Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) Order 2021
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Baroness Williams of Trafford
That the Grand Committee do consider the Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) Order 2021.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, in moving this order, I shall also speak to the following draft instruments: the Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) Order; the Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) Order; the Proceeds of Crime Act 2002 (Recovery of Listed Assets: Code of Practice) Regulations; the Proceeds of Crime Act 2002 (Investigations: Code of Practice) Order; and the Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) Order 2021.
The Government are taking wide-ranging action to crack down on crime and make our communities safer. One important part of that mission is our drive to stay one step ahead of criminals seeking to move, hide or use the proceeds of their illegal activities, and seeking to frustrate attempts by law enforcement agencies to recover them. The Criminal Finances Act 2017 was introduced to amend the Proceeds of Crime Act 2002 and significantly improve the UK’s ability to effectively trace and recover the proceeds of crime. The Criminal Finances Act has not been fully commenced in Northern Ireland. The reserved aspects of that Act—the counterterrorist financing and tax evasion provisions—were commenced, but the devolved provisions, primarily those pertaining to asset recovery, are outstanding.
Noble Lords may recall that the Assembly was dissolved during the passage of the Criminal Finances Bill, meaning that it was not possible to secure a legislative consent Motion. It was decided that the devolved provisions should remain in the Bill. At that time, we signalled our commitment to the central principles of the Sewel convention by openly stating before Parliament that we would not commence provisions on matters devolved to Northern Ireland without the appropriate consents having been obtained. Following the reconstitution of the Assembly, and in the absence of a mechanism to seek legislative consent in retrospect, the Justice Minister agreed that the outstanding powers should be commenced and—after engagement with the Northern Ireland Executive Committee and the Justice Committee and advising all Northern Ireland Assembly Members—asked the Home Secretary to commence the relevant provisions. We plan to commence the powers on 28 June this year.
I am pleased to introduce the draft instruments that we are debating, which form part of the package of legislation required to complete commencement. These draft instruments will each bring one of five distinct codes of practice into force. Each of the five codes of practice has been revised to reflect the extension of Criminal Finances Act powers to Northern Ireland. Some further minor amendments have also been made for clarity.
The first draft instrument brings into force a code of practice providing guidance for UK-wide agencies exercising reserved functions in Northern Ireland. That code governs powers of search, seizure and detention of property located in Northern Ireland to preserve it for confiscation. While it applies only to Northern Ireland, the code is issued by the Home Secretary because it relates to reserved bodies and their functions in Northern Ireland.
The four remaining instruments before the Committee bring into force revised codes of practice to provide guidance on search powers for recovering cash, powers to search personal assets, and investigatory powers. Three of the four remaining codes are issued by the Home Secretary and one is issued by the Attorney-General and Advocate-General for Northern Ireland specifically to provide guidance to prosecutors in the exercise of investigation powers.
The new powers that give rise to the revised codes of practice were debated extensively by both Houses during the passage of the Criminal Finances Bill. They are: the extension of various powers to officers of the Serious Fraud Office; a change to the definition of cash for the purposes of cash seizure and forfeiture powers to include gaming vouchers, fixed-value casino tokens and betting slips; the creation of new powers to seize, detain and forfeit certain personal assets; a broadening of the use of disclosure orders, which may now be sought in support of a money laundering investigation; and the introduction of unexplained wealth orders, which require certain persons to explain the origin and legitimacy of any assets that appear disproportionate to their known income.
Codes of practice must be revised, or new ones brought into force, when certain changes are made to the Proceeds of Crime Act 2002. That Act mandates that the Secretary of State must publish a draft, consider any representations made and modify the draft in the light of such representations, prior to laying revised codes. The draft codes of practice we are debating were subject to a nine-week public consultation spanning from the end of last year to the beginning of this year. Information on the consultation can be found in the Explanatory Memoranda that accompany the statutory instruments. Additional codes of practice have also been publicly consulted on and revised by the Northern Ireland Department of Justice.
To be clear, this debate does not concern the powers themselves. Rather, we are here to debate the codes that provide guidance about the use of those powers. The revisions that the Home Office and Attorney-General’s Office have made to the codes are technical and minor. The draft codes of practice largely replicate the published versions, as debated and approved by both Houses in 2017 and 2018.
The Proceeds of Crime Act and its subsequent amending legislation are complex. The codes of practice are therefore required to aid law enforcement officers’ understanding of the appropriate and proportionate way to utilise their powers. Additional record-keeping requirements imposed by the codes ensure that the public and judiciary can scrutinise the circumstances in which the powers are used, or are intended for use.
Certain powers governed by these codes of practice are intrusive; they may involve significant interference with individuals’ rights to privacy and peaceful enjoyment of their property. That is not to say they are not justified, but it is clearly right that we provide guidance on the exercise of those powers to safeguard against improper use. The codes of practice achieve this not only by clarifying the circumstances in which the powers may be exercised but by ensuring a consistent application of those powers. That is of vital importance given the broad range of law enforcement agencies to which the powers apply. When new powers are introduced the codes must be revised and scrutinised to ensure that the safeguards within are up to date. That is what these draft instruments and these debates provide.
These five draft instruments are necessary to deliver the Government’s objective to bring outstanding provisions of the Criminal Finances Act 2017 into force in Northern Ireland. We are determined to use every possible tool to trace and recover the proceeds of crime. The draft codes that we are debating ensure that those powers are used effectively, not only to deprive criminals of their ill-gotten gains but to help prevent further offending, therefore supporting our efforts to protect the public. I commend the instruments to the Committee.
Baroness Williams of Trafford (Con)
I thank all noble Lords who have taken part in this debate. So many questions were asked that I can hardly keep up with them.
The noble Baroness, Lady Bowles, asked about training for law enforcement, which is a perfectly reasonable question, because of course the powers will apply to them. The powers will largely be exercised by asset recovery specialists, who require little to no additional training; this includes officers of the NCA and the Serious Fraud Office. Our operational partners have a strongly embedded practice of supporting one another in our asset recovery endeavours. That can involve referring all aspects of the case to other agencies with particular expertise to ensure maximum proceeds of crime are removed from the system.
Noble Lords may also be aware that accredited financial investigators, individuals who support the traditional law enforcement agencies to disrupt economic crime, are trained, accredited and closely monitored by the Proceeds of Crime Centre in the National Crime Agency. Accredited financial investigators are subject to continuous professional development requirements and have their accreditation reviewed every two years. To ensure that recruitment, retention and training of financial investigators is robust and effective, an independent review of the current training provided by the Proceeds of Crime Centre—or POCC—was commissioned. It was completed in 2020, and we are working with the NECC and wider stakeholders to develop a comprehensive plan for reform. That will ensure that the training offered to our financial investigators is among the best. To that end, we intend to have a multiagency approach to the reform of POCC, and progress will be overseen by the multiagency strategic asset recovery group of Ministers.
The noble Baroness is also right to make the point about resourcing; we understand those concerns and it is important that agencies have the required resources to implement the new powers, which is why a proportion of the proceeds of crime recovered by law enforcement agencies is reinvested into the system under the asset recovery incentivisation scheme. The more an agency recovers, the more it receives to be reinvested in law enforcement capability. It is also important to recognise that, although powers are necessary to keep pace with criminals’ ever-changing modus operandi, these new powers will not necessarily demand additional resource. For example, existing resource that may have been used exclusively to address criminal cash five or 10 years ago may now be better deployed across cash forfeitures and forfeiture of funds held in bank accounts.
The upcoming economic crime levy will also be used to drive reforms to the sustainable resourcing of economic crime and could be used to fund an uplift in financial investigative capacity. On the SOC review, it has always been our intention to publish its key recommendations and we did so on 16 March by releasing the executive summary. The full report will not be published because of its sensitivity, but we have made it available to the appropriate partners.
An impact assessment has not been prepared for the instruments because we have considered the overall impact of commencing the Criminal Finances Act in Northern Ireland rather than preparing separate assessments for each statutory instrument in this package. On what has delayed it, the EU exit statutory instruments —of which there were many—have to a large extent been impacting absolutely everything we have done for the last couple of years, so that is the answer.
The noble Lord, Lord Kennedy, is right to ask how the Act is working; I think it is working well. The Criminal Finances Act has been vital in dealing with just the sort of people that the noble Lord, Lord Dodds, spoke about—those driving around in big cars and you wonder where the heck they ever got the money from; that is absolutely right. On the utility of the regulations in Northern Ireland, the noble Baroness, Lady Bowles, asked whether we are going to bring in new legislation. Clearly, we will keep them under review, which is very important, and update legislation where necessary.
In Northern Ireland, civil recovery investigations enhanced by the use of unexplained wealth orders, where appropriate, could play an integral role in tackling organised criminality and, as the noble Lord and the noble Baroness, Lady Ritchie of Downpatrick, said, paramilitarism, which is a key priority for the law enforcement agencies represented under the Organised Crime Task Force and the Paramilitary Crime Taskforce. Indeed, the Independent Reporting Commission recommended that the powers in the Criminal Finances Act were commenced in Northern Ireland as an utmost priority. Stripping criminals who are linked to organised crime and paramilitarism of their proceeds of crime can prevent those engaged in criminal activity benefiting financially or materially. This, in turn, will discredit them and prevent funding of other illicit activities.
On the thresholds that the noble Lord asked about, noble Lords may recall that the Criminal Finances Bill originally specified that only property valued in excess of £100,000 could be the subject of an unexplained wealth order and that that was then lowered to £50,000 after the Government tabled an amendment following representations from the devolved Administrations that the value of property varies considerably depending on where it is held in the UK. Having a value threshold as a qualifying criterion is considered to be a necessary safeguard against what is essentially an intrusive investigatory power.
I underline the point that I made to the noble Lord, Lord Kennedy, that the statistics demonstrate that the Proceeds of Crime Act powers are having a good impact. However, as I said to the noble Baroness, Lady Bowles, they are of course always kept under review.
I think I have answered all the points that noble Lords put to me and, with that, I beg to move.