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Lord Goodhart: My Lords, I found the noble and learned Lord's response far from convincing. He raised the argument of the one-person solicitors firm and said that the threat of a five-year term imprisonment for the breach of the money laundering rules by an employee of the solicitor would be inappropriate. Of course that is so but there would be no chance in those circumstances of any term of imprisonment being imposed. A five-year term would be almost equally inappropriate for a new young employee who, despite being properly trained, failed to notice something that an experienced employee would have noticed and became liable for negligence.

Equally, where the employees of a large firm or an incorporated business commit a series of breaches, plainly there is something wrong with the way that the employer runs the business and a fine—possibly substantial—would be entirely appropriate. Strict liability is a way of ensuring high standards in the commercial sector, so there are several fields in which employers are subject to strict criminal liability for breaches of law by their employees.

I would have been minded to press the amendment to a Division except that it would impose a considerable potential liability on any organisation that falls within the regulated sector now or may do in future. It would be inappropriate to press the amendment to a vote without more thorough consultation with the business sector potentially affected than we have been able to undertake. In those circumstance, while I remain convinced that the amendment is a much better way of proceeding, it is not appropriate to press it now. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 13 to 16 not moved.]

Clause 380 [Evidence overseas]:

Lord Falconer of Thoroton moved Amendment No. 17:



"(11) Rules of court may make provision as to the practice and procedure to be followed in connection with proceedings relating to the issue of letters of request by a judge under this section."

The noble and learned Lord said: My Lords, before I refer to Amendment No. 17, I want to add something that I should have said in response to Amendment No. 12. The Government believe that strong anti-money laundering measures, including the new negligence test, are fully justified against the background of several money laundering cases in the

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City that were not reported to law enforcement. For the City's financial reputation and standing, here and overseas, it is of utmost importance that the United Kingdom should be seen to demand the highest standards of diligence. I was recently able to reassure representatives of the Law Society concerning the operation of the provisions in Part 7. One of their concerns was that a problem might arise if NCIS is unable to consent to a transaction quickly and a client brings an action for negligence—for example, where there is urgency in completing a conveyancing transaction.

Although it would ultimately be for the court to decide, in our view it is highly unlikely that a company that is in dialogue with NCIS would be found negligent in those circumstances. Where a report is sent to NCIS and the matter is urgent, I am looking into establishing a follow-up hotline within NCIS to operate during daylight hours, so that the discloser is not left in the difficult position of neither being able to effect a transaction nor inform the client that a report has been made to NCIS. The Bill's time limits will be helpful but there will inevitably be cases where consent to a transaction needs to be given before seven calendar days, as provided in the Bill.

Lord Goodhart: My Lords, I am most grateful to the noble and learned Lord for making that point. The original Law Society proposal for a two-day time limit presented obvious difficulties and might have led to NCIS refusing permission without the opportunity to consider the matter properly because the two-day limit was approaching. The formula devised by the noble and learned Lord and the Law Society is the right way to proceed.

Lord Falconer of Thoroton: My Lords, I am obliged.

I alerted your Lordships to the need for Amendment No. 17 on Report. Its effect is to provide a power to make rules of court for proceedings under Clause 380, which makes provision for the Director of ARA to apply to a judge for a letter requesting evidence from overseas relating to confiscation investigations. The person under investigation will also be able to request such evidence for use in their defence. The amendment is required because applications under this clause will be made to a judge, not to a court, and therefore specific rule-making provision within the Bill to make rules of court will be required.

Amendment No. 18 is a purely drafting amendment. Part 5 of the Bill refers to "interim receiving orders" for England and Wales and to "interim administration orders" for Scotland—reflecting the different terminology in the two jurisdictions. The same terminology is used in Part 8. Amendment 18 simply adds a reference to "interim administration orders" to the interpretation provision for Part 8. I beg to move.

On Question, amendment agreed to.

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Clause 420 [Other interpretative provisions]:

Lord Falconer of Thoroton moved Amendment No. 18:


    Page 246, line 10, leave out "and "interim receiving order"" and insert ", "interim receiving order" and "interim administration order""

On Question, amendment agreed to.

Clause 423 [Tainted gifts]:

Lord Falconer of Thoroton moved Amendment No. 19:


    Page 247, line 42, after "339" insert ", 340"

The noble and learned Lord said: My Lords, the two sets of minor amendments that follow are technical. They are largely a matter of integration, in that they extend to the whole of the United Kingdom provisions that the Bill already applies to one or more of the three jurisdictions. The amendments to Clauses 429 and 433 are mainly designed to simplify for Northern Ireland the interrelationship between tainted gifts under the confiscation legislation and under-value transactions under the insolvency legislation. The amendments simply replicate for Northern Ireland amendments that your Lordships approved for England and Wales and Scotland on Report, when I mentioned that we would bringing them forward.

The second set of amendments affects Clause 423 and, to a lesser extent, Clauses 429, 431 and 433 and is concerned with preferences—a term used in insolvency legislation. I beg to move.

On Question, amendment agreed to.

Lord Falconer of Thoroton moved Amendments Nos. 20 to 22:


    Page 248, line 1, after "339" insert ", 340"


    Page 248, line 10, after "339" insert ", 340"


    Page 248, line 10, after "27" insert ", 44"

On Question, amendments agreed to.

Clause 429 [Tainted gifts]:

Lord Falconer of Thoroton moved Amendments Nos. 23 to 29:


    Page 251, line 31, after "312" insert ", 313"


    Page 251, leave out lines 33 to 36.


    Page 251, line 38, at end insert ", or


(ca) there is in force in respect of such property an order under section 51, 53, 130(3), 201 or 203."


    Page 251, line 39, after "312" insert ", 313"


    Page 251, line 39, leave out from "after" to "must" in line 40 and insert "an order mentioned in subsection (2)(c) or (ca) is discharged"


    Page 251, line 43, leave out subsection (4).


    Page 252, line 3, leave out subsections (6) and (7).

On Question, amendments agreed to.

Clause 431 [Tainted gifts]:

Lord Falconer of Thoroton moved Amendments Nos. 30 to 36:


    Page 254, line 4, after "238" insert ", 239"


    Page 254, line 5, after "242" insert "or 243"


    Page 254, line 6, after "alienations" insert "and unfair preferences"

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    Page 254, line 12, after "238" insert ", 239"


    Page 254, line 13, after "242" insert "or 243"


    Page 254, line 21, after "substitution" insert "—


(a) for references to section 239 of the 1986 Act of references to section 615 of the Companies Act 1985;
(b)"


    Page 254, line 22, at end insert ";


(c) for references to section 243 of the 1986 Act of references to section 615B of the Companies Act 1985."

On Question, amendments agreed to.

Clause 433 [Tainted gifts]:

Lord Falconer of Thoroton moved Amendments Nos. 37 to 43:


    Page 255, line 38, after "202" insert ", 203"


    Page 255, leave out lines 40 to 43.


    Page 255, line 45, at end insert ", or


(ca) there is in force in respect of such property an order under section 51, 53, 130(3), 201 or 203."


    Page 256, line 1, after "202" insert ", 203"


    Page 256, line 1, leave out from "after" to "must" in line 2 and insert "an order mentioned in subsection (3)(c) or (ca) is discharged"


    Page 256, line 5, leave out subsection (5).


    Page 256, line 11, leave out subsection (7).

On Question, amendments agreed to.

Clause 463 [Orders and regulations]:

Lord Goodhart moved Amendment No. 44:


    Page 271, line 15, at end insert—


"( ) an order under paragraph 5 of Schedule 9 to amend Part 1 of that Schedule;"

The noble Lord said: My Lords, at the very last gasp we plead for the third time for the Government to adopt the simple proposal to subject the extension of criminal offences to new groups of people to full parliamentary scrutiny by the mechanism of the affirmatory procedure—which was the recommendation of the Delegated Powers and Regulatory Reform Committee.

Clause 463 imposes a considerable burden on businesses that are designated in Part 1 of Schedule 9 as the regulated sector. Criminal responsibility is placed upon any person involved in that sector who has information that may be apposite to money laundering. The Government's response on Report was twofold. First, they said that it was necessary to implement the second European money laundering directive—which would extend the scope of the schedule to accountants, auditors, tax advisers, lawyers, estate agents, casinos and dealers in high-value goods. One only has to consider that last group to wonder what sort of businesses are included in dealers and high-value goods. How are they to be defined? The extensions should be fully debated and accepted affirmatively.

Secondly, the Government said that minor technical changes to the money-laundering regulations have already been made from time to time and that technical changes do not require the expenditure of a considerable amount of parliamentary time. If that is so, we are not concerned with minor technical changes but with the extension to new groups of people of a

11 Jul 2002 : Column 870

whole raft of new criminal offences. That matter should be fully considered by the House and another place. I beg to move.


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