| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Lord Bruce of Donington: My Lords, I should like my noble friend to address a single point on money laundering. I think that there is agreement among the general public that money laundering is one of the means by which terrorists help to organise their activities and get the materials and transportation that they require. I ask my noble friend whether he will try to ensure that the money laundering instructions or regulations that the noble Lord may have in mind will be much more precise in nature than the mere generalisations that have been offered over the past year or so. Those are so general in their effect that one can escape them very easily.
Money laundering is an activity that benefits not only the person who wants to launder the money but also the person or body who supplies it. Therefore, it is a very sensitive matter. Can my noble friend assure
me that some detailed precision will now be applied to the regulations that will be rigorously enforced? The Government should have studied the matter over the past year but the issue has now become vital. If we are successful in cutting off the money, we shall deal a very heavy blow against terrorism.
Lord Rooker: My Lords, I say to my noble friend that the Statement which is to follow this one will probably be more specific to the financing of terrorism. However, the point that he makes is correct. If we do not apply precision to the legislation, the matter will end up in the courts. As a result, the legal profession and not Parliament will make the decisions. Therefore, the more precise that we are, the greater the chance that Parliament and not the courts will make the rules. That is a matter about which we are actively concerned.
I return to the subject of the proceeds of crime Bill. As I indicated, it is a substantial piece of legislation and there will be plenty of opportunity to discuss it. I hope that the length of the Bill is an indication of its precision. Obviously, a broad-brush approach would leave gaping loopholes all over the place. Therefore, we must hone in on and target exact offences; otherwise, the matter will be taken out of Parliament's hands and into those of the courts.
Lord Mackie of Benshie: My Lords, I wonder whether the noble Lord can answer the last part of the previous question concerning resources. We shall need a great many more people in the security services. Will he obtain the necessary money from the Treasury?
Lord Rooker: My Lords, as I said, there are no turf wars and we have joined-up government. At present, resources are being made available as required.
Lord Campbell-Savours: My Lords, why should a person within the United Kingdom be allowed to board an aircraft without being required, if necessary, to prove his identity? Is there resistance within the department to the introduction of national identity cards?
Lord Rooker: My Lords, we have not kept embarkation details in this country for several years. Rather, the situation has gone the other way: we check those who enter the country, not those who go out. However, measures are in hand which I believe will meet the point to which my noble friend referred. As touched upon in my Statement, other legislation will deal with aircraft security, the swapping of information about people on flights before they land, and so on, so that the authorities receive good advance notice. I consider that to be important.
So far as concerns my noble friend's second point, the answer is no. There is no barrier in the department.
Lord Glentoran: My Lords, convicted terrorists in my part of the world have for many years continued
their dastardly trade from behind bars. Are there no conditions under which Her Majesty's Government will consider the reintroduction of the death penalty?
Lord Rooker: No, my Lords. In any event, as I understand it, that has always been a matter for a free vote in both Houses. I believe that the issue has been put to bed. The subject has been debated in Parliament time and again, and the result has been the same. Therefore, I say that there is no prospect of reintroducing such a penalty.
Lord Alton of Liverpool: My Lords, in his remarks earlier, the noble Lord, Lord McNally, reminded us of the abiding scenes of the emergency workers in New York. We also recollect the rock solid qualities of the Mayor of New York, Rudolph Giuliani, standing in the midst of the mayhem and creating some order out of the chaos. I want to ask the Minister whether he is happy that, if, God forbid, similar circumstances were ever to occur in this country--here in the city of London especially but also in our other great metropolitan centres--there will be clear lines of authority. Will someone be seen to be in charge and able to gather together all the resources of the state to deal with such problems?
Coupled with that, and endorsing a point made by the noble Lord, Lord Baker, about the importance of intelligence gathering, does the noble Lord recall the occasion in the 1990s when intelligence was able to detect that the state of Iran sought to purchase chemicals from Poland? That attempt was thwarted by good intelligence. Indeed, two-and-a-half years ago his own department quite properly warned of the dangers of anthrax and smallpox being brought into this country. Does he agree that good intelligence is the best way for us to combat the evil of terrorism? The noble Lord, and, through him, the Home Secretary, has asked for the support of all sides of the House today. In principle, he is entitled to that.
Lord Rooker: My Lords, with regard to the noble Lord's first question, contingency plans are, by definition, contingency plans. They are always being updated and tested. However, we do not advertise the fact and we do not make announcements. Exercises take place on an ordinary basis. During my time as a Minister since 1997 I have participated in contingency plans and exercises. However, that is not the type of matter about which one issues a press release. That would defeat the object of the exercise.
Obviously, post-11th September contingency plans have been considered, updated, extended and modified. I say with all sincerity that I have no reason to believe that a situation, as described or hinted at on more than one occasion, will arise in which we shall not know who is in charge in our great cities.
Lord Judd: My Lords, is my noble friend able explicitly to reassure the House that, amid all the important measures that are anticipated, the Government remain determined that one of the values which has been central to our life in Britain will be
upheld? Will Britain continue to be a safe haven for the genuine refugee and genuine asylum seeker? Can he reassure the House that we shall not in any way be driven from that commitment by the terrorists?
Lord Rooker: My Lords, I can give my noble friend that absolute commitment. There is no question of undermining this country as a refuge and safe haven for those who flee persecution and torture. The fact is that those who genuinely flee persecution and torture are a minority of those who seek asylum. Because criminal gangs organise the trafficking of people in whose cases there is no shred of evidence under the 1951 convention, the concern remains that the genuine person who flees persecution may be prevented from reaching a safe haven. However, we do not seek to undermine our commitment to the 1951 convention or to undermine this country's proud tradition of being a safe haven for those who flee persecution and terror.
Action against Financing Terrorism
5.38 p.m.
Lord McIntosh of Haringey: My Lords, with the leave of the House, I shall now repeat a Statement being made by the Chancellor of the Exchequer in the House of Commons. The Statement is as follows:
-
"With permission, Mr Speaker, I wish to announce measures to cut off the supply of funds to terrorism.
"Those who finance terror are as guilty as those who commit it. So our response to the funding of terrorist acts must be every bit as clear, as unequivocal and as united as our response to the terrorist acts themselves.
"The action plan that I am placing in the House of Commons Library and making available in the Vote Office"--
-
"today arises from concerted work across governments, in particular from decisions of the G7 group of finance ministers and central bank governors on 6th October and will tighten the law, further empower the police, and strengthen co-ordination across the world.
"I can report to the House that, having already fully implemented UN Security Council Resolution 1267, on the Taliban, and UN Security Council Resolution 1333, on Osama bin Laden, the UK has now frozen 35 suspect bank accounts, immobilising more than £63 million of suspect terrorist funds.
"I can also report that by Order in Council following the latest UN resolution, Resolution 1373, we have frozen all UK bank accounts associated with the individuals and organisations named in the US Treasury suspect lists; the effort includes action this weekend by which bank accounts have been frozen and £180,000 belonging to those identified in Friday's updated lists have already been seized.
"Our UK domestic controls are already among the best in the world but, as part of the emergency anti-terrorism Bill that was announced this afternoon by the Home Secretary, the Government propose a new power to freeze funds when suspicious transactions are under investigation. They will be backed up by new reporting arrangements on financial institutions so that they must disclose not only known transactions that are destined for terrorism but also transactions about which there are grounds for suspicion.
"Clearly, a balance has to be struck between individuals' right to privacy and their security at a time of increased risk. However, we believe that there is a case for new powers for the police to monitor accounts that may be used to facilitate terrorism, for Customs to be allowed, where there are suspicions, to seize cash not only at our borders but also within the UK and for the Inland Revenue and Customs to share information and co-operate more effectively with the police. We do that because of the weight of evidence concerning the finances of Osama bin Laden and the Al'Qaeda organisation, which are complex but which are becoming clearer daily. It is not primarily his personal wealth that supports the Taliban and active terrorist operations, but the profits from the drugs trade and other businesses and from individual and company donors. That money is channelled through a range of financial centres across the globe and the evidence already points to centres in the Gulf, Pakistan and central Asia and to money laundering through an established underground banking system.
"The cells that form part of the wider Al'Qaeda network are often self-financing, and possibly use business fronts and crime to sustain themselves. Unravelling that relies on first-rate co-ordination.
"Since 11th September, security services, the police, the special branch and Customs and Excise, co-ordinated by the National Criminal Intelligence Service, and our Armed Forces, have worked together to track down terrorist finance. I believe that the whole House will wish to express its gratitude to them. To enhance those efforts we now propose to establish and fund within NCIS a new multi-agency terrorist finance unit that is fully supported by additional special branch investigative resources.
"To further improve financial intelligence a new task force will also bring into the anti-terrorism effort the best academic, financial and commercial expertise and use the best skills of forensic accountancy to track assets. It will also investigate underground banking, which is often used for legitimate purposes, such as remitting earnings to far-away families and communities but which is also known to provide a very easy means by which criminals and terrorists can conceal the laundering of money and its movement around the world.
"Bureaux de change are another network by which money can be laundered and transferred. During the past 18 months, Customs and Excise has charged 89 people in connection with the laundering
- of £590 million. I believe that that is just a start. In the consultation document that we are publishing today we therefore propose the implementation from 12th November of a new regime of supervision to ensure compliance with money laundering regulations; we will also consult on a registration charge. To make easier the tracing and tracking of criminal and terrorist assets we are also consulting on a new requirement for the proper disclosure of the beneficial ownership of companies.
"Large financial centres all over the world have an important part to play in cutting off the supply of terrorist funding. I am able to tell the House that many of the measures that we are bringing forward are to be replicated throughout UK Crown dependencies and overseas territories. They are announcing their own plans to introduce appropriate equivalent measures.
"The G7 finance ministers and central bank governors met in Washington on 6th October and concluded that a special plenary of the international financial action task force would meet later this month to agree the imposition, enforcement and monitoring of a new international standard to combat terrorist finance. The UK is also pressing for the United Nations to establish a permanent monitoring unit, for the IMF to provide expert help to countries setting up economic crime units and for the early ratification of the EU second money laundering directive and of the UN convention on the suppression of the financing of terrorism.
"At those international meetings G7 ministers also had a chance to review the current state of the world economy. We expressed solidarity with the US Government and the whole of the USA after the tragic events of 11th September and agreed that the global economic challenge demanded a global response. Not only have interest rates been brought down worldwide but the central banks of America, the euro area, Japan and Britain have made clear their determination to take any necessary further action.
"Oil prices, which have previously risen in times of trouble, have fallen during the past month. We will continue to work with the oil-producing countries to ensure steadiness of supply and prices. Where markets have failed, as in airline insurance, governments across Europe and America have acted together, with a new short-term insurance guarantee.
"These remain uncertain and testing times. As governments and finance ministers work together, every one of us is conscious of the human consequences of economic uncertainty--there are particular concerns about employment. However, since 11th September, the world has acted together and decisively to maintain the conditions for stability and growth.
"The Government's assessment of the current state of the economy and our forecasts for next year will be published next month in the pre-Budget report for full discussion in this House.
"If fanaticism is the heart of modern terrorism, finance is its lifeblood. I believe that the whole House will agree on the need to move expeditiously to cut off the supply of terrorist finance. This House is once again demonstrating its unity and determination--it is standing firm, as one, to cut off all means of support to terrorism."
5.46 p.m.
Lord Saatchi: My Lords, we are grateful to the Minister for giving us an opportunity to hear the Chancellor's Statement and for giving these Benches this opportunity to respond.
We remember the thousands of people who died in the attacks in September, but a month later people are still confused. In how many countries do the terrorists still have cells? How did they plan such a crime in total secrecy? Why even now do we lack intelligence about the whereabouts of a veritable army of men? However, there is one thing about the terrorists of which we can be sure--they must eat. And to eat, they must have money. As today's money is electronic, it should leave a money trail. However, as the Minister has just said, life seems to be more complicated than that.
We recall that in the second of our emergency debates the noble and learned Lord the Leader of the House rightly said that the present supervisory oversight system for transactions in the UK has many weaknesses. He referred to the £63 million, which was mentioned in the Statement, that had been frozen in UK bank accounts as a drop in the ocean. That description must also apply to the £180,000 that was mentioned in today's Statement. He wisely advised that our best course of action in defeating terrorism might well be to follow the money.
We also recall the words of the US Defense Secretary, who said that we were now engaged in a cold war. We remember that the previous cold war, against communism, ended when the economic system of communism collapsed. I hope that today's Statement will bring forward the day when, in Mr Rumsfeld's phrase, terrorism also collapses from within. That is why these Benches wholeheartedly welcome the Chancellor's Statement and support bipartisan legislation that will demonstrate to our friends and enemies, here and abroad, that Britain stands with the US in the campaign to dismantle the financial infrastructure of terrorism.
I dare to hope that the Chancellor's new procedures will become a model for the gaining and sharing of financial intelligence. It is certain that a new approach is required. Many experts in the financial services sector are asking questions such as: what is terrorist financing? For example, are terrorist organisations moving funds into the UK banking system through third-party correspondent accounts at major UK banks or are they relying more on cash transfers through underground money services businesses? How did those people get credit cards and bank accounts without raising suspicion? If the attacks could be executed without leaving an obvious financial
trail, what might we be missing now? Finally, there is the chilling question of whether it is possible that terrorist financing is continuing undetected in the UK.These are urgent questions. Our purpose on these Benches must be to help the Government to devise effective legislation and procedures to stop it, however it occurs. From what investigators have so far pieced together of the money trail, I find that there are still more questions than answers as to how the operation that culminated in the horror of 11th September was paid for. What we know suggests that we should place a much higher priority on non-traditional or "underground" banking systems that fall largely outside the scope of normal reporting and record-keeping requirements.
For example, the ancient money exchange system of "hawala" is virtually impossible to detect. Hawala is an Arabic word that means word of mouth. It is an international underground economic system by which people in different locations honour each other's financial obligations by making payments wherever needed. Such activities have no apparent victim and involve people who are legitimate businessmen in every other way. There is no movement of money between countries. It is hard to see how we can possibly detect such transactions or stop them.
I have two questions for the Minister. First, is he convinced that the proposals described in the Statement are adequate to address the particular features of terrorist financing which I describe? I am not sure. The new regime seems to be designed to detect the kind of money transfers associated with crimes that generate significant proceeds. It does not appear to be particularly well suited to catch an unconventional terrorist operation often financed by legitimate business activity.
Does the Minister agree that the fight against terrorism should not be regarded as a sub-issue of money laundering but as a battlefield of its own? My right honourable friend the Shadow Chancellor said in another place earlier this afternoon that money laundering involves making dirty money clean, but here we are dealing with a system which makes clean money dirty. Does the Minister agree that a recognition of the distinction between money laundering and terrorist financing should be at the heart of our approach, and that simply building on the same laws as may arise against money laundering may not prove to be the right course? For example, does the Minister agree that the proceeds of crime Bill seems to be particularly ill-named as a vehicle for the right kind of legislation against terrorist financing?
Secondly, this morning The Times newspaper reported that:
- "The Home Office and the Treasury were unclear yesterday as to precisely how their responsibilities for the anti-terrorism measures were divided".
In summary, we see three major goals for government policy. The first is to bolster the ability of the police to find and destroy the financing of terrorist organisations, whether in banks or in underground hawala systems. The second is to establish a government-industry partnership to stop terrorist funding. The third is to track any terrorist money kept in foreign bank accounts and to increase foreign co-operation with the new UK and US policies. We shall support the Government in their efforts in those areas.
The best way for our Parliament to commemorate the lives of the victims is to ensure that the gates to the financial services system are locked to terrorists. Now is the time to draw the line.
5.53 p.m.
Lord Taverne: My Lords, we shall have to look at the details of the proposals but, in general, we warmly welcome these measures. It seems to me of the greatest importance that there should be international co-operation and better co-ordination of services on the part of the Government in this country. These are practical measures and are likely to be an effective weapon against terrorism.
However, I have some questions for the Minister. First, what is the status of sanctions on non-co-operating countries? A number of countries have not co-operated on international measures in the past. In the Government's view, can the legislation deal with money laundering in the state funds of some developing countries and other countries; for example, in Nigeria, Indonesia and Russia?
Secondly, in the past there has been some coincidence between tax havens and money laundering. Do the Government see such a connection? If so, how will that affect their actions? Thirdly, I shall make a general observation. Towards the end of the Statement, the Chancellor refers to measures dealing with recession. I am sure that the Government agree that irrational and panic reactions are worsening recessions and thereby serving the aims of the terrorist. Do not the Government accept that some of the language used and statements made have increased public fears irrationally on both sides of the Atlantic? Should not there be, generally, more emphasis on operations against terrorism and rather less use of the language of war? Would not that be more effective in defeating the aims of the terrorists?
5.55 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lords, Lord Saatchi and Lord Taverne, for the general welcome they gave to the Statement. More than that I am grateful to them for their constructive approach in suggesting further
measures we might take, and, indeed, for a proper degree of criticism and realism about what is proposed.I agree with the noble Lord, Lord Saatchi, that the key to all of this is the money trail. As he said, we must follow the money. He is right to say that support for bi-partisan legislation must depend on agreement on the way in which we propose to proceed. Perhaps I may say straightaway that the proposals put forward by the Chancellor do not rely principally or even largely upon legislation. Many of the measures announced by the Chancellor can be introduced either through Order in Council, as happened last weekend in response to United Nations Security Council Resolution 1373, or by administrative action, as the new units in the National Criminal Intelligence Service imply.
There is legislation, which is part of the spectrum of legislation referred to in the Statement given by the Home Secretary. The noble Lord, Lord Saatchi, is right to say that the "proceeds of crime" is not a natural way to describe terrorist financing. On the whole, those are legitimate movements of funds which may be used for illegitimate purposes rather than the other way round.
Other powers will be needed. Some will require only secondary legislation; for example, the introduction for the first time of proper controls over bureaux de change. Some will require primary legislation, for example, wider grounds for freezing funds: greater police powers to seize cash and monitor accounts; greater monitoring obligations on banks and money-holders generally, and reporting obligations to Government. We shall certainly consult on those matters with the financial institutions concerned.
Reference has not been made to what may be a controversial element of the proposals; namely, a greater co-operation between departments. I am aware that that is a matter which concerns noble Lords, and rightly so as civil liberty issues are involved. I can only say that Parliament will be adequately consulted and will have an opportunity to express its views on those matters.
It is true that the kind of underground financial organisation which was referred to by the noble Lord, Lord Saatchi as hawala, is the most difficult type to identify. That is particularly so as there is no flow of money involved, simply the flow of oral promissory notes. I believe that the answer to that will be not legislation but intelligence, which the Chancellor has put forward in the Statement. Subject to the comments of the noble Lord, Lord Saatchi, I believe that such proposals deserve the support that he is prepared to give.
The noble Lord, Lord Taverne, has quite rightly said that international co-ordination is the key. A large part of the Statement is about the G7 meeting on 6th October and the agreement to hold a wider group meeting before the end of this month. At that meeting consideration will be given to one of the issues properly raised by the noble Lord, namely; sanctions
on non-co-operating countries. Such sanctions are possible. The noble Lord also raised the issue of tax havens. The Statement made it clear that, as far as we are concerned, our Crown Dependencies and Overseas Territories are working on similar steps to those described in the Statement. Finally, he urged that we should not give way to panic reactions, which increase public fears. I entirely agree.
| Next Section | Back to Table of Contents | Lords Hansard Home Page |