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Proceeds of Crime Act 2002: Money Laundering

Baroness Scotland of Asthal: My honourable friend the Parliamentary Under-Secretary of State for the Home Department (Paul Goggins) has made the following Written Ministerial Statement.
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I have today laid in draft before Parliament the Proceeds of Crime Act 2002 and Money Laundering Regulations (Amendment) Order 2005.

The draft order brings to a conclusion an informal consultation exercise which the Home Office conducted last year on whether the law on the duty of accountants, auditors and tax advisers to report money laundering under the Proceeds of Crime Act 2002 needed to be changed to bring it fully into line with European Community law, and if so how. This followed representations from the Institute of Chartered Accountants in England and Wales that the current legislation discriminated unfairly against accountants, auditors and tax advisers, contrary to the 2nd EC Money Laundering Directive (2001/97/EC.)

The consultation exercise resulted in more than 40 responses mostly from the accountancy and legal professions. For the most part the accountancy profession argued that UK law was not compliant with the directive and needed to be amended whereas the legal profession argued that there was no need for a change in the law.

In response the Government have decided to amend Section 330 of the Act to provide for the defence to the "failure to disclose" offence, which currently applies to professional legal advisers in certain circumstances, to be extended to include accountants, auditors and tax advisers who satisfy certain conditions. The equal treatment between these professions, for which the draft order provides, will apply only to the very limited extent that they are carrying out effectively the same functions in relation to legal advice. The exemption from the obligation to report money laundering to the appropriate authorities is therefore a narrow one which should only apply in specified and appropriate circumstances.

It should be noted that the limited exemption from the requirement to report money laundering does not extend to all accountants, auditors and tax advisers. It will apply only to those who are members of a professional body which requires a test of competence as a condition of membership and the maintenance of professional standards, including sanctions for non-compliance with those standards.

The amendments to the Proceeds of Crime Act made by the order also provide a defence for a person who is employed by, or is in partnership with, a professional legal adviser or other relevant professional adviser, as defined in the order.

The Money Laundering Regulations 2003 (S.I. 2003/3075) also give effect to the 2nd EC Money Laundering Directive. In addition to amending Section 330 of the Proceeds of Crime Act, the order also amends the Money Laundering Regulations 2003.

The principal purpose of the EC directive is to combat money laundering. The Government support the measures in the directive and are fully committed to working with the financial services industry to maintain strong defences against money laundering. The amendment to the Proceeds of Crime Act, to which the order gives effect, will help reduce the regulatory burden on accountants, auditors and tax
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advisers in certain circumstances without damaging the effectiveness of the money laundering reporting regime.

South Asia Earthquake: Reconstruction

The Lord President of the Council (Baroness Amos): My right honourable friend the Secretary of State for International Development (Hilary Benn) has made the following Written Ministerial Statement.

On 19 November, my honourable friend the Parliamentary Under-Secretary of State attended the Pakistan earthquake donor conference in Islamabad. The United Nations, represented by the Secretary-General Kofi Annan, all major donor countries and international financial institutions attended.

The government of Pakistan proposed a range of reconstruction activities for which international community funding was needed to help the people affected by the recent earthquake. Reconstruction will be directed and led by the government of Pakistan through the Earthquake Reconstruction and Rehabilitation Authority (ERRA).

In addition to the terrible human cost of the earthquake, the preliminary damage and needs assessment prepared for the government of Pakistan by the World Bank and the Asian Development Bank estimates that Pakistan will need $5.2 billion for relief and reconstruction. This is made up of $1.7 billion for continuing relief and to restore livelihoods and $3.5 billion to replace damaged and destroyed buildings and infrastructure.

My honourable friend announced at the conference that the United Kingdom would contribute £70 million, or over $120 million, over three years for the reconstruction effort. This money will be used to support the government of Pakistan's reconstruction programme, which includes the rebuilding and repair of schools, hospitals, electricity and water supplies, houses, and support for restoring people's livelihoods. In conjunction with the government of Pakistan, United Nations, other donors, international non-governmental organisations and civil society representatives we will agree how this support will be disbursed.

The total amount pledged for both relief and long-term reconstruction is now around $5.8 billion. This includes $1.9 billion (around £1 billion) in cash grants and assistance in kind, with the remaining $3.9 billion (£2.3 billion) in concessional loans.

The European Commission announced a new total of $110 million, with increased pledges by most EU member states. Contributions from Germany and France are each now expected to exceed $100 million. The United States and Saudi Arabia each announced total pledges exceeding $500 million. Pledges from the international financial institutions—the World Bank, Asian Development Bank and Islamic Development Bank—now exceed $2.5 billion in total, with the majority offered through concessional loans.

We will need to work closely with the government of Pakistan to ensure that effective governance structures
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are in place to ensure proper financial management of these funds and to ensure these pledges make a difference on the ground.

Humanitarian Assistance The government of Pakistan's latest figures report more than 73,000 deaths and some 69,000 injured in Pakistan-administered Kashmir and in North West Frontier Province. Some 3.5 million people are affected; 2.5 million have lost their homes; 200,000 people are living in remote and cut-off areas above the snow line. In India more than 1,300 died and 4,500 were injured. The immediate priority is to ensure that those who survived the disaster are supported through the winter months.

DfID is working, alongside the United Nations, the Red Cross and non-governmental organisations, to help meet the immediate survival needs of the affected population. We will continue this support for as long as necessary. To date, we have allocated £33 million (around $57 million) of assistance for the immediate relief effort. More than £30 million has been disbursed. We are prepared to contribute further.

We have provided more than £10 million of direct and in-kind assistance to the United Nations, including logistics support by the United Kingdom military. This included supplying three Chinook helicopters, the airlifting of two helicopters from Spain and rations and water from Kabul using a C130 aircraft. £2 million was contributed for the NATO air bridge to transport priority relief items from UN warehouses, such as tents and blankets.

In addition, in support of charitable organisations, DfID has provided £6 million towards their relief programmes and funded 80 flights for the United Kingdom's Disasters and Emergency Committee at a cost of over £3.9 million.

Waterways Ireland: Performance Measures

Lord Rooker: My honourable friend the Minister of State for Northern Ireland (David Hanson) has made the following Ministerial Statement.
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Waterways Ireland is a cross-border implementation body established by agreement between the British and Irish Governments dated 8 March 1999. The body has responsibility for the management, maintenance, development and restoration of the inland navigable waterways of Ireland, principally for recreational purposes.

The sponsor departments for the body are the Department of Culture, Arts and Leisure (DCAL) in Northern Ireland and the Department of Community, Rural and Gaeltacht Affairs (DCRGA) in the Republic of Ireland.

As DCAL Minister I have discussed accountability arrangements for the body with the DCRGA Minister and the chief executive of Waterways Ireland. We have agreed the business plan for 2006 and we have also agreed that the chief executive will report to Ministers on the outcome of performance targets for 2005. These include:

The chief executive also has specific responsibility for meeting the plans, objectives and targets set out in the current year's business plan.

Together with officials in our departments I will continue to work with the DCRGA Minister and the Waterways Ireland chief executive to ensure the body is fully accountable for meeting the terms of its performance agreement 2005.

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