Institutions) considered
the draft Decision at its meeting on 23 February. The Committee
noted that notwithstanding the request of the European Scrutiny
Committee last October, you have failed to provide any clarification
of the Government's position. So far as the Policy Implications
are concerned, all your Explanatory Memorandum does is to reiterate
the present factual position, namely that the National Criminal
Intelligence Service is involved in the exchange of information
relating to suspicious transaction reports.
The Committee also noted that the Government
does not appear to have undertaken any external consultation on
the proposal. The draft decision, which is intended to facilitate
information exchange between national financial intelligence units,
would have implications for the individual, the rights of defence
and data protection. The Committee is concerned that you appear
not to have seen fit to consult interested parties outside Whitehall
or, if you have, you have not described the process and outcome
to Parliament.
The Committee has decided to hold the document
under scrutiny, pending further information as to the Government's
position. In the meantime it proposes to consult a small number
of interested parties in order to obtain their reactions to the
proposal.
23 February 2000
Letter from Barbara Roche MP, Minister
of State, Home Office, to Lord Tordoff, Chairman of the Committee
I am very sorry that it was not possible to
send an earlier response to your letter of 23 February regarding
the Explanatory Memorandum which we submitted on this draft instrument.
The draft Council Decision will place on a more
formalised and transparent basis the exchange of information between
EU Member States about suspicious financial transactions, in the
context of possible money laundering. Such transfers of information
are operationally very important but they clearly raise some very
sensitive issues and on reflection our Explanatory Memorandum
did not discuss in any detail the issues to which you draw attention
or emphasise sufficiently that substantive discussion is continuing
on a number of the draft Decision's provisions.
Perhaps it would be useful if I describe more
fully the existing arrangements. Exchange of information in suspicious
transaction reports by the National Criminal Intelligence Service
(NCIS) is presently possible on a case by case basis in the interest
of the investigation of crime. For countries with an administrative
Financial Intelligence Unit (FIU) with whom information exchange
takes place on a regular basis—such as France and Belgium—NCIS
has signed a Memorandum of Understanding with the relevant FIU
to formalise the exchange of information. Exchange of information
with police based FIU's—which are the majority of EU FIU's—occurs
through Interpol.
Since the draft Decision was first tabled in
July 1999, consultation has taken place with the enforcement authorities
and we have also considered the data protection provisions with
some care in the light of the UK's ratification of the Council
of Europe Convention on Data Protection and our own data protection
laws. Article 5.4 of the draft Decision currently states that
personal data would be protected by the same rules of confidentiality
as those that apply under the national legislation applicable
to the requesting FIU; and Article 5.5 details that the requesting
FIU are bound to comply with any conditions laid down by the requested
FIU. This provides a high degree of protection (all EU Member
States must for example have effective data protection laws in
force, in order for instance to be able to participate in Europol),
but this is one of the issues still under consideration in the
Group.
You refer in your letter to a lack of information
about: the implications of the draft instrument for the individual;
the rights of the defence as well as data protection; and the
extent to which there has been external consultation about the
proposals. As I have indicated these concerns are very understandable:
personal financial information is sensitive. However it is difficult
to see exactly what in practice the difficulties are likely to
be as far for instance as the "rights of the defence"
are concerned. The transfer of financial information will, if
relevant, be the subject of disclosure requirements in the UK,
could be excluded if the Court thought fit, and would not remove
or lessen the obligation on the prosecution to adduce adequate
admissible evidence to prove its case. As far as data protection
considerations are concerned, as indicated above the instrument
does contain specific provisions in this area, but a number of
other amendments have been proposed, some of which might well
strengthen the provisions further.
As far as external consultation is concerned,
it is true that we have not sought comments from outside organisations;
however this is a law enforcement instrument for the exchange
of information; it formalises an existing practice and will not
for instance result in any further intrusive activity. We note
that your Committee has sought comments from a small number of
interested parties and, of course, I will certainly consider fully
any such observations you may care to pass on.
The central point therefore is that discussions
on this instrument are continuing and many of the issues raised
by the Committee will be fully discussed. We are consulting the
enforcement agencies on the proposed amendments to assess how
many of their amendments which have been proposed we can accept
without unduly prejudicing operational efficiency. When a new
text of the instrument does emerge it will of course be fully
considered and submitted for scrutiny in the usual way, accompanied
by a further Explanatory Memorandum.
20 April 2000
Letter from Lord Tordoff, Chairman of
the Committee, to Barbara Roche MP, Minister of State, Home Office
Thank you for your letter of 20 April. The further
information given will, I am sure, be helpful to Sub-Committee
E. We have now received the comments of Justice and Statewatch
on the proposed Decision. I enclose copies for your consideration.
You will see that a number of points have been raised concerning
the rights of defence, data protection and the drafting of the
Decision. We have assumed that you will be consulting the Data
Protection Registrar.
The Committee looks forward to receiving your
detailed response to these points and any new text and further
Explanatory Memorandum. In the meantime the draft Decision remains
under scrutiny.
3 May 2000
Letter from Barbara Roche MP, Minister
of State, Home Office, to Lord Tordoff, Chairman of the Committee
Thank you for your letter of 3 May with which
your forwarded comments you had received regarding this draft
Decision from Justice and Statewatch. I hope that the responses
in this letter—together with the latest text and Explanatory
Memorandum—adequately address the various concerns which
have been expressed. Both letters cover much the same ground so
I will deal with the subjects they raise under single headings.
DATA PROTECTION
(POINT 4—STATEWATCH/ARTICLE
1.2—JUSTICE)
Justice state that because of the exemptions
from the normal data protection rules for crime and tax-related
activities which would apply to the data covered by the draft
Decision, it is necessary, in the interests of transparency, for
Article 1.2 to be more specific about the information to be exchanged.
Whilst it is true that "information of any fact which might
be an indication of money laundering" could cover a wide
range of information, I do not see a need to detail in this instrument
all the types of information which this could encompass or what
doing so would achieve; moverover such a list would be difficult
to formulate and could prove inflexible.
Justice also point out that individuals will
be unlikely to gain access to information held about them by FIUs.
As you will know, as a general principle, individuals have a right
to see and obtain a copy of personal data that is held about them.
However in the United Kingdom that right may only be restricted
in accordance with the exemptions provided for the Data Protection
Act. There is a law enforcement-related exemption (section 29(1))
which exempts personal data from the data protection principles
for the prevention and detection of crime. Given that any information
which is transmitted from NCIS to another FIU will be concerned
with the investigation of potential money laundering offences,
the lack of access by an individual to this information as part
of United Kingdom data protection legislation—or equivalent
legislation in another member state—is certainly not an
unacceptable weakening of an important safeguard but rather the
maintenance of a vital and well precedented principle designed
to ensure that potential money launderers are not tipped off that
an enforcement agency has become aware of their practices.
Statewatch made some cogent criticisms about
the lack of specific data protection provisions in earlier versions
of this instrument; we very much shared that concern and, together
with other Member States, sought to remedy the omission. As you
will see the text of the old Article 5.4 has been significantly
revised under a new article 5.5 which provides extensive provisions
on data protection. These have been formulated along the lines
of the European Parliament's Civil Liberties Committee's suggested
Article 5.4—which Statewatch favoured as a starting point
together with a reference to the national law of the requested
and requesting state. It sets as a basic common minimum standard
the Council of Europe Convention of 28 January 1981 for the Protection
of Individuals with regard to the Automatic Processing of Personal
Data. This is the approach which was adopted with regard to Europol
and the Schengen Information System, both of which also handle
sensitive personal data. Whilst some discussion took place as
to the suitability of also citing the EC Data Protection Directive
95/46/EC of 1995—as proposed in the new EP text—it
was concluded that it would be inappropriate to come to a view
on this question in isolation since a horizontal working group
is currently examining how the 1995 Directive principles should
apply to Third Pillar instruments. An additional reference has
however been made to the Recommendation No R (87) 15 of 15 September
1987 of the Council of Europe Regulating the Use of Personal Data
in the Police Sector. We are satisfied that these comprehensive
provisions will provide a more than adequate degree of data protection
and given that they follow well-established precedent there would
appear to be no reason to consult more widely on the question.
Statewatch also sought clarification of Article
5.3 regarding the need to refuse information if such transmission
could violate EC, international, or national data protection law
to disclose it. I assume that Statewatch are referring to Article
5.2 of the former text which deals with these provisions. The
new text details these provisions under Article 5.3 and provides
for a refusal of the provision of information on the basis of
restrictions under its national law or any conditions referred
to in Article 4.3. This latter allows for non-transmission on
a wide range of grounds, ie where this would impair a criminal
investigation, be disproportionate to the legitimate interests
of a natural or legal person of the Member State concerned, or
would otherwise not be in accordance with fundamental principles
of national law. Taken together I am satisfied that these represent
a formidable set of safeguards against Member States being required
to transmit information against their wishes.
PROSECUTIONS (ARTICLE
5.2—JUSTICE/POINT
5—STATEWATCH)
Justice have asked whether information should
be used in a criminal investigation only if that use would be
permitted in the actual Member State transmitting the information.
Statewatch make similar points relating to the use of information
being subject to the requested and requesting states' rules on
the rights of the defence.
The exchange of information referred to in this
Decision is primarily for intelligence purposes. As the revised
Article 5.2 in Crimorg 70 outlines, the transmitting FIU has a
discretion to place restrictions on the use of this data for any
other purpose. When a Member State wishes to use documents transmitted
to it as evidence in a criminal investigation or prosecution for
money laundering, under the provisions outlined in Article 5.3—(taken
together with the provisions in Article 4.3)—the requested
state shall be able to refuse its consent on a range of grounds.
The use of the information which might not be admissible in the
country where it was obtained is not specifically one of these
grounds, but it is not the purpose of this instrument to harmonise
the rules of evidence in Member States. Where the investigation
or prosecution is for an offence other than money laundering,
Article 5.2 allows the transmitting state to impose any conditions
on the material's subsequent use.
HUMAN RIGHTS—POINT
1 STATEWATCH
This Decision is about the exchange of information
with regards to FIUs Whilst the recognition of basic human rights
is of paramount importance, all Member States are party to the
same international instruments which protect these fundamental
rights. There is no need to restate this obligation in every instrument
since observance of the European Convention on Human Rights is
a formal obligation on the European Union by virtue of Article
6 (2) of the Treaty (as amended by the Treaty of Amsterdam).
CREATION OF
FIUS—POINT
2 STATEWATCH
All Member States already have their own FIUs.
These were largely established in response to the Council Directive
91/308/EEC of 10 June 1991 on prevention of the use of the financial
system for the purpose of money laundering. Although this draft
instrument does not impose any obligation on Member States to
set up FIUs, this point is therefore academic.
STATUS OF
FIUS—POINT
3 STATEWATCH
Article 3 refers to the differing nature of
FIUs within Member States—whether they be a police based
unit or administrative in nature. It means that whatever their
nature the unit will fulfil the function of an FIU as outlined
in Article 2.1. There will be no obligation to change the status
of FIUs in national law.
EUROPOL—POINT
6 STATEWATCH
Under Article 4 of the Europol Convention, the
designated National Unit—NCIS in the United Kingdom—which
liaises with Europol—with regards to the tasks Europol has
been designated to carry out—is required to:
(1) Supply Europol on their own initiative
with the information and intelligence necessary for it to carry
out its tasks.
(2) Respond to Europol's requests for information
intelligence and advice.
(3) Keep information and intelligence up
to date.
(4) Evaluate information and intelligence
in accordance with national law for the competent authorities
and transmit this material to them.
(5) Issue requests for advice, information,
intelligence and analysis to Europol.
(6) Supply Europol with information for storage
in the computerised system.
(7) Ensure compliance with the law in every
exchange of information between themselves and Europol.
Article 8 of the draft Decision merely puts
beyond doubt the fact that exchange of information between Member
states will not affect the obligations they have to Europol.
DRAFTING—POINT
7 STATEWATCH
As far as the layout of the text is concerned,
the old Article 6.2 has been revised and incorporated within article
5.2 of the new text. Article 6 provides for an important set of
provisions imposing a national law compliance test.
Overall the Home Secretary is satisfied that
this latest text is not only a major improvement on the earlier
versions but is the best which is likely to be obtained, given
the need for consensus in the Council and the varying concerns
of different Member States. The draft was discussed at the JHA
Council on Monday 29 May where there was general agreement on
the text with only the United Kingdom and Sweden maintaining their
Parliamentary Reserves, the text also being subject to some further
detailed amendment in relation to the extent of its territorial
application. We anticipate that this point will be resolved and
the Swedish Reserve lifted next week, leaving the United Kingdom's
reserve as the only obstacle to adoption.
Given that the latest text of this document
has become available only so recently, we intend to maintain our
Parliamentary Reserve until you have had the opportunity to examine
it. However given our overall assessment of its merits and the
fact that re-negotiation of any substantive elements would have
virtually no chance of success at this stage, I am afraid we will
need to consider lifting our Reserve if no new and substantive
issues are raised on the text in the next two weeks or so.
9 June 2000
Letter from Lord Tordoff, Chairman of
the Committee, to Barbara Roche MP, Minister of State, Home Office
Thank you for your Explanatory Memorandum of
5 June and your letter of 9 June and for the full explanations
of the draft Decision you have given. This was most helpful to
Sub-Committee E (Law and Institutions) when it considered the
proposal at its meeting on 21 June.
As you will recall from our earlier correspondence
two main matters of concern were raised by Justice and Statewatch.
First, as regards data protection, the Committee notes that Article
5(5) has been amended by the inclusion of references to the Council
of Europe Convention of 1981 and Recommendation of 1987. As regards
safeguarding the rights of a particular data subject, much it
would seem may depend on the status of the FIU in the requesting
State and the extent of protection given by the local law in the
light of any applicable exceptions or derogations.
The second concern related to the rights of
defence. You draw the Committee's attention to Articles 5(2) and
(3) and we note the reliance you place on the reference to the
"fundamental principles of national law" and on the
requirements of Article 6(2) of the Treaty on European Union.
The Committee wonders, however, to what extent the National Criminal
Intelligence Service (as the UK FIU) will have regard to the rights
of defence and rules as to admissibility of evidence when determining
whether to impose a condition on the use of information on the
grounds of the need to respect "fundamental principles"
of the laws of the United Kingdom.
This letter clears the proposal from scrutiny.
22 June 2000
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