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Lord Rooker moved Amendment No. 292X:
- Page 304, line 22, at end insert—
Section (Registration) (2)(a) and (4)."
On Question, amendment agreed to.
Schedule 9, as amended, agreed to.
Clause 451 [Orders and regulations]:
Lord Rooker moved Amendments Nos. 293 and 293A:
- Page 260, line 25, after "section" insert "75(4),"
- Page 260, line 25, after "section" insert "229(4),"
On Question, amendments agreed to.
Baroness Buscombe moved Amendment No. 294:
- Page 260, line 25, after "294(4)," insert "359(4),"
The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 295C, 297 and 298C. The amendment, to which the Minister kindly added his name, responds to the recommendation of the Delegated Powers and Regulatory Reform Committee that the order amending the definition of customer information, which can be requested from a financial institution, must be subject to the affirmative resolution procedure. I beg to move.
On Question, amendment agreed to.
Baroness Buscombe moved Amendment No. 295:
- Page 260, line 25, after "432(9)" insert "438, 439, 444"
The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 298. The amendments refer to Clauses 438, 439 and 444. I shall begin with the references to Clauses 438 and 439. They relate to external requests and orders, external investigations and the powers that Her Majesty may, by Order in Council, make. The amendments refer to clauses that in a sense involve a certain loss of sovereignty, in that, being external orders, they may have an effect on other jurisdictions. They say, in a sense, to foreign courts, "Your orders abroad in relation to criminal matters will operate in this country". We are concerned about that to the extent that we believe that if we are to have such orders, they should be subject to the affirmative resolution of both Houses. Such measures should not be agreed to by negative resolution when they involve a potential loss of sovereignty.
On Clause 444, we are somewhat surprised that the provisions do not apply to public servants of the Crown. We are again nervous in this regard. We want to see how they will apply—money laundering and prejudicial investigations are involved. We believe that the regulations should apply. I beg to move.
Lord Rooker: As the noble Baroness said, the amendments would in effect make the order-making powers in Clauses 438 and 439 subject to the affirmative resolution procedure. Those clauses enable the Secretary of State to make Orders in Council to enforce requests from "overseas authorities" for the investigation, restraint, civil recovery and confiscation of assets. The amendments would also make the power in Clause 444, to make specified Crown servants subject to the money laundering provisions of the Bill, subject to affirmative resolution.
Contrary to what I have said throughout our consideration of the Bill, amendments to that effect were tabled but not reached at Report in the other place. We consider that, given the explicit nature of the relevant provisions in Parts 2, 3, 4 and 8, and the technical nature of the adaptations required for the enforcement of external orders, the use of secondary legislation that is made under the negative resolution procedure is appropriate.
The powers in Clauses 438, 439 and 444 are based on similar powers in the existing confiscation legislation—for example Sections 39, 40 and 61 of the Drug Trafficking Act 1994. The negative resolution procedure applies to orders made under those sections, and the clauses draw upon the existing provisions.
We set out that reasoning in paragraphs 123 to 127 and 131 to 133 of the Home Office memorandum to the Delegated Powers and Regulatory Reform Committee of your Lordships' House, which carried out its usual thorough analysis of the powers contained in the Bill. In relation to Part 11, the committee said in paragraph 7 of its 16th report of this Session:
- "Part 11 of the Bill is concerned with international co-operation. Clause . . . 438 [is concerned] with requests for assistance coming from outside the UK and [Clause] 439 with
- investigations for the purposes of the Bill which need to be conducted outside the UK. Each clause leaves the necessary substantive provision to be made by Order in Council . . . We consider that all this is appropriate".
The committee went on to say in paragraph 8 of its report:
- "With the exception of the commencement power (clause 450) all the other powers in the bill are subject to negative procedure (or, if made by Scottish Ministers, the Scottish equivalent). We consider that this is appropriate, except in three cases, which we discuss in more detail in the following paragraphs".
With my explanation and the approval of the Delegated Powers and Regulatory Reform Committee, I ask Members of the Committee to trust the Government and the noble Baroness to withdraw the amendment.
Baroness Buscombe: I thank the Minister for his response. He may not be surprised to hear that I shall not trust the Government. That said, I shall read with care in Hansard what he said and, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Thomas of Gresford moved Amendment No. 295A:
- Page 260, line 25, at end insert—
The noble Lord said: This amendment is concerned with the method by which the Government intend to extend the money laundering disclosure rules to groups which are not currently in the regulated sector, such as solicitors and estate agents. That is an important matter. It is the view of these Benches that it should be done only after parliamentary debate. The Select Committee on Delegated Powers and Regulatory Reform made that recommendation, but it was rejected by the noble Lord, Lord Rooker, on the basis that parallel provisions in the Money Laundering Regulations 1993 can be carried out by order, subject to the negative resolution procedure, under the European Communities Act 1972.
We believe that there is a flaw in that reasoning. An order extending the regulated sector could not be brought in under that Act because the penalty exceeds two years. Therefore, it seems that the justification given for using the negative procedure here is not accurate. I invite the noble Lord to reconsider his position in relation to this matter.
Lord Rooker: Naturally, if what the noble Lord, Lord Thomas of Gresford, has just said is right, then we are wrong. It would be churlish of me to say that we
The amendment would mean that the order-making power in Part 3 of Schedule 6 would be subject to the affirmative, rather than negative, resolution procedure, which is what we are proposing. The order-making power enables the Treasury to amend the definitions of the regulated sector and supervisory authorities, to which the provisions in Part 7 of the Bill concerning money laundering apply.
It is anticipated that the order-making power will be used to keep the scope of the legislation in line with future extensions of the regulations. That may bring in other sectors that are not presently regulated. I note that the noble Lord's main concerns, which are similar to those of the Delegated Powers and Regulatory Reform Committee, arise mainly from the fact that it is intended that the power will be used to implement the necessary changes following implementation of the Second European Money Laundering Directive.
Implementation of that directive will bring the activities of accountants, auditors, tax advisers, lawyers—except in circumstances of legal privilege—real estate agents, casinos and dealers of high-value goods within the scope of Schedule 6 and the provisions of Part 7. Members of the Committee will, of course, be aware that the regulations, and hence the criminal law, will be amended simply in order to fulfil our international obligations as set out in the directive.
I want to make it clear from the outset that for this, and other, reasons, we are still not minded to accept the noble Lord's amendments or the recommendations of the Delegated Powers and Regulatory Reform Committee in this respect. As I said, I wrote to the noble Lord, Lord Dahrendorf, on 30th April. A copy of my letter has been placed in the Library.
As set out in paragraphs 84 and 85 of the Home Office's memorandum to the Delegated Powers and Regulatory Reform Committee, at present the Treasury can change the schedule of business in the regulated sector set out in the Money Laundering Regulations 1993 by order, subject to the negative resolution procedure, as stated, under the European Communities Act 1972. That covers issues such as the requirement to establish systems for suspicious transaction reports, keeping records, undertaking training and appointing designated money laundering reporting officers.
We do not believe that it would be sensible to have one definition of the regulated sector for the purpose of the Money Laundering Regulations but another definition for the requirement in the Proceeds of Crime Bill to make suspicious transaction reports when there were "reasonable grounds to suspect" involvement in money laundering. That is the outcome that we risk if we make one order subject to affirmative resolution.
In addition, we do not consider it to be an appropriate use of valuable parliamentary time to require a debate every time a very minor change to the wording of the regulations to deal with technical issues proves necessary, as happened recently. In the light of that explanation, I hope that the noble Lord will withdraw his amendment, with the caveat to which I referred in my opening remarks regarding the point that the noble Lord raised because I do not have an answer to his question.
"(ab) an order under paragraph 5 of Schedule 6 to amend Part 1 of that Schedule;"
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