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Police Reform Bill [HL]
The Minister of State, Home Office (Lord Rooker): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 8, Schedule 1, Clause 9,
Schedule 2, Clauses 10 to 13, Schedule 3, Clauses 14 to 34, Schedule 4, Clauses 35 and 36, Schedule 5, Clauses 37 to 43, Schedule 6, Clauses 44 to 90, Schedules 7 and 8, Clause 91.—(Lord Rooker.)On Question, Motion agreed to.
Proceeds of Crime Bill
3.8 p.m.
Lord Rooker: My Lords, I beg to move that this Bill be now read a second time. This is a highly complex and technical Bill. It comes to us from the other place where it received thorough and detailed scrutiny over several months. It runs to 304 pages and contains 454 clauses and nine schedules, many a repetition of the same issue so that Scotland and Northern Ireland are dealt with in the same way as England and Wales.
The huge profits made from crime are often flaunted and give force to the old saying, "Crime pays". This causes deep offence to hard-working and law-abiding members of the community and it makes harmful role models for our young people. Above all, the proceeds of crime provide the working capital for future criminal enterprise. Recovering the money must therefore be an inherent part of our crime reduction strategy.
The June 2000 report from the Government's Performance and Innovation Unit leaves no doubt that far too many defendants pass through the criminal justice system with little or no effort being made to deprive them of the benefit they derived from their crimes. Police and Customs experts believe that following the money trail provides an effective route to identifying major criminals and disrupting criminal organisations as well as relieving crooks of the proceeds of their crimes.
I am not asking for approval of this important legislation—voluminous though it is—in isolation. It must be supported by other action, the first of which is on resources. Very little priority has been given to financial investigation and the recovery of criminal assets. The Government have therefore made money available in the current settlement period to fund 86 additional financial investigator posts for the police service in England and Wales.
Next, we need action on expertise. This is extremely complex work demanding the right skills—people properly trained in financial investigation and prosecutors and judges equipped to deal with difficult cases. Moreover, we need action on international co-operation. Criminals use national boundaries to protect both themselves and their money. Improvements made by the Bill will apply to the
recovery of money generated by crime overseas as well as by domestic crime. We can also make better practical use of powers and procedures, both now and in the future. The Government have set themselves a target of doubling receipts from the proceeds of crime. In real money, the target is £60 million in three years' time. The Government and the law enforcement and prosecution agencies have drawn up a strategy, which has been published, for achieving that goal.As we are asking the House to approve a large tranche of new legislation in this Bill, I should briefly describe some of the problems with current legislation. We have identified some weaknesses. The first is that the separate treatment of drug trafficking from other criminal activity makes current legislation ineffective in dealing with today's versatile criminal entrepreneurs. When dealing with such criminal groups, it is often impossible in practice to distinguish between the proceeds from drug trafficking and their other activities.
Furthermore, modern technology makes it possible to transfer money from one bank account to another, or from one country to another, at the touch of a button. We must have powers to track such transactions. Currently, even if investigators locate the assets, they have no power to freeze them until the defendant is about to be charged. By then, the defendant will often have realised that he—sometimes she—is under investigation and will have placed the assets beyond reach. The complexity of the confiscation system deters the courts and practitioners. In fact, the system produces only about 1,100 confiscation orders annually, compared with 65,000 defendants found guilty of offences in Crown Courts. Furthermore, the enforcement process is ineffective. Only 40 to 50 per cent of the value of confiscation orders granted is actually recovered.
Another problem is that many major criminal figures have become untouchable by prosecution and confiscation. They organise or finance the criminal activity of others and then profit from the results. Subsequently, they are subject to our current processes, but, as I said, are almost untouchable. In many such cases, law enforcement has compelling evidence that assets were derived by unlawful activity. That evidence is often supplemented by evidence that property has been concealed, or by the absence of any rational explanation for the legitimacy of a person's assets. The Bill addresses that key issue.
The Bill comes to your Lordships' House from the other place in fairly good shape. It was substantially debated for more than 115 hours, including 96 in Committee and more than 10 on Report. Some 28 distinct aspects of the Bill have been amended and there are a number of issues on which, in response to points raised in another place, we shall be bringing forward further amendments for your Lordships' consideration. I shall comment on some of those later. The Government are grateful to the Joint Committee on Human Rights and to the Delegated Powers and Regulatory Reform Committee of your Lordships' House for their reports. I shall comment later on some of their findings.
First, however, I should like to outline what the Bill will do. Part 1 establishes an assets recovery agency which will be dedicated to recovering the proceeds of crime. The agency will share the confiscation functions of the law enforcement and prosecution authorities. It will also have sole authority to operate the civil recovery procedures in England and Wales and Northern Ireland under Part 5 of the Bill, and will exercise taxation functions throughout the United Kingdom under Part 6. I shall deal with that point separately. The agency will also train and accredit financial investigators, who will then be able to apply their skills in their own organisations. The agency director will be accountable to the Home Secretary although he will act independently on all the cases he handles. We envisage that the agency will be staffed by a multidisciplinary team of between 100 and 150 people including investigators, lawyers and accountants.
Part 2 sets out a consolidated scheme for restraining and confiscating the proceeds of crime in criminal proceedings following a conviction for any acquisitive offence. Parts 3 and 4 contain similar procedures for Scotland and Northern Ireland. As I said, there is a good deal of repetition of the issues in the Bill, for reasons which will be clearly understandable.
The power to restrain the assets of a suspect will be made available at an earlier stage, from the start of a criminal investigation instead of at the point of charge, and applications will be heard by the Crown Court instead of the High Court as at present. Normally, a confiscation order will reflect the convicted defendant's benefit from his particular crime. However, when the defendant has a criminal lifestyle, the confiscation order will reflect his benefit from his general criminal conduct—that is, all criminal conduct committed by him.
A defendant has a criminal lifestyle in cases in which he is convicted of drug trafficking, money laundering or other specified offences. We have placed in the Library a list of the types of criminal conduct that we believe should normally be indicative of a criminal lifestyle. In response to debate in the other place, we shall be bringing forward in Committee a new schedule listing criminal lifestyle offences. We shall also consider amending the power to add further offences by use of the affirmative resolution procedure, as recommended by your Lordships' Delegated Powers and Regulatory Reform Committee.
The Bill identifies two other criteria for a criminal lifestyle: when a single offence is committed over a period of at least six months, for example a conspiracy; or when an offender is convicted of three or four offences from which he has benefited. I should say a few words about the assumptions. When a defendant has a criminal lifestyle, the court must assume that assets held since conviction regardless of when they were acquired, and property transferred to the defendant or expenditure incurred by him during the six years before criminal proceedings, represented the proceeds of crime. The Joint Committee's report appeared to accept the public policy arguments for applying the assumptions in drug trafficking cases.
The Joint Committee has, however, questioned applying the assumptions in other cases, arguing that the criminal lifestyle criteria are too widely drawn.We have carefully examined this issue, but we currently do not consider that the Joint Committee has given sufficient weight to the substantial safeguards that the Bill provides, or to the recent judgment of this House in the Rezvi and Benjafield cases. As I said, this is not new in principle. Similar challenges against the use of the existing assumptions procedure in drug trafficking cases were rejected by the Privy Council in McIntosh, in February 2001, and by the European Court of Human Rights in Phillips, in July 2001. In the Bill the court must not apply the assumptions if the defendant shows them to be incorrect, or if doing so would give rise to a serious risk of injustice. The courts have regarded these safeguards as sufficient to ensure compliance with human rights.
I should also deal with the provisions on the family home, which is treated differently as between England, Wales and Scotland. The Joint Committee on Human Rights argued that the provisions in Part 3 which place certain limits on the realisation of a family home in Scotland should apply in the rest of the United Kingdom. Parts 2 and 4, which apply to England and Wales and Northern Ireland respectively, require a family home to be confiscated when that is necessary to satisfy a confiscation order in the same way as any other property liable to confiscation. Part 3, which applies to Scotland, empowers the court to refuse realisation of a family home when the authorities are unable to prove that it was acquired with the proceeds of crime. This reflects other provisions in Scottish law that restrict access to the family home in certain types of proceedings. The two provisions are different, but the Government are satisfied that they are both consistent with our obligations under the European Convention on Human Rights.
Part 5, on civil recovery, empowers the director of the agency to sue people in the High Court for the recovery of property derived from unlawful activity. This is a civil action to which civil rules and procedures will apply. In Scotland, Scottish Ministers will be responsible for civil recovery and proceedings will take place in the Court of Session.
It is important to take on board the fact that the prosecution of criminals must always take priority—that is a key element—and it will continue to do so. However, it is not acceptable that ownership of the proceeds of crime should remain immune from any form of legal challenge where criminal proceedings are not available. The director will have access to the investigation powers in Part 8 of the Bill, prior to the start of litigation. If the court is satisfied that he has a good, arguable case, he will be able to seek an interim receiving order that freezes the property, pending the outcome of the case, and places it under the control of a court-appointed receiver. Civil recovery will not seek to establish guilt or innocence but will focus on whether particular property is, or represents the proceeds of, unlawful conduct.
The scheme contains substantial safeguards, as everyone will expect. The burden of proof will be on the director. There will be a financial threshold below which proceedings will not be initiated and we expect to set that at not less than £10,000. Civil legal aid will be available and where the director loses, the court will be able to order him to compensate respondents for any financial loss they have incurred.
There is a substantial and detailed protection for people who show that they have purchased property in good faith for full value and without notice of its tainted origins and for other innocent interests. In the light of all those safeguards the Government are confident that the civil recovery provisions are compatible with the European Convention on Human Rights.
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