Proceeds of Crime: EUC Report
(12 years, 7 months ago)
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Lord Hannay of Chiswick
To move that this House agrees the recommendation of the European Union Committee that Her Majesty’s Government should exercise their right, in accordance with the protocol on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, to take part in the adoption and application of the proposal for a directive of the European Parliament and of the Council on the freezing and confiscation of the proceeds of crime in the European Union (document 7641/12) (32nd Report, Session 2010–12, HL Paper 295).
Lord Hannay of Chiswick
My Lords, I beg to move the Motion standing in my name on the Order Paper. It is in my name because I have the honour to chair the European Union Committee’s Sub-Committee on Home Affairs, which at the end of the last Session prepared the report now before your Lordships’ House.
As your Lordships know, when the House considers reports of the European Union Committee, this is almost invariably on the Motion that the House should take note of the report. In the case of this report, the Motion invites the House to agree the committee’s recommendation. The reason for this is that the report deals with draft legislation falling within the area of freedom, security and justice, and the legislation will apply to this country only if the Government exercise their right under the protocols to the treaties to take part in the legislation—in other words, if they opt into it. They have to do this within three months of the proposal being presented to the Council, which, in the case of the directive we are considering tonight, means before 15 June. The committee believes that the Government should do so, and the Motion invites the House to agree with the committee.
Last year, this Government repeated an undertaking given by the previous Government—usually known as the Ashton undertaking—that time would be found to debate opt-in reports well before the expiry of the three-month period. I am grateful that, despite Prorogation, the Government have made time available for this debate early enough for them to be able to take the views of the House into account before they formally reach a decision on whether to opt in.
Freezing and confiscation of the proceeds of crime is one of the most effective ways of fighting crime. Since criminals are much more mobile and much more ingenious about hiding these proceeds, it clearly strengthens this aspect of the fight against organised crime if such freezing and confiscation can be enforced across the whole of the European Union and not just within one country’s borders. There is current EU legislation on the subject in a series of framework decisions stretching from 2001 to 2006. Two of these establish minimum rules on freezing and confiscation of proceeds of crime. There is, however, nothing to prevent member states enacting more stringent legislation, as this country has done in the Proceeds of Crime Act 2002. The new draft directive that we are debating this evening would supersede these two framework decisions and add to them fresh powers—in particular, the power to confiscate the proceeds, despite there having been no criminal conviction because, for example, of the death or flight of the suspected person. This is a power already available to the courts of this country. My committee supports the proposal that the courts of all member states should be required to have this power.
The confiscation of the proceeds of a crime is of course an integral part of the penalty—the criminal should not be allowed to profit from their ill gotten gains—but even more important is the deterrent effect. Criminals who know that the proceeds of their crimes are likely to be confiscated may think twice before embarking on criminal activities. It is therefore a weakness in our law enforcement system that, as things are, the proceeds are not all that likely to be confiscated. The figures available are, unfortunately, very speculative, as estimates of the proceeds of crime vary wildly. In the United Kingdom one estimate is that, of the £15 billion annually criminally acquired, in 2009-10 only £154 million was recovered to the state. That is net of assets recovered for the victims and of management expenses but, even so, the proportion of the proceeds recovered cannot on any measure exceed 3%. The position in other member states is no better. The deterrent effect is thus currently small but not negligible.
The Costa del Sol has been the haven of choice for criminals to retire to and enjoy the fruits of their labours. The statistics from Eurojust show that in 2010 one case in Spain resulted in the confiscation of €112 million, with many other cases netting smaller amounts and, in addition, a number of properties, boats and luxury cars. This demonstrates the importance of all member states having these powers.
The Government have stated on many occasions their determination to pursue the fight against serious organised crime. In my view, this entails not just having adequate domestic law in the United Kingdom but bringing pressure to bear on other member states to have provisions in their own laws on freezing and confiscation which at least meet the minimum requirements laid down in this directive. The committee therefore believes that it is important that the Government should opt in to the proposal and play a constructive part in negotiating a strong directive, and support other member states which may have weaker law enforcement systems thereafter to implement the system effectively. That is where there have been doubts in the past and I hope that this new legislation will provide a basis for much more effective work in the future.
There is one aspect of the draft which has caused the committee real concern. It is a regular feature of serious crime that the criminal will launder the proceeds internationally and put them into assets in many countries. A conviction in one country will therefore be fully effective only if a confiscation order made by one court is automatically recognised and enforced in other member states. There are two framework decisions dealing with mutual recognition of freezing and confiscation orders, but the directive being discussed tonight does not deal with that topic. We hoped that the directive would repeal, replace and strengthen the provisions of all four framework decisions. Instead, it repeals, replaces and strengthens the two dealing with the making of freezing and confiscation orders, but leaves in place those dealing with mutual recognition of orders made in other countries’ courts. The committee fears that that may be an unintended consequence of the arbitrary and illogical division of the former Commission directorate of freedom, security and justice into two separate directorates, dealing respectively with justice and home affairs. I would like to hear the Minister’s views on this; perhaps he could in any case tell the House whether the Government will argue in the negotiations for the new directive to be extended to include mutual recognition provisions as well.
This is only one of a number of aspects of the directive that we would like to see raised in the negotiations. Others are detailed in our report. Some are technical, but there is one to which I should draw attention. If the Government were not to opt in, the United Kingdom would remain bound by the current provisions of the earlier framework decisions, which will thus be included in the list of those measures on which the Government have to decide—by May 2014 at the latest—whether all or none of them should continue to apply to the United Kingdom. That arises under Protocol 36 to the treaties. I am not wishing to raise that extremely interesting and sensitive issue tonight, but merely say that it is one about which your Lordships will hear more in the period ahead of us, not least from the European Union Committee, which will be carrying out an inquiry into the background to the 2014 decision in due course, and nearer that time.
We are continuing to keep the directive under scrutiny, so at this stage one matter only comes formally for decision to the House: whether or not the Government should exercise the United Kingdom’s opt-in. For the reasons I have given, the committee is firmly of the opinion that the Government should do so. I hope very much that we will hear from the Minister at the conclusion of the debate that this is their intention.
Lord Hodgson of Astley Abbotts
My Lords, I am no longer a member of Sub-Committee F; I have been transferred for a period of rest and recreation to Sub-Committee G under the chairmanship of my noble friend Lord Bowness. These are probably my valedictory remarks in connection with a report of the sub-committee that I was on when it was prepared. I enjoyed my time on the sub-committee, first under the chairmanship of my noble friend Lord Jopling and more recently under the chairmanship of the noble Lord, Lord Hannay, who, with his impeccable style, has given us a clear exposition of the issues before us. We were splendidly looked after and impeccably marshalled by our clerk, Michael Collon. His deputy was originally Michael Torrance, who has now ascended to higher and greater things to the clerk of the committee. I am only sorry that I shall not be there to see him in action.
It is a truism that the past 40 to 50 years have seen the trends of globalisation and interdependence of nations burgeoning. It is hard for me to remember that when I first finished university and went to work in New York, one could not make an international telephone call; one had to book it. At weekends and holidays, one might have to book it several days ahead. In the investment bank in which I worked, because I had a decent English accent, my first job was to chat up the operators at the New York international exchange so that the lines could be kept open until my bosses were ready to make the telephone calls that they wished to.
In those days, when you went abroad it was demonstrably a foreign country, in a way that is inconceivable today. With Ryanair and easyJet, people pop all over Europe and indeed over the wider world in a way that in my youth was considered impossible. The emergence of global brands of clothing has meant that some of the physical appearances of us all have become much more similar. I think, by the way, that there is a PhD thesis to be written on the role of jeans in creating a global culture, but that is for another day.
All this is no doubt a good thing—increasing international understanding and so on—but there is of course a seamier side, which is the subject of our debate today. It used to be said that if the Governor of the Bank of England raised his eyebrows in the City of London, whatever was being complained of would stop, and no doubt the news that Scotland Yard was on your tail had a similar calming effect. These threats no longer have the same power or influence, because of globalisation. My first reason for encouraging the Government to opt in to this proposal is that crime has gone global. As our report on the EU’s international security strategy said,
“the nature of the international threat in this area was clearer and that therefore international cooperation was”—
as one of the witnesses put it—“utterly indispensable”.
The second reason, which was referred to by the noble Lord, Lord Hannay, is that to date our efforts at recovery have only scratched the surface, and there is a serious need to up our game. This means that work to establish effective asset recovery offices across the continent of Europe is a very high priority. To see how high, I suggest that the Minister ask his officials to look at Annex 2 to the Commission Staff Working Paper. Only eight countries are listed out of the total in the EU. Every set of statistics is on a different basis, no headings are the same and you have no way of telling what the level of effort is or how effective it is, or of comparing one country’s performance with another.
Even turning to the United Kingdom, which has a commendable record in this, and looking at the Serious and Organised Crime Agency’s report, which the noble Lord, Lord Hannay referred to—he gave the net figure for recovery, but the gross figure is £350 million recovered—in the same year when the Government said that cybercrime was costing the UK £27 billion, we were recovering £350 million gross. That is the second reason for urging the Government to opt in.
The third reason is that we need to establish some centralised mechanism to share information, establish best practice and spread it across Europe. Of the reports that we have had in Sub-Committee F, one of the most depressing sets of evidence was from Europol, which said that all too often police forces in individual European countries have bilateral arrangements and do not send information through Europol itself. If we are not able to create a central approach to this, then for certain the cops will never catch up with the robbers. We need to make sure that within this proposal the ability of Europol to set standards, find out what is going on and make sure that a proper level of collaboration and co-operation takes place, is critical.
What are the downsides? One answer perhaps lies in Annex 4 of the Staff Working Paper. Pages 58-71, headed “Asset recovery in the UK”, show what a lot of good work is being done in the UK. However, this is of absolutely no value unless other countries in the EU are upping their game at the same time. Page 6 of the Explanatory Memorandum states:
“In order to address the lack of data, the main economic analysis is … based on a model which uses proxy indicators to extrapolate from a detailed analysis of income and cost in the UK (the only Member State for which income and costs for all elements of the asset confiscation system can be estimated and which has a confiscation system that is a reasonable approximation of the maximal legislative sub- option)”.
So we are ahead of the game and, judging from that statement, most other countries are far behind us. The same report states that:
“EU Member States will progressively sign and ratify the 2005 Council of Europe Convention”—
which is on laundering, search, seizure and confiscation of the proceeds of crime.
“While this Convention is based on a relatively good consensus, seven EU Member States have not even signed it yet”.
So we have some justification in this country in being a trifle cynical. The UK is leading the way—we are taking on the associated costs and bureaucratic impediments—but who is following us?
My second reason for being concerned is that the trans-European experience on judicial co-operation has not always been an unqualified success. I refer in particular to the European arrest warrant. I declare an interest as a trustee of Fair Trials International. It is a mixed experience on access to interpreters, on access to the proper level of legal advice and on common bail conditions. Some noble Lords may say that we are talking about something completely different here, but in the Explanatory Memorandum there are some serious questions about levels of proof in different European countries, particularly a criminal standard of proof in countries such as Germany, while others, such as this country, use a civil standard of proof to facilitate confiscation. There is a lot of work to be done at the nitty-gritty end to make this decision meaningful.
My reasons for supporting opting in clearly outweigh those for standing aside, for the reasons that the noble Lord, Lord Hannay, gave. However, there is a lot to be done by the Government to ensure that the detailed work that will make this effective is given real impetus. If it is left in a half-formed state, not only will it be ineffective in tackling the problem, which we all agree is serious, but it will add another burden to this country which our competitor and fellow European states are not undertaking.
Lord Judd
My Lords, like the noble Lord, Lord Hodgson of Astley Abbotts, I have had the privilege of serving on the committee and putting my name to the report. It is very important at the outset to place on record how the members of the committee appreciate the leadership and chairmanship of our chair, the noble Lord, Lord Hannay—it is good to work under him—and the effective and professional work of the clerk and his colleagues. They made a very strong combination and we should put that on record.
In a debate last night we paid tribute to the noble Lord, Lord Roper. We should today take the opportunity to say that it is very good that his successor is with us in these deliberations and to wish him well. He has got a difficult act to follow but, having known him over many years now, I think he has all the talents and skills that will enable him to fulfil the role very effectively. Therefore, as I say, we wish him well.
We know that there are some very big issues before the European Union at present on which there are profound matters of difference. We also know that both the Government and the Opposition frequently take the opportunity to restate that they are in no way questioning our membership of the Union and that they are deeply committed to its success. That is why, when we come to specific matters such as this, it is all the more important to be positive, to engage and to do all we can to make a success of what is being recommended. Like the noble Lord, Lord Hannay, I believe very strongly that we should get on with ratifying and implementing this proposal.
Obviously, crime has become very sophisticated and the rather disappointing figures on how much of the proceeds of crime is actually recovered is in no way any criticism of the dedicated people who are doing the police and other work involved. It is, however, an indication of the complexity and size of the challenge. It is not an issue that we can possibly solve on our own; we simply have to work with others. Therefore, this proposal has great merit in enabling that to happen. In making that point I would like to emphasise one other issue, about which frankly I get rather anxious. Due to the complexity of the kind of crime we are dealing with in these proposals, it is very difficult—in fact it may be impossible—to establish a dividing line between what is legitimate, legal business and what is very significant crime. There is not a clear-cut dividing line all the time; there can be overlaps. Of course, in our newspapers we read about the more sensational evidence of this every day. That is another reason for making sure that we have the strongest possible international collaboration in making a success of the arrangements that exist.
I hope that we will not delay any longer in ratification. I hope also that by showing our commitment at a time when we are differing from the Community on so many other issues, we will take the opportunity to demonstrate how strongly we believe in the Community where it really is relevant and can help us all in meeting the challenges that face us. If we are always hanging about on everything, it rather undermines the strength of the commitment, as it is expressed, to belonging. We really should get on with it.
Having said all that, I want strongly to endorse what the noble Lord, Lord Hodgson of Astley Abbotts, said. One of the characteristics of the European Union and its activities—although it is not only the European Union—is that everything can become terribly complex and, in a sense, abstract and intellectual. It becomes about legislation, but legislation does not solve the problem. It is the monitoring the detail—what is actually done—that achieves this. There are quite a number of areas in which it has become clear to me since I have been on the committee that there is a great deal to be done, together with our colleagues in the European Union, to strengthen the monitoring and scrutiny not only of the legislation and its intentions, but how the activity is going; what is strong, what is weak, what needs to be put right, and what this demands of us all. I think the noble Lord was absolutely right to make that point and it is one with which I totally concur.
I strongly support the chairman’s recommendation and I am very glad to be associated with the words of the report. I do hope we are going to hear a very positive response from the Government and the Minister on how quickly and firmly they intend to proceed.
Baroness Hamwee
My Lords, the whole House will be grateful to the noble Lord, Lord Hannay, and to his sub-committee. Even for a Europhobe, which I am emphatically not, it seemed to be a no-brainer. However, as I read the report, I realised that issues arise which make one consider the differences in approach between our law and procedures and those of other European states, and the overall principle of how far one should go in willing the means as well as the end. As has been said, we are talking about big crime, which is big business. The Explanatory Memorandum to the directive referred to it in what was very much a financial take on the situation, and to the position weakening,
“our ability to fight cross-border … crime”—
yes—and affecting,
“the functioning of the Internal Market by distorting competition with legitimate businesses”.
It also referred to depriving,
“national governments and the EU budget of tax revenues”.
I do not quarrel with that, but there is another dimension to this. There are real, human victims of serious, organised international crime and therefore the deterrence of confiscation is of great importance.
As we have heard, it is very hard to stay ahead on these matters. Criminals seem to manage to be ahead of agencies and I wonder whether harmonisation in the EU will drive the transfer of funds outside the EU. You do not have to go as far as somewhere such as Belize to get outside the EU. Following the money is rarely straightforward. People who have headed for bankruptcy on a rather smaller, more personal scale know well about trying to transfer assets so that they are not, they hope, liable to be seized. Again, the Explanatory Memorandum deals with this. Obviously, the directive does as well but I am afraid that I cannot claim to have read that.
Third-party confiscation raises some quite important issues. I was interested to see that the provision,
“requires third party confiscation to be available for the proceeds of crime or other property … received for a price lower than market value and that a reasonable person in the position of the third party would suspect to be derived from crime”,
which clarifies the “reasonable person” test. Given the sophistication of much organised crime, evasion is likely to be very sophisticated and there will be innocent third parties, so that gave me a little cause for concern. I was also worried about confiscation in the absence of conviction—something that we in this country, with our own legal traditions, would be particularly aware of. I was reassured by the explanation that this would be in very limited circumstances, where the court finds,
“that a person … is in possession of assets which are substantially more probable to be derived from other similar criminal activities than from other”,
non-criminal “activities”; and, importantly, that:
“The convicted person is given an effective possibility of rebutting … specific facts”,
and that there are rights of appeal. “Substantially more probable” is an interesting phrase and not one that we are that familiar with here. I do not know how it works with our recognised standards of proof but, reading it in a common-sense way, it seems to me to be somewhere between the balance of probabilities and beyond reasonable doubt.
The report makes the point, which has been made in the debate, that if we do not opt in it sends the wrong message to our partners about the Government’s attitude to international co-operation and that there are impacts beyond the subject matter. The report states:
“We have no doubt that the Government should opt in”.
Neither have I.
Lord Rosser
My Lords, I thank the noble Lord, Lord Hannay of Chiswick, for his very helpful opening speech, for the work that he and his committee have done on the draft directive that we are discussing and which we broadly welcome, and for the report that has been presented to us.
We await the Government’s response with interest, but I understand that a decision has now been taken to put back the scheduled debate upon the draft directive in the other place. It was scheduled to take place tomorrow. No doubt the Minister will confirm whether that is the case and, if so, will tell us why and, unless the reason is a lack of time in the other place tomorrow, why the Government considered it appropriate to proceed with our debate today.
The treaty of Amsterdam gave the Council the power to legislate in this field of police and judicial co-operation, since when four framework decisions and one decision have been adopted covering the area that we are considering today. The framework decisions require member states to enable confiscation, harmonise confiscation laws and provide for mutual recognition of freezing orders and confiscation orders. The Commission’s view is that member states have been slow in transposing the framework decisions on harmonising confiscation laws and providing mutual recognition of freezing orders and confiscation orders, and that the relevant provisions have often been implemented in an incomplete or incorrect way. The noble Lord’s committee has made it clear that it finds this most unsatisfactory, and it would be helpful to know if that is also the Government’s view.
The new draft directive appeared at one stage to have been expected by the Commission to strengthen the EU legal framework on confiscation through allowing more third-party confiscation and extended confiscation, and to facilitate the mutual recognition of non-conviction- based confiscation orders between member states. As the committee’s report states, though, in actual fact the draft directive is silent about mutual recognition, and the committee expressed its concern at the failure of the draft directive to deal adequately with the mutual recognition of extended confiscation orders and to deal at all with the mutual recognition of civil recovery orders. Once again, it would be helpful if the Minister said whether that concern is shared by the Government.
The principal issue considered in the report from the noble Lord’s committee is whether the Government should opt in to the proposed directive, and it is in no doubt that they should. The noble Lord’s committee has drawn attention to the very small proportion of the proceeds of serious organised crime that is currently recovered, has observed that confiscation would be a more effective weapon if there were better co-operation at international level and has stated that a failure by the Government to opt into a measure setting out minimum provisions to be adopted by member states would be against our national interest, since it would be in our national interest for all member states to introduce tougher measures on the confiscation of criminal assets. The committee also expressed the view that not opting in would send entirely the wrong message to our partners about the Government’s attitude to international co-operation. What is the Government’s response to this case for opting in that the committee has made in its report?
The Government have stated in their Explanatory Memorandum that they take a case-by-case approach to the application of the opt-in protocol and that, in this instance, the issues that they will need to consider in particular are: the ability to support or develop our asset recovery programme; wider domestic developments in tackling organised crime; the burden on the legislative programme; cost; and association with other international developments. The committee was clearly underwhelmed by the strength of the issue of,
“burden on the legislative programme”,
describing it as “lacking in merit”, bearing in mind that member states will have two years from the date of adoption of the draft directive in which to transpose it into national law, and bearing in mind that the Government consider that United Kingdom law already complies with most of the substantive provisions of the directive. In the light of the comment in the committee’s report, will the Minister say if,
“burden on the legislative programme”
is still seriously being advanced as an issue that needs considering when determining whether or not to opt in?
A decision on whether or not to opt in needs to be taken, as I understand it, by the middle of June, since the directive will apply to the United Kingdom only if by 15 June the Government notify the President of the Council that we wish to take part in the adoption and application of the directive—in other words, to opt in.
In the later paragraphs of their Explanatory Memorandum, the Government make a number of points that, frankly, could be construed as the basis of developing a case for not opting in. While the committee has made an argument in its report for opting in, and indeed strongly supports taking that course of action, the Explanatory Memorandum appears to lack any particularly positive statements about the draft directive. I hope that the Minister will give us an indication of the Government’s current thinking on the draft directive, although maybe, if it is true that there has been a hiccup that has led to the debate in the other place being put back, we shall find that the Minister is no longer in a position to say anything very much.
It would be helpful, though, if he could say what further developments there have been since the Explanatory Memorandum of 26 March that update any of the issues or points referred to in that memorandum. It would also be helpful if he spelt out in more detail, if they have not yet made a decision, the specific points being considered and why they are crucial under the five issues that the Government are considering before deciding whether or not to opt in, which I referred to earlier and which are set out in paragraph 26 of the Explanatory Memorandum. Included in those five issues is the issue of cost. What conclusions have the Government reached on this score, and why?
The report of the committee of the noble Lord, Lord Hannay, sets out, in paragraphs 14 and 15, certain legal questions. What is the Government’s response to those questions and points? The committee also says in paragraph 20 of its report that the joint action and certain provisions of the two framework decisions are to be repealed and replaced, but only,
“in relation to Member States participating in the adoption of this Directive”.
The report goes on to say on this point that if the United Kingdom does not opt in, it will continue to be bound by the existing measures and that this would be an unfortunate situation and an unnecessary complication. Do the Government share the committee’s view on this point?
The House of Commons European Scrutiny Committee said in its report last month that,
“the draft Directive nevertheless represents a significant extension of EU competence on such matters as third party and non-conviction based confiscation and on the freezing of property, in some cases without first obtaining a court order”.
Is that the Government’s view as well? If so, is it this point that is the Government’s principal concern over opting in?
We share the committee’s view about the importance of co-operation at the international level on the freezing and confiscation of the proceeds of cross-border organised crime. I hope that today the Minister will be able to tell us more about the Government’s stance on the draft directive, including issues that are still of concern to them or are unresolved and which may still be precluding a final decision on whether or not to go down the road recommended by the noble Lord’s committee—namely, that we should opt in to this draft directive.
The Minister of State, Home Office (Lord Henley)
My Lords, as always, I welcome the opportunity to debate the draft directive. I offer my thanks to the noble Lord, Lord Hannay, for his introduction, particularly for his explanation of the process, for his explanation of the Ashton undertaking and how we are supposed to take these things forward. It is obviously right that the Government should listen to the expertise that we have in this House and on the European Union Committee. On that basis, I welcome the presence of the noble Lord, Lord Roper, the former chairman of that committee; the noble Lord, Lord Boswell, whom I can no longer call my noble friend now that he has taken over that job; and all those who offer their expertise, particularly the noble Lord, Lord Hannay. The Government will certainly bear all that in mind before making their decision on whether to opt in or out.
At this point I must offer an apology to the House as, at this stage, the Government have not made a decision as to which way we should go. As the noble Lord, Lord Hannay, made clear, if we want to opt in at an early stage, we must do so before 15 June. A decision will certainly be made before then. However, it is always possible that we could opt in after final decisions have been taken and the whole adoption stage has been completed, when we have seen what has been agreed. There are very difficult decisions to be made. I hope I will be able to explain exactly why we have not yet made a decision and give some thought to our reasoning behind the different options before us.
Before I do so, I will say a little about the timing of this debate and the debate in another place, which was raised by the noble Lord, Lord Rosser. I know that the noble Lord is immensely experienced and has been in this House for a number of years. However, he obviously does not realise that things operate on a very different basis between the two Houses in this particular matter. In line with the Ashton undertaking, the appropriate time for this debate to take place was a matter for the noble Lord, Lord Hannay, as chairman of the sub-committee, to negotiate with the usual channels. It was agreed some weeks ago—before we prorogued, I think—that it would take place around now. Quite rightly, it went ahead. Even though the Government have not come to their final decision, it would not have been right for me or anyone else to go to the noble Lord, Lord Hannay, to suggest that it should be put off to a later date, purely because we had not made a decision.
The debate in another place is on a government Motion, which is completely different. It would not be right for the Government to table a Motion before they have made up their mind. However, as the noble Lord is probably aware, the Government will make up their mind before 15 June. We will have that debate and another place will have a debate—I give that assurance—before 15 June.
Lord Rosser
I think I understand the procedures. Will the Minister just confirm whether it is true that the debate in the other place was scheduled to take place tomorrow and that it has been put back?
Lord Henley
My Lords, my understanding is that a debate was to take place tomorrow. It was put back because the Government have not come to a final decision. There is nothing wrong with that. The Government want to make the right decision. All that I make clear to the noble Lord, who obviously does not understand these procedures, is that we will have done so before 15 June. That is our timeline. I give the noble Lord that assurance. The noble Lord seems to imply that there is some sort of conspiracy here. The Government want to get it right and must put down a Motion for the debate. Procedures in this House are different, which is why we do things differently. The noble Lord should have understood that.
I want to explain relatively briefly what our thinking is and not which way we are going—as I have said, a decision has not yet been made—but the pros and cons of the different options before us. I want to make it quite clear to the House that we believe that asset recovery is a very important weapon in our efforts to tackle organised crime. We believe that the proceeds of crime are not only a central motivation for organised criminals but that they also fund further criminality. Freezing and confiscating criminal finances hurts organised criminals and protects the public.
The United Kingdom has advanced legislation in this area, as other noble Lords have alluded to, and we have had real operational success. In 2010-11, United Kingdom law enforcement agencies froze or recovered more than £1 billion worth of criminal assets. The amount of assets recovered has increased year-on-year since the Proceeds of Crime Act 2002 was passed. As my noble friend Lord Hodgson made clear, the United Kingdom is recognised as a leader in this field. We still want to do more, particularly on international asset recovery, as we made clear in our organised crime strategy in July 2011. In 2008, it was estimated that some £560 million of UK criminal assets was held abroad. Improved international co-operation is a necessary step towards recovering that money. That is why we welcome the aims of this directive. It is right that we seek, as leaders in this field, to drive up standards throughout the European Union and to find better ways of working together with our EU partners. To this end the directive covers confiscation following a criminal conviction, extended confiscation, third-party confiscation, non-conviction-based confiscation, and powers to freeze assets.
We must, of course, consider carefully the contents of the draft directive. The Government’s analysis is in progress. Our recommendation on the opt-in decision will be communicated to the parliamentary scrutiny committees at the first opportunity. The United Kingdom already has all of the powers envisaged by the directive in our Proceeds of Crime Act 2002. In almost all areas we exceed the minimum standards established by the directive. There are, however, areas where changes to domestic legislation might be necessary were the final version of the directive to include the same provisions as this draft.
Some aspects of the directive’s provisions on non-conviction-based confiscation, extended confiscation, and freezing without a court order do not sit easily with our domestic regime. Without prejudice to the Government’s final position, it should be noted that the directive as drafted appears to pose a risk to our domestic non-conviction-based confiscation regime. Our non-conviction-based confiscation powers are civil law measures—they allow prosecution agencies to take action against property that they think has been acquired through unlawful activity. The action is not taken against an individual and no criminal conviction is necessary. It is a particularly useful tool for tackling the high-level, organised criminals against whom it is difficult to achieve a criminal conviction. In 2011-12, some £20 million worth of criminal assets were recovered using non-conviction-based confiscation powers.
Due to its criminal law basis, the directive risks placing non-conviction-based confiscation measures in the UK onto a criminal law footing, opening new avenues of legal challenge to our powers. If criminal law procedural protections and a criminal law standard of proof were introduced, our domestic regime could be severely weakened and our law enforcement agencies would find it harder to disrupt the workings of some of the most dangerous organised criminals.
The Government are considering whether the best approach is to opt in to the directive and attempt to negotiate out those aspects that conflict with our domestic regime; or whether the conflict in some areas is sufficiently serious that not opting in at this stage is the better approach. While the directive does not offer direct benefit to the United Kingdom’s domestic regime, tougher legislation and more effective action elsewhere in the EU will help tackle those cross-border criminals who cause harm in the UK, as the European Union Committee said in its report, and for that we are grateful. We believe that it is vital that we get the detail right and we must consider the effect of the directive on our domestic regime and its likely operational impact.
The noble Lord, Lord Hannay, wanted to know whether we would press for mutual recognition to be included in the directive from both conviction and non-conviction-based confiscation. We would like to see effective mutual recognition arrangements for both conviction and non conviction-based confiscation. This aim would be better achieved through separate instruments. The directive is a minimum standards directive; obviously, we will continue to work with our partners to seek further new mutual recognition instruments from the Commission.
None the less, it is certainly our intention to play an active part in the negotiations on this directive, irrespective of whether we opt in or not at the outset: that is, before 15 June, the date to which the noble Lord, Lord Hannay, referred. The United Kingdom’s internationally recognised experience and expertise in asset recovery will help us to achieve an influential position in negotiations. The directive offers us a valuable opportunity to raise the standard of asset recovery legislation in the EU, enhance our co-operation with member states, and increase our powers to recover criminal assets held overseas. I repeat the fact that the expert views of the EU sub-committee will play a very important part in the Government’s thinking as they decide whether to opt into this directive. For that I am very grateful, and again we will take note of everything that has been said.
Lord Hannay of Chiswick
My Lords, first, I thank all those who participated in this short debate and have made very valuable contributions. Perhaps I may be permitted to thank in particular the noble Lord, Lord Hodgson of Astley Abbotts, whose departure from the sub-committee that drafted this report is a cause of regret to all its members, because he has made a remarkable and constructive contribution to our work over the past three years. He will be sorely missed.
I join those who spoke about Michael Collon, our clerk, who has guided this committee for so long and has now moved on to greater things. He will also be missed.
As to the points raised in the debate, I followed carefully what the Minister said. I understand the procedural complexities of the matter and the need for the Government to handle their relationship in the other place in a way that is consistent with reaching a decision on this. I admit to a scintilla of regret that the Minister could not rise to his feet this evening and say that the Government had decided to opt in, but patience is sometimes rewarded. I can see why they are in the position that they are in.
The only point that I make is that from my own experience, and I think from the experience of much of the legislation in this area, it is a better way to influence this sort of legislation effectively if one opts in and negotiates as a full negotiating partner than to have to try to do it from the outside with the use of the potential opt-in at a later stage when other people have shaped the legislation. I am sure that the Government would in those circumstances still try to exercise their influence, but in my view they would have less influence than if they opted in before 14 June. So I very much hope that that is a decision that they will come to. This may be a triumph of hope over experience, but I even hope that the scrutiny committee in the other place may take a somewhat less negative view than it has on many matters, particularly given the importance to this country of Europe-wide legislation to deal with the confiscation and recovery of assets. I do not find it believable that they should feel that it is not a reasonable objective of our national policy and in our national interests to see tougher provisions Europe-wide, not just in this country.
I hope that this debate and its outcome, which I suggest will be the House’s approval of the Motion on the Order Paper, will be factored into the Government’s consideration and will be given due weight.