Terrorist and Extremist Propaganda: Online Sources
Baroness Williams of Trafford Excerpts(6 years, 10 months ago)
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Lord Naseby
To ask Her Majesty’s Government what measures they are taking to combat terrorist and extremist propaganda released through multimedia channels, particularly social media, videos, the internet, and other online sources.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, before I begin, I wish Muslims here and all round the world Eid Mubarak.
The Government have been clear that there should be no safe space online for terrorists and their supporters to radicalise, recruit, incite or inspire. We continue to work closely with industry to come up with innovative ways to tackle terrorists’ use of the internet.
Lord Naseby (Con)
Is my noble friend aware of the detailed and excellent work done by the Henry Jackson Society, which proves that if a radicalised individual sees material such as a beheading video, he or she is likely to act within two to three weeks? My noble friend mentioned industry, but is she further aware that Facebook, Microsoft, YouTube, Google and Twitter have teamed up to make the servicing of hostile material very difficult? Nevertheless, that does not cover encryption of messages, there are no financial penalties as there are in Germany, and videos are taken down only when there is a complaint. Against that background, will Her Majesty’s Government move with all possible speed to ensure that the agreements between those companies are tightened up even further, and look at the other elements that I have mentioned?
Baroness Williams of Trafford
My Lords, my noble friend is right that the move to actual radicalisation can be very quick indeed. I pay tribute to the Counter Terrorism Internet Referral Unit, which since 2010 has helped to secure the removal of 270,000 pieces of material from the internet by social media providers—8,000 a month in 2016 alone. The CTIRU was the first of its kind globally and continues to be world-leading in its operation. My noble friend mentioned encryption, and we support the use of strong encryption. However, we must also ensure that, in tightly prescribed circumstances, our law enforcement and security and intelligence agencies are able to access the communications of criminals, including terrorists.
Lord Singh of Wimbledon (CB)
My Lords, does the Minister agree that what generally passes for religion is not only ethical guidance for sane living, but a sometimes oppressive culture and a shared history often bent or moulded to dislike or hatred? It is such material that is used to radicalise people. Does the Minister agree that there should be open debate about these things and that this aspect of religion should not be protected by political correctness if we want a truly healthy society?
Baroness Williams of Trafford
The noble Lord, as always, makes insightful points. Of course there is a big difference between religion and culture and it is often in the attempt to conflate the two that we come up against such horrible types of terrorist activity. The Prime Minister said the other day that we must be prepared to have difficult conversations and I totally agree. Just because conversations are difficult does not mean that we should not have them, and they may lead to a much smoother way forward.
Lord Paddick (LD)
My Lords, the Government realise that the only effective sanction against overseas pornographic websites that refuse to implement age verification is to ask UK internet service providers to block those sites. Bearing it in mind that it would be disproportionate to block sites such as Facebook and YouTube, how do the Government intend to deal with terrorist and extremist propaganda if technology companies do not do enough?
Baroness Williams of Trafford
The noble Lord is absolutely right. I pay tribute to my right honourable friend the Home Secretary, who has spent an extensive amount of time over the past few weeks and months talking to communications service providers. Only on Monday, Twitter, Facebook, Microsoft and YouTube announced the formation of a global internet forum, primarily to counter terrorism but also, through that collaborative way forward, to tackle some of the things that the noble Lord mentioned, such as extreme pornography.
Baroness Lane-Fox of Soho (CB)
My Lords, I declare my interest as in the register. The internet is also the place of initiatives that help to counter terrorism—think of the incredible relief that many victims of terrorism have felt by using social media and gathering information and news. Does the Minister agree that it is as essential to protect an open and free internet as it is to make sure that we take down the videos to which the noble Lord, Lord Naseby, referred? Can I ask that, in the digital charter announced in the manifesto and in the Queen’s Speech, we do as much to revert to some of the original spirit of the internet as we do to address the challenges that we face in 2017?
Baroness Williams of Trafford
The noble Baroness is absolutely right not only that the internet is a useful tool to challenge this sort of activity, but that freedom of speech and use of the internet are important in our society. There is a fine balance between freedom of speech and speech that is downright extremist and hateful. That is why we have adopted our approach, which is to take down extremist material and put up a counternarrative, in the meantime, helping to educate people about the dangers of radicalisation.
Baroness Jones of Moulsecoomb (GP)
My Lords, following that answer, can the Minister tell us what definition of “extremist” the Government are using?
Baroness Williams of Trafford
The Government are not using the definition of extremism which I know the Metropolitan Police has designated the noble Baroness with. “Extremist material” refers to content that is assessed as contravening UK terrorism legislation.
Terrorist Attacks
Baroness Williams of Trafford Excerpts(6 years, 10 months ago)
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The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, with the leave of the House I shall now repeat a Statement delivered in the other place by my right honourable friend the Home Secretary.
“With permission, Mr Speaker, I would like to make a Statement about the terrorist attacks we have seen since Parliament last sat. There has been no summer like it. When we rose seven weeks ago, we left this House in the wake of the worst terrorist attack our country had seen in over a decade, with Khalid Masood trying to strike at the heart of our democracy. He was foiled that day by one of our brave police officers. But tragically, that has proved to be the first of many attempts to bring terror and hate to our streets.
Two months later, a cowardly and devastating attack in Manchester left 22 people dead and 59 injured, after a suicide bomber targeted children at a concert in the Manchester Arena. On 3 June, a van was deliberately driven into pedestrians on London Bridge before three men got out of the vehicle and began stabbing people in nearby Borough Market. Eight people were killed and 48 injured. Then on Monday, almost exactly one year after Jo Cox was brutally murdered in Birstall, we woke up to the news of the return of far-right terror, when a man viciously drove into a group of Muslim worshippers in north London. One man, who had fallen ill before the attack, died and nine others were treated in hospital.
Westminster, the Manchester Arena, London Bridge and now Finsbury Park have left 36 innocent people dead and over 150 hospitalised—a tragic loss of innocent life. Last week, I met a mother and father who had lost their daughter in the vicious attacks on London Bridge. She had been stabbed while out celebrating her new job with a friend in Borough Market. Just under two weeks before, she planned to be at the arena in Manchester where Salman Abedi committed his heinous crimes but she decided not to use her ticket. She had come to London to enjoy a wonderful trip away—a once-in-a-lifetime experience—but instead it was the last trip she ever made. I know that everyone in this House will want to join me in expressing our sorrow for the pain her family will be feeling, and for all those families who have lost loved ones.
As well as passing on our thoughts and prayers for those victims who are still trying to recover from the trauma and tragedy of these events, I know that the House will want to join me in acknowledging the incredible efforts of our emergency services during this difficult period. The events of recent months serve to remind us of the bravery, professionalism and, above all, the incredible sacrifice made by those who work to keep us safe. As Home Secretary, there is nothing more saddening than standing before Parliament to deliver a Statement like this.
These acts of terrorism represent the very worst of humanity. They seek to spread fear, intolerance and hate. Countering this threat has always been a crucial part of the work of government. That is why we have introduced measures to disrupt the travel of foreign fighters and passed the Investigatory Powers Act, which gives the police and intelligence service more powers and the tools that they need to keep the public safe. That is why, just seven weeks ago, we legislated to strengthen our response to terrorist financing within the Criminal Finances Act. We have also protected overall police funding in real terms since 2015, increased counterterrorism budgets and funded an uplift in armed police officers. We are now in the process of recruiting more than 1,900 additional security and intelligence staff. The Channel programme, which offers voluntary tailored programmes of support to people assessed as at risk of radicalisation, has supported over 1,000 at-risk individuals since 2012. Following referrals from the Counter Terrorism Internet Referral Unit, social media providers have removed 270,000 pieces of illegal terrorist material since February 2010.
But we are entering a new phase of global terrorism and many of the challenges we face are unprecedented. We now believe we are experiencing a new trend in the threat that we face. Between June 2013 and the Westminster Bridge attack in March this year, the security services foiled 13 plots linked to or inspired by Islamist extremists. But just since then, we have seen five plots prevented as well as three such Islamist extremist plots succeed—and, of course, the appalling attack at Finsbury Park earlier this week. We must do more. We must do more to defeat ideologies of hatred by turning people’s minds from violence and towards pluralistic British values. We must make sure that these ideologies are not able to flourish in the first place. We must do more to force tech companies to take down terror-related content from their platforms, and do more to identify, challenge and stamp out the extremism that lurks in our communities.
That is why we will be setting up a commission for countering extremism. Just as the Labour Government in the 1970s set us on a course to tackle racial inequality in this country by setting up the Commission for Racial Equality, we need to—and must—do more to tackle those extremists who seek to radicalise and weaponise young people in Britain today. Doing more also means asking difficult questions about what has gone wrong. In the light of the terrorist attacks in London and Manchester, Britain’s counterterrorism strategy will be reviewed to make sure that the police and the security services have what they need to keep us safe. In addition, there will be a review of the handling of the recent terror attacks to look at whether lessons can be learned about our approach. I am pleased to announce that David Anderson, the former Independent Reviewer of Terrorism Legislation, will oversee it.
What we have witnessed in Manchester and in London are the depraved actions of murderers intended to tear our country apart, but each act of hate has been met with overwhelming defiance. In Borough Market recently, I saw stall holders dishing out olives into plastic pots, shoppers searching for delicious treats and tourists flicking through guide-books in the shadow of the Shard. Rather than being divided by recent violence, people seemed ever closer together. We should follow the example of the traders and the shoppers of Borough Market. What terrorists want is for us to fear and to turn on one another, but we will never give terrorists what they want. We will stand together, and we will make the point that terrorists will never win and that our values, our country and our unity will prevail. I commend this Statement to the House”.
Lord Paddick (LD)
My Lords, I, too, thank the Minister for repeating the Statement and express the condolences, thoughts and best wishes of those on these Benches to all those affected by these tragedies. I also express our thanks and admiration to the emergency services involved in each of these incidents, particularly the armed officers who had to take the difficult, split-second decision to shoot the suspected perpetrators of the London Bridge/Borough Market attack. Our thoughts should also be with those officers and their families.
I have four questions. Can the Minister confirm that central government funding for the police service is increasing in real terms? What account has been taken of the additional financial pressures on the police service, such as the apprenticeship levy, and the additional operational pressures, such as the public inquiry into covert policing and the post-event investigations into these terrorist incidents? Is it not time to restore community policing, an invaluable source of community intelligence, after a cut of 20,000 police officers and 24,000 police support staff since 2010? Does the Minister agree with the Commissioner of Police for the Metropolis that the Met is struggling because of a lack of resources? We welcome David Anderson’s role in reviewing the handling of recent terror attacks. We welcome the idea of a commission for countering extremism, but we need to understand what that means. We also welcome an independent, evidence-based review of Britain’s counterterrorism strategy, including an independent, evidence-based review of Prevent. Can the Minister give any more detail about the commission and can she confirm that the review will be independent and evidence-based?
Baroness Williams of Trafford
My Lords, I thank the noble Lord, Lord Kennedy, and the noble Lord, Lord Paddick, for the points they have made. The noble Lord, Lord Kennedy, made some very constructive points about police numbers and having the resources to meet the needs of the police in the work they do. Since 2010, police forces have increased the proportion of officers working at the front line and proved that you can continue to cut crime with a smaller, more agile workforce. This is going to be important as we consider capabilities going forward. Since 2015—I hope this goes to the point made by the noble Lord, Lord Paddick—we have protected overall police spending in real terms. We have increased the counterterrorism budget, and we have funded an uplift in the number of armed police officers. We have also increased the budget of our security services. There are more officers and staff involved in counterterrorism policing than ever before. However, the challenge is not simply about maintaining police numbers. As the nature and complexity of the threat changes, as noble Lords have said, so does the nature of the skills needed to tackle that threat. We have all seen that in recent weeks. We are in an ongoing and constructive dialogue with the police, including the Metropolitan Police. I do not recognise the cuts that the noble Lord talked about, but we will be talking to the police about ensuring that the right powers, capabilities and resources are in place.
The noble Lord talked about the David Anderson review, which will look into why the attacks took place and whether further work needs to be done. It will look into the historical aspect; not just things that have happened over the last few weeks but those in the past as well. Going forward, the review will also look at how we protect our citizens and whether any changes, including legislative changes, are needed as we proceed. But of course it is very early days. We want a thorough review, not a quick one, to make sure that we get things right in the future and respond to changing threats and those which might emerge.
The noble Lord also talked about the Manchester attacker and whether he was known. I hope noble Lords will understand that these matters are subject to police inquiry and that it would be wrong of me to start discussing any of these details, but of course the review will look into what the answers are. I think I have answered both noble Lords’ questions, but I might have missed one from the noble Lord, Lord Kennedy. If he wants to repeat anything, I would be very happy to answer.
Lord Tebbit (Con)
My Lords, I welcome most wholeheartedly what the noble Lord, Lord Kennedy, said about the duty that falls on all of us to condemn all terrorists. I think today of course of my friends—Airey Neave, Ian Gow, Robert Bradford, Tony Berry—all Members of the other place and all murdered by the IRA. I hope the noble Lord, Lord Kennedy, will have a quiet word in the ears of the leaders of his party who have such soft and comforting words for the IRA.
Baroness Williams of Trafford
My Lords, as we deal with extremism in all its forms, we look not just at Islamist extremism but at far-right extremism. My noble friend is absolutely right to point out that we cannot forget the events in our recent history that caused such damage in our communities, both here and in Ireland.
Lord Campbell-Savours (Lab)
My Lords, there is a tendency for party political polarisation to dominate this debate about handling terrorism. I wondered whether Ministers saw the interview with my noble friend Lady Chakrabarti during the middle of the election campaign in which she suggested that it might be possible to put together a team of privy counsellors, operating within the rules that apply to them and comprising members of all political parties, to sit down and evaluate these things and then make recommendations, bypassing the Government, directly to Parliament. There is a precedent for this from the late 1940s, when Mr Attlee did precisely that when dealing with national emergencies. Might Ministers consider what my noble friend said and perhaps come forward with some recommendations?
Baroness Williams of Trafford
My Lords, it is fair to say, certainly in this House and in the other place, that when events such as this happen, there is broadly a consensus on how we should deal with things. We conflate matters sometimes when we talk about extremism, radicalisation or indeed terrorism and get mixed up in various activities, but the point is that we all seek the same ends. When the extremism commission starts its work, it will seek to get the views of Parliament on its recommendations. I think we all seek the same ends.
Baroness Verma (Con)
My Lords, will my noble friend take back to all parliamentarians and to all those in positions of power that the rhetoric they use has a great impact on all our communities? In the past, we have seen divisive language from all sides, which needs to be looked at carefully if we are going to tackle this in a sensible, decent way. I suggest to my noble friend that she also takes back to her department that if we are to tackle extremist violence or extremist thought we need to start looking at it at a much earlier age and at how we can get into primary schools to create greater understanding between all communities.
Baroness Williams of Trafford
My noble friend is absolutely right. We do not realise sometimes what far-reaching consequences the language that we use has. I am talking about all forms of prejudice or extremism et cetera. The noble Lord, Lord Singh, who is not in his place today, quite often talks in this House about religious literacy. We could all learn lessons when it comes to the consequences of the points that we make and how they might affect broader society. I also agree with my noble friend about schools being involved in some of the early education of our children. Some of the events of recent weeks have frightened children, and they are being misinformed, which may lead to them being hostile towards each other at a young age. I certainly know that after the Manchester attack, Muslim children of friends of mine felt more reticent on their way to school. Of course, local communities and local schools have worked very hard to educate in this sphere, but education starts in those early years.
Baroness Hamwee (LD)
My Lords, language is indeed important, and I wanted to ask about the use of the phrase “stamping out” extremism. It reflects understandable emotion, and indeed determination, but can stamping out achieve everything? Can the noble Baroness confirm that the extra staff referred to in the Statement will include psychologists, psychosocial experts and others who will work with no less rigour to approach the problem and address the issue? Secondly, I do not think that she replied, at any rate with any detail, to my noble friend’s question about the commission for countering extremism. Can she tell the House about the terms of reference and confirm, as I hope she will, that there will be wide consultation on those terms?
Baroness Williams of Trafford
I thank the noble Baroness for that question. I did not give much detail about the commission for countering extremism because I simply do not have much detail at this point. Recommendations will certainly come back to Parliament. There was a question in the other place earlier about Parliament feeling outside what the commission does, but Parliament will be consulted and have its say on the commission’s recommendations. As for stamping out extremism, will we always stamp out all types of extremism? No, we will not, but what we can do as a society is collectively be intolerant of extremism in our society, and the cohesion of our communities will, to a great extent, achieve this.
Lord Marlesford (Con)
My Lords, does my noble friend recognise that when countering terrorism, to preserve our national security, there will be occasions when there is a real and irreconcilable conflict with human rights? Will she assure the House that the Government will always carry out a careful and proportional assessment in order to decide in such cases whether counterterrorism or human rights should take precedence?
Baroness Williams of Trafford
My noble friend brings up a very good point about the balance that we have in place to preserve our human rights—we will not be leaving the European Convention on Human Rights, as the manifesto makes clear—while also bringing perpetrators of terrorist atrocities to book. When we look forward, we will certainly consider whether we have got that balance right.
Baroness Uddin (Non-Afl)
My Lords, I express my heartfelt condolences to those who perished in the terrorist attacks and all those who remain in a critical condition. I add my own tribute to the emergency services; they showed tremendous courage in all its forms, and we are very grateful to them. I also take this opportunity to say that I knew PC Keith Palmer and I am delighted that he has received the honour that he has.
I want to make two points to the Minister. She mentioned looking at Channel, and my noble friend made a point about reviewing the Prevent programme. First, with regard to Channel, will the Minister write to me with details, or perhaps make them available in the Library, about the categories of Channel referrals? What are those categories and what are the criteria for referral?
Secondly, on the Prevent review, the Minister may not know that I was involved in Tony Blair’s preventing terrorism task force. That group worked for maybe 18 months, as I have no doubt the commission for countering extremism will, but it resulted in the Prevent programme, which was very far from all the discussions that emanated from it. The Prevent programme in its entirety has been a failure because it missed out working in partnership with communities. What will the Minister do to ensure that the new commission will be broadly representative and contain men and women who do not just speak with the Government’s tongue and make the Government feel comfortable?
My final point relates to division. It is time that this House and the other place rooted out from their language the term “Islamic terrorism”. It is unforgivable. We are blessed with language to describe murder and mayhem, and we should stick to that. There has been an enormous amount of coming together of the community, but such language consistently divides and makes young people scared. I have four grandchildren, and my grandsons, who are four, five and nine, are scared to go to school because of such language, which alienates them from their friends. I urge the Government to reconsider the way in which they describe the utter brutality of terrorism, mayhem and murder.
Baroness Williams of Trafford
I say to the noble Baroness that the Prime Minister and the Home Secretary’s Statement on Monday was met with great praise, certainly from the Muslim community in Greater Manchester, because it expressed the same horror with regard to what went on on Monday as to what had gone on in previous terrorist events. I think that might be what the noble Baroness was pointing to.
I cannot go through the criteria for Channel, but broadly speaking it is a voluntary mechanism that is in place for people who are at risk of radicalisation. It does not target people who are at risk of radicalisation; it tries to protect them. That is the most important aspect of the Prevent programme. There have been 1,000 Channel referrals over the last few years, 25% of which, by the way, related to the far right. I am confident that Prevent is working. We have disrupted people from going abroad to fight foreign fighters.
On the noble Baroness’s point about language, I have already said this to my noble friend but I will reiterate it: we have to be careful about the language that we use. I can speak most of all for Manchester because I was there in the aftermath of the attack. The coming together of communities is our strength. There are things that government can do, but communities are very powerful bodies. I stood in Albert Square while we had the vigil and I saw people from all races, creeds and colours. The Sikh community were giving out water to people, and there was a great sense of coming together. Afterwards I stood with Afzal Khan at the British Muslim Heritage Centre in Whalley Range. For me, that immediate response from communities and that coming together are among the most powerful things that have come out of the attacks in Manchester.
Lord Cormack (Con)
My Lords, should we not bear in mind that we are pandering to the terrorists the longer we delay the resumption of normal activities after a terrorist outrage? I condemn utterly what was done, but I believe that the suspension of ordinary activities was a little prolonged and gave them a victory.
Baroness Williams of Trafford
As my noble friend knows, terrorists do not like democracy. We certainly had to perform a balancing act in the wake of the terrorist attacks. We wanted to give respect to the dead, which was extremely important. The feeling in Manchester was visceral; these were little children who had been murdered. I thought that after the Manchester attack it was right to give a longer period of respect during the election period. However, we did not want democracy thwarted either, so after the third attack, which was so close to the general election, activity was resumed at a much quicker pace. I think we got the balance right, and I think the cross-party view was that we got the balance right.
Baroness Tonge (Non-Afl)
My Lords, I thank the Minister for repeating the Statement. I share her horror at recent events and extend my condolences to the victims and their families. I wonder whether the House will join me in commending the imam of the Finsbury Park mosque, who held back a lot of very angry people who wished to attack the perpetrator of that event, and in doing so demonstrated the rule of law, which is surely one of the most noble of our British characteristics.
Baroness Williams of Trafford
From the noise that the noble Baroness is hearing she will be able to tell that the whole House agrees with her. I sometimes wonder whether the bravery of ordinary people is something that I would be capable of, and that imam was absolutely wonderful.
Lord Hutton of Furness (Lab)
My Lords, will the commission for countering extremism, which she has referred to a number of times, exercise any statutory powers or functions?
Baroness Williams of Trafford
I think the commission itself needs to explore the work that it is doing, and those deliberations are certainly in train. Whether legislation is needed as a result will become clear in due course.
Lord Polak (Con)
My Lords, at the Al Quds march in London on Sunday, Hezbollah flags were displayed in direct contravention of Section 13 of the Terrorism Act 2000. Separating Hezbollah into military and political wings is an untenable and artificial exercise. In fact, the United States, Canada, the Netherlands, the Arab League and the Gulf Cooperation Council designate Hezbollah in its entirety. In the wake of the awful deadly terror attacks against civilians in our country, is it not time that the UK demonstrated its commitment to combating extremism by joining our important allies in proscribing this terror group in its entirety?
Baroness Williams of Trafford
My noble friend makes a very similar point to that made earlier by Robert Jenrick MP in the other place. Displaying those flags is certainly distasteful. It was probably designed to aggravate, and I certainly understand the concern that people might have when such things are thrust into the community. There is a big difference between a different political opinion or view, and putting that into action, and how far that has gone to this end. I certainly share my noble friend’s view that that was certainly an attempt to goad people and make them feel very uncomfortable, particularly the family of Robert Jenrick, whose wife is Jewish.
Child Refugees
Baroness Williams of Trafford Excerpts(7 years ago)
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Lord Dubs (Lab)
My Lords, I beg leave to ask a Question of which I have given private notice.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, in 2016, the UK transferred more than 750 children from France as part of comprehensive support for the Calais camp clearance. The UK also offered support to France following the recent fire at Dunkirk. We continue to work closely with the French to transfer eligible children under Section 67 of the Immigration Act and the Dublin regulation. The fastest route to safety is to claim asylum in France.
Lord Dubs
My Lords, I welcome the fact that the Government announced in a Written Ministerial Statement today that a further 130 children would be taken into this country under Section 67 of the Immigration Act, even if the reason is the Home Office having to hang its head in shame because it made an administrative error as part of collating the figures. That comes out of “Yes Minister”. Will the Government now reconsult local authorities, because many local authorities, not just in England but in Scotland, Wales and Northern Ireland, have expressed a willingness to take more child refugees? Is not the Minister aware that many representations have been made recently about the availability of local authority places?
Baroness Williams of Trafford
The administrative error is most unfortunate, and for that I apologise. I would not want that to happen. The good news is that we have an additional 130 places, and I think we should all be very pleased about that. The important thing here is that no child has been disfranchised. Any eligible child has been taken thus far, and 200 children have been taken so far, so we have not even got to the figure of 350. I would not want noble Lords to think that any child had been disfranchised because of this administrative error, which is, as I said, most regrettable.
On the consultation, we have consulted local authorities. For the record, I can tell noble Lords that there are 4,000 unaccompanied children in local authority care as we speak. Some local authorities, such as Kent and Croydon, host a disproportionate number of children. We are always very glad to hear from local authorities coming forward to take children through the national transfer scheme or to take refugee children, but it is not as though we have not consulted properly. I know that the Immigration Minister wrote to all local authorities, a national launch event was held, and more than 10 regional events were held in every part of England, as well as one in Scotland and one in Wales.
Lord Wigley (PC)
My Lords, the Minister will be aware of reports last week in the context of child refugees that an assumption was being made that, if such a child was disabled, they would be debarred because they would be regarded as too burdensome. Will she take the opportunity to deny with all possible strength that that could be the Government’s policy?
Baroness Williams of Trafford
My Lords, it would never be the Government’s policy—I do not think any Government’s policy—to disfranchise a disabled child because they were too burdensome. A child would be assessed under the criteria of either Dubs, Dublin or the vulnerable children’s resettlement scheme. No child would ever be disenfranchised because they were disabled. I can very strongly confirm that.
Baroness Sheehan (LD)
I have two questions for the Minister. Is she aware that Help Refugees will press ahead with its pending court case, as freedom of information data show that further clerical errors exist? Secondly, will the Government accept that we have a moral and legal duty to these children to reopen the Dubs scheme to ensure that these errors are ironed out once and for all and that we act with utmost haste in bringing these unfortunate children to the UK? The Government have been far too slow in actioning those points.
Baroness Williams of Trafford
My Lords, as my first Answer explained, we have not closed the Dubs scheme. We have 200 children here and there is potential for another 280 to arrive under the additional numbers. I look forward to the outcome of the court case and would not want to comment on it at this stage.
Baroness Manzoor (Con)
My Lords, France or Europe are not some war-torn country, so I am delighted that refugees are able to get to a place of safety, whether in France or here. My concern is that the most vulnerable children and women are still in Syria and on the borders of Syria. What support have the Government given in that vital work?
Baroness Williams of Trafford
I am very pleased to be able to do that. My noble friend is absolutely right that the most vulnerable are still in the regions. Last year, the former Prime Minister made an announcement to double the amount of assistance going to the region to £2.4 billion—double the amount that it had been previously. My noble friend makes exactly the right point that we should be sending help to the regions where it is most needed.
Lord Rosser (Lab)
First, I think it would have been better if the Government had come with an Oral Statement to the House on this issue rather than putting it in a Written Statement just before we are about to cease sitting, as this is an issue of considerable interest to the House. We discussed this in the House on 9 February, after the Government said a Written Statement in the Commons:
“Local authorities told us they have capacity for around 400 unaccompanied asylum-seeking children until the end of this financial year”.—[Official Report, Commons, 8/2/17; col. 10WS.]
That would have been 2016-17. I asked the Minister:
“What capacity have local authorities told the Government they have for unaccompanied asylum-seeking children in the 1917-18 financial year on the basis that the current level of government funding is continued?”.—[Official Report, 9/2/17; col. 1861.]
I did not get a direct reply to that question. The Minister said that the Government were in constant touch with local authorities. Can she give us the figure? What capacity have local authorities told the Government that they have for unaccompanied asylum-seeking children in the next financial year, 2017-18, on the basis that the current level of government funding is continued?
Baroness Williams of Trafford
My Lords, as my honourable friend in the other place outlined in the Written Ministerial Statement yesterday, the capacity for Section 67 children is 480. As for future commitments, obviously we are hours from Prorogation and I cannot make any future declarations at the Dispatch Box, much as I would want to. Those figures will be forthcoming should we be successful in the general election.
Lord Roberts of Llandudno (LD)
My Lords, the Minister said that there are 4,000 children in foster care. Are these 4,000 asylum-seeking, unaccompanied youngsters, as we voted on in the recent Act, and is she aware that of the children dispersed in France, 600 have made their way back to Calais because they have not been accepted in a very friendly way? Can the she answer those two questions?
Baroness Williams of Trafford
I am not sure why children who had been accepted for local authority accommodation here would want to go back to Calais. I am sure that there are various reasons for that.
Baroness Williams of Trafford
Sorry, I have slightly misheard the noble Lord’s question. He asked me, first, whether there are 4,000 unaccompanied children in local authority care in this country. Yes, there are. Other children who were not eligible for either Dubs or Dublin have been dispersed within France.
Lord Elton (Con)
My Lords, the debates that we have from time to time on this issue focus almost exclusively on local authorities, suggesting that they are the only and the best providers. Is that the case? If so, what is the arrangement by which other providers can link into the system in order to increase the number of places available?
Baroness Williams of Trafford
I am glad that my noble friend asked that question, because one thing that the Government have been very keen to promote is the community sponsorship scheme, which the most reverend Primate the Archbishop of Canterbury has taken part in, taking in Syrian families in Lambeth Palace. In fact, in my own local authority in Trafford we also have a community sponsorship scheme. I never let the time pass up without encouraging noble Lords to tell of any community sponsors they know who might be willing to take families.
Terrorism: Domestic Extremism
Baroness Williams of Trafford Excerpts(7 years ago)
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Baroness Jones of Moulsecoomb
To ask Her Majesty’s Government whether they intend to refine the definition of domestic extremism, in order to enable the police to focus on those involved in terrorism and serious crime.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the definition of domestic extremism used by the police is not statutory. Questions about the police definition and their work on domestic extremism are matters for the police.
Baroness Jones of Moulsecoomb (GP)
I thank the Minister for that evasive Answer. Quite honestly, of course it is a matter for the Home Office whether the police misuse their time. There is now a huge amount of incontrovertible evidence showing that the police watch peaceful, non-violent environmental campaigners. They are utterly wasting their time and not concentrating on people who can actually cause terrorism—terrorism, not tourism—in this country or commit violent crime. Will the Home Office take its responsibilities seriously about preventing such crime and make sure that the police follow some reasonable guidelines on what a domestic extremist is?
Baroness Williams of Trafford
My Lords, I do not agree with the point on the police misusing their time. On whether the Answer was misleading, the Question read:
“To ask Her Majesty’s Government whether they intend to refine the definition of domestic extremism”.
It is not our definition.
Lord Harris of Haringey (Lab)
My Lords, I refer to my interests in the register. I appreciate that we are towards the end of this parliamentary Session so the opportunity to do something about what was in the last Queen’s speech is diminishing, but in the last Queen’s speech the Government promised a Bill to look at preventing extremism. I understand that that has been festering in the long grass ever since because of the difficulty in defining extremism. Will it carry on festering in the long grass or are the Government planning, if they manage to be re-elected, to bring forward proposals that will define extremism and that might then define whether the noble Baroness is an extremist? Quite a number of us might be deemed by other colleagues in your Lordships’ House to be extremists. How will the Government address that question, as they told us in the Queen’s speech they would?
Baroness Williams of Trafford
My Lords, clearly events have overtaken us. Tomorrow we will prorogue and this will be in the hands of the next Government—it might be a Labour one—to decide whether to bring forward such legislation. Yes, at the time of the last Queen’s speech that was our intention.
Lord Singh of Wimbledon (CB)
My Lords, I emphasise the concern over definitions. In the 1980s, when Sikhs were persecuted throughout India, when they were blamed and called terrorists and extremists, I was asked by the BBC whether I was a moderate or an extremist. I replied, “I am extremely moderate”. Such words have no meaning. We must get beyond these smear definitions and look to what actually concerns us.
Baroness Williams of Trafford
As someone who is extremely moderate as well, I do not disagree with the noble Lord. The point I was making in my Answer to the Question is that this definition was made by the police.
Lord Paddick (LD)
My Lords, last week the Minister for Prisons said:
“Any form of extremism must be defeated wherever it is found”.
Can the Minister remind us of the Government’s definition of extremism, as used by that Minister last week? Does it include Jehovah’s Witnesses?
Baroness Williams of Trafford
My Lords, a Jehovah’s Witness may or may not be an extremist depending on their activity. Extremists seek to justify behaviour that contradicts and undermines our shared values. If that is left unchallenged, those values that bind our society together start to fall apart: women’s rights are eroded, intolerance and bigotry become normalised, minorities are targeted and communities become separated from the mainstream. That sort of behaviour cannot go uncontested.
Lord Morris of Aberavon (Lab)
My Lords, can extremism ever really be legally defined?
Lord Pearson of Rannoch (UKIP)
My Lords, does the Minister recall the recent report from the National Police Chiefs’ Council, which found that less than 10% of tip-offs about potential terrorists came from within our Muslim communities? Does that not suggest that our peaceful Muslim friends may not be doing enough to expose and stand up against their violent co-religionists? If so, what can the Government do to help them?
Baroness Williams of Trafford
My Lords, I think such blanket presumptions are unhelpful at this stage. The vast majority of Muslims in this country share our values and our aspirations as parents and members of society. Prevent, the programme that this and previous Governments have run, has helped support people and protect them from those who would wish to poison their minds.
Lord Rosser (Lab)
The Government announced at the beginning of this month that a 100-strong task force of counterterrorism experts was to be established the following week by the Home Office and Her Majesty’s Prison and Probation Service to examine intelligence from around the country to assess the danger posed by radicalisation behind bars, with the new unit being,
“the nerve centre for all counter-terrorism and counter-extremist work across the prison estate and probation service”.
Where have the 100 members of the new counter- terrorism task force come from, and which areas of work within which departments or organisations are now currently operating with fewer staff as a result of the creation of this new task force of counterterrorism experts?
Baroness Williams of Trafford
That is a question on which I am going to have to get back to the noble Lord. I simply do not know, and I am not going to pretend that I know, the detailed answer to the question, so I will have to get back to him.
Criminal Finances Bill
Baroness Williams of Trafford ExcerptsTuesday 25th April 2017
(7 years ago)
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The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, before I begin, I want to make a few comments. Following the decision last week to call a general election, this is likely to be the last opportunity for the House to scrutinise this legislation. As noble Lords have said, it has had cross-party support throughout its parliamentary passage and I am very grateful to noble Lords, through the usual channels, for enabling us to take both Report and Third Reading today. Time is very short, but we all agree that this Bill will deliver valuable powers to fight money laundering, prevent the financing of terrorism and combat corruption. I hope we can maintain consensus on the way forward and return the Bill swiftly to the Commons.
Perhaps I may also take a moment to thank the noble Lord, Lord Empey, who might have brought back an amendment today but, given the shortness of time, has decided not to do so. He would like it placed on the record that this in no way undermines his support for the victims groups that he has supported over many years.
As well as the amendments in the names of my noble friends, this first group is composed primarily of government amendments that seek to fine-tune the Proceeds of Crime Act 2002. These are consequential on matters already in the Bill and should not, I suggest, raise any particular concerns. However, I will address each of them for the benefit of noble Lords.
Amendments 6 and 7 make explicit that unexplained wealth orders can be used in cases where the property of interest is registered in the name of an overseas company. UWOs should be a significant tool to help probe the ownership of UK property with suspected links to illicit funds, and these amendments seek to address the helpful intervention in Committee of my noble friend Lord Faulks about the London property market. Although it is already implicit that UWOs can apply to cases where property is held in the UK but registered overseas, this explicit clarification is helpful. However, it should in no way cast doubt over the other provisions in POCA, or elsewhere in law, where such an explicit clarification is not included. For example, Sections 84 and 414 of POCA define property in respect of confiscation and investigation powers respectively. These have been applied to property registered in the names of overseas companies where persons in the UK hold this property in some way. Those provisions must continue to operate in that way and I fully expect them to do so.
Our amendments clarify that the UWO provisions apply to property held by foreign companies, and our existing provisions already require a respondent to set out,
“the nature and extent of his interest”,
in a property. It is clear from this that a beneficial interest in property will be captured where a UWO is served on a serious criminal or a non-EEA PEP.
Regarding the specific points about the bodies corporate regardless of whether they hold or obtain property, the amendments provide clarity and certainty that the UWO provisions apply in this circumstance. We introduced the amendment, after discussing the point with my noble friend Lord Faulks, to make absolutely clear that UWOs can apply in respect of overseas companies. I made the important point that this clarification does not cast doubt on the normal application of the term “person” elsewhere in POCA or the statute book. I hope that this will address the concerns of my noble friend Lord Faulks in Amendment 2, which goes to the heart of the category of individuals on whom a UWO can be served. We have already previously clarified the wide scope of what is meant by “holding property”, which includes a person who has effective control over the property.
We have carefully considered the categories of potential respondents to a UWO and I was pleased to have the opportunity to discuss this with my noble friend. The Government do not consider that it is appropriate, or indeed proportionate, to add a third category of potential respondents to a UWO, when inclusion in that category is dependent only on the way in which an individual holds property. Property could, of course, be held in this way perfectly legitimately.
I will now refer to other points that were made. My noble friend asked about the annual tax on enveloped dwellings, which we have homed in on before. The annual tax on enveloped dwellings does not enable corporate or foreign ownership of property; it is a reality of UK law. I sympathise with the concerns raised, but I assure my noble friend that there is no evidence that the tax encourages money laundering. Many legitimate companies own property in holding companies.
On the point about the London property market that we have also touched on previously, I assure both my noble friend and noble Lords generally that the UWO is an important addition to the tools that can be used here. We are doing more: BEIS has launched a consultation on a public register of overseas ownership of UK property. Such a register would help to highlight abuses of this sort and deter investments of this type. We have created a public register of beneficial ownership and the register makes publicly available details of those who have a 25% stake or greater in a company’s shares or voting rights. The forthcoming set of money laundering regulations currently out for consultation will require estate agents to conduct customer due diligence on those purchasing property as well as those selling property. This will likely lead to more suspicious activity reports linked to property purchases and create more opportunities to use UWOs.
A number of noble Lords asked about purported compliance. They made the point that either a person complies or they do not. The term exists to balance against the serious consequence of not complying with a UWO. If you do not comply with one, the property is presumed to be recoverable in any subsequent civil recovery proceedings. This is without the need for the enforcement authority to provide evidence that the property is the proceeds of crime. This is reversing the burden of proof, which is a significant and unusual approach in our law, so purported compliance is to recognise that if a person engages with the process by answering all the points of a UWO, they will be protected from the presumption that their property is automatically recoverable, and issues as to whether they have complied or not will fall away. The onus transfers back to the enforcement authority to prove that the property is a proceed of crime in the usual way, and the term provides certainty as to the circumstances in which the presumption of recoverability will arise—which will be important in respect of any further proceedings against the property.
In addition, when the UWO is obtained the applicant agency has a broad scope to tailor the requests for further information and documents required by the order, meaning that the likelihood of a poor-quality response is reduced. Also, if a person provides a response, the UWO has been successful in flushing out evidence. The enforcement authority can decide whether to further investigate on the basis of that evidence or to launch proceedings.
I turn now to Amendments 15, 16 and 50, which clarify our existing provisions to ensure that in Scotland the ability to obtain vacant possession of a property can be dealt with at the same hearing as civil recovery relating to that property. Related to these provisions, Amendments 25 to 31 correct an inconsistency in the Bill. They will allow Scottish Ministers and Northern Ireland Ministers to make consequential amendments to legislation, including UK legislation, that is within their legislative competence. To ensure that any changes do not create unforeseen issues, they would be required to consult the Secretary of State prior to doing so.
The Bill provides HMRC and the Financial Conduct Authority with the power to pursue civil recovery proceedings and with supporting investigation powers. On further analysis, it was unclear whether their existing information sharing gateway powers would allow them to receive information for the purposes of these new functions. Amendments 45 to 48 make that certain.
The remaining government amendments in this group are a series of minor and technical amendments to POCA, particularly in respect of “free property”—that is, property belonging to a defendant that can be liable for confiscation. They insert correct references, ensure consistency of language and remove ambiguity to ensure that relevant powers work as they should.
Finally, I will address the other amendments tabled by my noble friend. Amendment 1 seeks to introduce a possible requirement for an individual served with a UWO to answer questions “on oath”. As my noble friend will recall from our earlier discussions on the Bill, a UWO is a civil, investigative power, and it is already a criminal offence for a respondent to a UWO to knowingly or recklessly provide false or misleading information. If a person engages with the UWO process by answering all the points of a UWO, we believe that it is right that the presumption should not apply, even if it is arguable that the person has not fully complied. The onus transfers back to the enforcement authority to prove that the property is a proceed of crime and can be recovered.
In Committee, I committed to publishing the draft code of practice in relation to UWOs and disclosure orders. I am pleased to confirm, as my noble friend already has, that I have since written to noble Lords who spoke in Committee and enclosed the draft code for their review. When I wrote I also committed to publishing the code on the GOV.UK website. I regret that we have been overtaken by events and that doing so now would not be consistent with pre-election guidance. However, I have placed a copy in the Library of the House to ensure that noble Lords can scrutinise it ahead of the public consultation that will follow in due course.
We will be considering addressing issues such as statements of truth in giving evidence and purported compliance in the POCA investigation code of practice. It will then be open to noble Lords to make any representations relating to that code once a final draft, subject to the required public consultation, and the order bringing the code into force are subject to the affirmative resolution procedure. It will be debated in the House before being introduced.
“( ) References to a person who holds or obtains property include any body corporate, whether incorporated or formed under the law of a part of the United Kingdom or in a country or territory outside the United Kingdom.”
“( ) References to a person who holds or obtains property include any body corporate, whether incorporated or formed under the law of a part of the United Kingdom or in a country or territory outside the United Kingdom.”
“Co-operation: beneficial ownership information
In Part 11 of the Proceeds of Crime Act 2002 (co-operation), after section 445 insert—“445A Sharing of beneficial ownership information(1) The relevant Minister must prepare a report about the arrangements in place between—(a) the government of the United Kingdom, and (b) the government of each relevant territory,for the sharing of beneficial ownership information.(2) The report must include an assessment of the effectiveness of those arrangements, having regard to such international standards as appear to the relevant Minister to be relevant.(3) The report—(a) must be prepared before 1 July 2019, and(b) must relate to the arrangements in place during the period of 18 months from 1 July 2017 to 31 December 2018.(4) The relevant Minister must—(a) publish the report, and(b) lay a copy of it before Parliament.(5) The reference in subsection (1) to arrangements in place for the sharing of beneficial ownership information between the government of the United Kingdom and the government of a relevant territory is to such arrangements as are set out in an exchange of notes—(a) for the provision of beneficial ownership information about a person incorporated in a part of the United Kingdom to a law enforcement authority of the relevant territory at the request of the authority, and(b) for the provision of beneficial ownership information about a person incorporated in a relevant territory to a law enforcement authority of the United Kingdom at the request of the authority.(6) In this section—“beneficial ownership information” means information in relation to the beneficial ownership of persons incorporated in a part of the United Kingdom or (as the case may be) in a relevant territory;“exchange of notes” means written documentation signed on behalf of the government of the United Kingdom and the government of a relevant territory setting out details of the agreement reached in respect of the arrangements for the matters mentioned in subsection (5)(a) and (b);“relevant Minister” means the Secretary of State or the Minister for the Cabinet Office;“relevant territory” means any of the Channel Islands, the Isle of Man or any British overseas territory.””
Baroness Williams of Trafford
My Lords, I am again grateful to the noble Baroness, Lady Stern, and others for their amendment, which allows us to return to the important issue of company ownership transparency in the British Overseas Territories. As noble Lords will be aware, the Government have tabled their own amendment and I am pleased to have been able to discuss this with colleagues prior to today’s debate. The group also contains an amendment in the names of my noble friends Lord Faulks and Lord Hodgson of Astley Abbotts, no doubt prompted by concerns about the abuse of the London property market. I intend to address this in my closing remarks.
Before I turn to the government amendments, I hope I might be allowed to detain noble Lords for a few moments while I reiterate certain important points on company ownership transparency in the British Overseas Territories and Crown dependencies. As part of our international efforts to increase corporate transparency, the Government continue to work closely with our overseas territories with financial centres to tackle money laundering, terrorist financing, corruption and fraud. In Committee, I described the exchanges of notes the UK signed last year with overseas territories with financial centres and with the Crown dependencies, setting out new arrangements on law enforcement access to beneficial ownership data.
These arrangements are due to be implemented by June this year. They will put the UK and the wider “British family” of the OTs and CDs well ahead of most jurisdictions in terms of transparency, including many of our G20 partners and other major corporate and financial centres, including some states in the US, and demonstrate our continued leadership. I reiterate that we should be proud of this fact and of the progress achieved. These arrangements will bring significant benefits in the capacity and information that UK law enforcement authorities will have at their disposal to tackle criminal activity and to investigate bribery and corruption, money laundering and tax evasion. They will prevent criminals hiding behind anonymous shell companies incorporated in the overseas territories and Crown dependencies, ensuring that these jurisdictions are not open to exploitation by those seeking to hide the proceeds of their crimes.
The UK has continued to work closely with the overseas territories on implementing the arrangements. Indeed, we arranged for the London representatives to attend a meeting in the House this morning so that noble Lords could hear about their progress at first hand. I am very pleased to report there have been some further positive developments since I provided an update in Committee which I will briefly share with noble Lords.
The British Virgin Islands will shortly introduce the beneficial ownership secure search Bill, which will be known as the BOSS Act 2017, to its House of Assembly. This will reinforce the existing process for sharing information with UK law enforcement authorities.
The newly elected Premier of the Turks and Caicos Islands has confirmed that legislation will be introduced on an urgent basis to establish a central registry of beneficial ownership information in its existing companies registry, and to determine access to such information. She expects that the register can be established by the June 2017 deadline, albeit that it will take longer to populate the register fully with data on corporate and legal entities incorporated in the jurisdiction.
Montserrat had in fact committed in November 2015 to establish a public register of beneficial ownership. Although Montserrat is therefore not covered by the exchange of notes, we receive regular updates on its progress. Officials advise that a draft companies Bill will shortly be put to its Cabinet for approval.
The NCA has confirmed that it is already seeing enhanced co-operation from some overseas territories, with turnaround times for processing requests for information much shorter than previously. We expect to see this further improved to meet the agreed standards by June this year. This demonstrates what can be achieved by working consensually with the overseas territories and the Crown dependencies. It is reaping benefits and I believe that it will continue to do so.
Rather than imposing new requirements on the overseas territories, the Government believe that we should continue to work with them and to focus our efforts on the implementation of the existing arrangements, including the passage of new primary legislation in the territories and complex technological improvements. I know that noble Lords would like a timetable to be set for public registers. However, the Government respect the constitutional relationship with the overseas territories and the Crown dependencies. As previously noted, legislating for the overseas territories is something that we have done only very rarely, on issues such as abolition of the death penalty which raised issues of compliance with human rights obligations and thus areas for which the UK retains direct responsibility.
While tackling this kind of complex criminality and its consequences is extremely serious, there is a clear constitutional difference in that financial services is an area devolved to territory Governments. In the case of the Crown dependencies, the UK has never legislated for them without their consent. Doing so would be likely to lead to the territories withdrawing their current level of co-operation, jeopardising the progress made and the spirit of working in partnership that we have fostered with them. I hope that noble Lords will see that this is not a course of action we should take.
It is quite right that we should ensure that the territories’ existing commitments are effectively implemented and deliver real benefits for UK law enforcement—this point was emphasised by the noble Lord, Lord Rosser, in Committee. Following careful consideration, I have brought forward Amendments 8 and 32 to address the concerns raised by him and others. The amendments provide for a report to Parliament on the effectiveness of the bilateral arrangements in place between the UK and the Governments of the overseas territories with financial centres and the Crown dependencies on the exchange of beneficial ownership information.
As I noted in Committee, the Government are committed to following up on these arrangements to ensure that they deliver in practice. There is already provision in the exchange of notes agreements with the overseas territories and the Crown dependencies for reviews of the arrangements six months after they come into force—that is, on 31 December this year—and for further reviews annually thereafter. The arrangements also provide for continuous monitoring by both parties. However, placing a review of the first 18 months of operation of the arrangements on a statutory basis will provide further assurance that careful parliamentary scrutiny will be given to their effectiveness and demonstrate that they are being implemented properly, working effectively and meeting our law enforcement objectives.
As I have said previously, the UK is the only G20 country to have established a public register, and it is this Government’s long-term ambition that publicly accessible registers of beneficial ownership will in time become a global standard. At that point, we would expect the overseas territories and Crown dependencies to implement this standard. The government amendment includes provision that, in the review of the effectiveness of the arrangements, we can consider relevant international standards. This further demonstrates our intention to ensure that we and our overseas territories and Crown dependencies remain ahead of the curve on international standards and will continue to consider the bespoke arrangements set out in the exchange of notes in relation to those standards as they evolve.
Given that so many jurisdictions fail even to reach the standards set by the Financial Action Task Force for beneficial ownership transparency, it is right to focus our efforts on persuading others to up their game while ensuring that the overseas territories and the Crown dependencies deliver on what they have promised. We will of course continue to engage with partners through the key international groups such as the FATF and the OECD to increase levels of transparency worldwide.
I pay tribute to all noble Lords who campaigned on this issue. The fight against global corruption is a priority for the Government and we listened carefully to all those who made representations, not least the noble Lord, Lord Rosser, the noble Baronesses, Lady Stern, and the noble and learned Baroness, Lady Butler-Sloss. I hope that the House will recognise the strong rationale for the Government’s proposed approach and that noble Lords will be minded to accept the concessionary amendment we have proposed in light of our debates. I look forward to responding to noble Lords at the conclusion of the debate, when I will also seek to address the amendment in the name of my noble friends Lord Faulks and Lord Hodgson. I beg to move.
Baroness Williams of Trafford
My Lords, I thank all noble Lords who have spoken so passionately on Amendments 8 and 14. I particularly thank the noble Baroness, Lady Stern, for all the work that she has done in promoting her Amendment 14. I also thank all noble Lords who attended the meeting with the overseas territory this morning. I hope they found it was useful and that they can see that progress is already being made.
I begin with Amendment 24 in the name of my noble friends Lord Faulks and Lord Hodgson of Astley Abbotts, which would provide for the creation of a public register of beneficial ownership of foreign companies that own property in the UK. I am pleased to have the opportunity to return to this issue. The clear abuse of the London property market and high-value properties across the country—I was particularly interested to hear about the properties in Manchester—to launder money, including the proceeds of corruption, has to be stopped. We must not allow this city to be a haven for kleptocrats hiding their ill-gotten gains. That is why the Government share the ambition of creating such a register. As my noble friend Lord Faulks told us, on 5 April, the Department for Business, Energy and Industrial Strategy published a call for evidence on our proposed register and how it will work. In the call for evidence, the Government sought views on the design of the register and how it will interact with the UK property market to ensure that it is effective.
This policy enshrines the UK’s position as world leader in corporate transparency policy. However, as this register is novel and ambitious, its development should not be rushed. The UK will be considered world leading in this agenda only if the register works. The Government have therefore taken time to develop effective proposals and ensure that they deliver full transparency without creating undue burdens on business or adversely impact commercial property transactions. Publishing the call for evidence earlier this month demonstrated the Government’s ongoing commitment to this agenda. Subject to the outcome of the general election, it remains our intention to introduce legislation to create the register as soon as parliamentary time allows. I hope this provides my noble friends with the reassurances that they seek.
Moving back to the overseas territories and Crown dependencies, I welcome noble Lords’ recognition of the value of the Government’s amendments. They will help us to ensure that the jurisdictions successfully implement their commitments and that the UK law enforcement agencies can pursue investigations into money laundering and corruption as a result. As I have previously noted, a key feature of the Government’s approach is that it creates a level playing field between all the overseas territories with financial centres and the Crown dependencies. By taking a different approach to the Crown dependencies and overseas territories, the noble Baroness’s Amendment 14 would risk disrupting this level playing field, creating weaknesses in certain jurisdictions that could be exploited and damaging the spirit of co-operation we have been able to create between them. The Government’s amendment has the merit of treating all relevant overseas territories and the Crown dependencies on an equal basis, ensuring that they are held to the same standard and are subject to a level playing field.
The noble Lord, Lord Rosser, asked whether the information provided to UK law enforcement agencies can then be shared with operational partners in other countries, including those where grand corruption is rife. The exchange of notes are bilateral agreements with the overseas territories and Crown dependencies to enable the exchange of accurate and timely beneficial ownership information. On an operational case-by-case basis, and subject to each agency’s legal position, the UK agencies may share this information with operational partners in other countries. If a subsequent UK law enforcement investigation recovers property that relates to criminal activity or corruption in another country, we may also seek to return it to such a country under the terms of existing agreements or memoranda of understanding.
Noble Lords should also note that, if we were to impose legislation in a field of activity that is devolved to the overseas territories, we would need to ask ourselves to what degree we could ensure that such legislation would be implemented successfully in practice. Although Westminster has the legal power to legislate, enforcing practical implementation of legislation in this case would be fraught with difficulty. We could, in fact, significantly undermine the progress that we are making in return for little or no real benefit.
The noble Lord, Lord Rosser, asked what the review will cover. It will take into account the impact on law enforcement outcomes such as the number of cases concluded, the quality of evidence received and the overall impact on combating economic crime. He also asked whether there would be a debate in both Houses. He will understand that I cannot commit the next Government to scheduling a debate on the report but this will, of course, be a matter for business managers in due course. However, I am sure that interest in this issue will remain in both Houses and there would be considerable support for such a debate at the relevant time. Of course, there is no bar to such a debate being held in your Lordships’ House.
The noble Lord, Lord Eatwell, asked about data being provided to overseas territories being verified, and another noble Lord talked about verification. The UK’s persons with significant control register is publicly accessible and is accessed more than 1.2 billion times a year. This enables information to be cross-checked with other data sources to improve accuracy and the quality of information on an ongoing basis. This is the information which will be shared with overseas territories and Crown dependencies under the exchange of notes. The legislation that underpins the UK register includes its own statutory review clause, which will require its effectiveness to be reviewed and a report to be provided to Parliament by 2019.
My noble friend Lord Naseby asked which international standards would be considered for the statutory review. As he stated, the statutory review provided for in Amendment 8 will take into account evolving international standards such as new FATF standards. The UK will be assessed against the new FATF standards over the next 12 months. Other jurisdictions such as the overseas territories will be assessed at a later stage. While the exchange of notes is focused on improving law enforcement outcomes rather than emerging assessments against international standards, our review will, of course, take into account the wider context.
The Government have listened and brought forward a concessionary amendment. I hope noble Lords will be satisfied that the issue of company ownership transparency will remain a high priority in the next Parliament, and that the statutory review, which will be laid in Parliament, will ensure that this is the case. On that basis, I hope that the noble Baroness and my noble friends will feel inclined not to press their amendments.
Lord Mendelsohn (Lab)
My Lords, I rise briefly to speak in support of Amendment 13, proposed by the noble Lord, Lord Sharkey, and to which I have added my name. He has raised a very important point in relation to how the discount is applied and we are all very grateful to him. He has made a compelling case, and I should like to make a couple of comments in this context.
Since the financial crisis, $321 billion has been paid out globally in fines, compensation and legal costs, and the UK has contributed some $60 billion of that. KPMG reported in 2015 that, between 2011 and 2015, 60% of bank profits had been paid in fines, compensation and legal costs. Since the financial crisis in general, payouts in legal fees, fines, compensation and bonuses are basically equivalent to the entire profits generated, with all the consequences for shareholders, corporate governance, the reputation of the financial sector and losses to the taxpayer. At its very core, the attempt to deal with culture, conduct and, in some cases, apparent contempt for customers has lacked one key element: accountability. Using the discount to emphasise this element of accountability is one of the compelling parts of this proposal.
We on this side do not agree with the argument that the FCA is not up to the job; nor do I believe that it has not used its powers or that its procedures are flawed. The noble Lord, Lord Sharkey, has found a very important gap, which needs to be plugged: there is an incentive that does not work because there has been no downside. Even the FCA has moved towards the senior management regime to support the noble Lord’s central argument.
I, too, am grateful to the Minister for her openness and engagement and for the provision of officials—a quite copious amount of officials—to try to help address these sorts of matters. We have enjoyed those discussions and are looking forward to them continuing. Further openness on the cases where the discount has been applied would be extremely beneficial. As the FCA moves towards pursuing less significant fines, and has limited resources to both police and investigate, the approach of the noble Lord, Lord Sharkey, is helpful in ensuring compliance, and places a sensible responsibility on the financial sector. It can mean that we can feel confident—and I hope that I am not tempting fate—that when the most egregious fines and compensation sums are probably now behind us, the lower aggregate level of cost does not allow us to believe that the industry is properly policed. Only the accountability and responsibility in this amendment will do so.
Baroness Williams of Trafford
My Lords, I start by thanking the noble Lords, Lord Mendelsohn and Lord Sharkey, for the time that they have taken in entering into discussions with me and officials and representatives of the FCA, both today and yesterday. The discussions were very helpful but, as the noble Lord said, we have more to go.
Amendment 13 basically requires the FCA, as the noble Lord has said, to withhold a proportion of the discount to a penalty applied to a financial firm until that firm has completed any internal disciplinary actions agreed in the settlement. I really welcome the noble Lord’s objective of improving compliance and the culture across the financial services sector. The Government share this objective and we have made significant progress in the area in recent years. We have, for example, introduced the senior managers and certification regime, to which the noble referred. This will, where appropriate, ensure that the FCA can take action against individuals where they are at fault. I know that the culture at firms is also a priority for the FCA, which has observed that it is both a key driver and a potential way of mitigating risk, and therefore plays a role in the achievement of its statutory objectives. The senior managers and certification regime is a key workstream in the FCA’s work programme on culture, as is the FCA’s focus on those aspects of remuneration policy that drive individual behaviour and culture.
Noble Lords spoke about disciplinary action to be taken against individuals working for firms. At the outset, I want to emphasise that if the FCA thinks that a disciplinary action should be taken against individuals, it can and does take action itself, as opposed to leaving it to the companies to do so. The FCA and other enforcement agencies have powers to fine individuals, or to take other action such as prohibiting them from continuing to operate in the financial services industry. This approach can be seen in a number of high-profile cases, including those involving LIBOR manipulation. The FCA settled eight cases with firms totalling £758 million. It is also conducting a number of separate enforcement actions against individuals. There have been seven completed actions against individuals in cases that involved settlements with firms in relation to LIBOR or Euribor, but others are still ongoing. More generally, the FCA issued fines against 64 individuals between 1 April 2013 and 24 March 2017 totalling £15.5 million. They might be the cases that the noble Lord was referring to. Many of these were connected to previously settled cases against firms, although I am afraid that I am unable to provide noble Lords with an exact number.
That said, the FCA also expects firms to consider what action they themselves should take. If a firm has not taken appropriate action by the time the FCA imposes a penalty on it, the FCA can increase the penalty as a result. We went through a lot of that today. I am saying that not for the benefit of the noble Lord, but mainly for the benefit of the House, because we have been through this. Of course, in appropriate circumstances, the FCA can impose a requirement that a firm consider further whether it needs to take any additional action to remedy the breaches identified.
The noble Lord asked me today whether it would be a better arrangement to have an automatic system of withholding a proportion of the discount, so as to make it directly in the interests of the firms to take the action that they are supposed to take, rather than the FCA having to make an assessment later of whether it ought to impose an additional penalty. I commend him on his ingenuity, but having consulted with operational partners and Treasury officials, the Government’s view is that the existing regime gives the FCA the flexibility to apply penalties and impose requirements on a case-by-case basis. It allows it to leverage those requirements wherever needed in order to ensure that the firm acts appropriately. While there might be options to enhance this approach and better achieve the outcomes that we all seek, we should be clear about the potential benefits before pursuing any such options. That is kind of where we left it today.
I trust that noble Lords will agree that we should not seek to reform or amend without exploring the implications, both the advantages and any unintended or undesirable consequences. For instance, we are concerned that this amendment would weaken the incentives for firms to settle early with the FCA, given that the settlement would not be final, subject to the full discount being granted. As a result, they might instead choose to engage the FCA in costly and protracted action rather than all being involved in focusing on remedying the underlying issues.
Moreover, further detailed consideration would need to be given as to how this amendment would interact with established principles of employment law. In particular, when a firm disciplines an individual, it needs to follow due process rather than agreeing in advance a predetermined course of action. For the amendment to work effectively, consideration would need to be given as to whether the FCA would need to be given a power to require firms to take such action against their employees; otherwise the amendment would put the FCA at risk of liability when undertaking the duty the amendment creates. Moreover, appropriate amendments would also need to be made to the Employment Rights Act 1996 to ensure that such action does not give rise to unfair dismissal claims by relevant employees against their firms. It is also not clear whether the proposed approach would be the best way of achieving the aim of improving the culture of firms.
In summary, we can all agree that this an extremely complex issue, which seemed to be made even more complex as discussions went on today. We share the same objectives of improving compliance and the culture in the banking sector. Ultimately, the FCA already has significant powers to address the issues underlying the noble Lords’ amendment, not least the power to sanction relevant employees in appropriate circumstances. I trust that the House will see that it is far from clear that the amendment would deliver the positive outcomes that have been described. That being said, I found the discussions today to be very interesting, as did the relevant officials, and hope this has been an equally insightful discussion to the two noble Lords. There might be ways of enhancing the existing regulatory system; the FCA is, in fact, conducting a review of its penalties policy at present, and I know that it would welcome the opportunity to continue this discussion with both noble Lords.
I can confirm that, subject to the outcome of the election, I expect that the Government will consider how best to facilitate further discussions on this issue, and, as I outlined to the noble Lord, Lord Sharkey, this would be my intention. I am very grateful to the noble Lords for their amendment. However, I ask them to withdraw it so that action not be taken in haste. I hope they feel comfortable to do so following some of the undertakings I have given.
“( ) After section 245 insert—“245ZA Notice to local authority: Scotland(1) This section applies if, in proceedings under this Chapter for a recovery order, the enforcement authority applies under section 266(8ZA) for decree of removing and warrant for ejection in relation to heritable property which consists of or includes a dwellinghouse.(2) The enforcement authority must give notice of the application to the local authority in whose area the dwellinghouse is situated.(3) Notice under subsection (2) must be given in the form and manner prescribed under section 11(3) of the Homelessness etc.(Scotland) Act 2003.(4) In this section—“dwellinghouse” has the meaning given by section 11(8) of the Homelessness etc.(Scotland) Act 2003;“local authority” means a council constituted under section 2 of the Local Government etc.(Scotland) Act 1994; and “area”, in relation to a local authority, means the local government area for which the authority is constituted.””
“(f) it is the forfeitable property in relation to an order under paragraph 10I(1) of that Schedule.””
Baroness Williams of Trafford
My Lords, I congratulate my noble friend Lord Hodgson of Astley Abbotts on neatly batting off the question asked by the noble and learned Baroness, Lady Butler-Sloss—I could not resist; we have all made cricket jokes. I thank noble Lords for their interest in the outcomes of the Government’s recent review of the anti-money laundering supervisory regime. As a result of this review, the FCA has agreed to create a new team—the office for professional body anti-money laundering supervision, otherwise known as OPBAS—to strengthen the regime and help to ensure that professional body AML supervisors, such as the Law Society and the Institute for Chartered Accountants in England and Wales, comply with their obligations in the money laundering regulations. It is important to note that OPBAS will be a new team hosted in the FCA and is not in itself a new regulatory body.
Amendment 22 would require that the FCA would have powers to directly monitor and advise all practitioners subject to criminal finances legislation. This would be a significant extension of the FCA’s responsibilities. Rather, our intention is that the FCA’s new objective will be carefully targeted to address weaknesses identified through last year’s call for information, while preserving the existing strengths of the regime by focusing on helping to ensure that professional body AML supervisors comply with their obligations in the money laundering regulations. The noble Lords’ proposals would duplicate the role that existing AML supervisors play in safeguarding the UK’s financial system and would increase unnecessary burdens on businesses.
Amendment 21 would also require the FCA to have regard to regulatory best practice principles in delivering its new objective. However, I assure the House that the FCA will comply with its existing governance and safeguards as it goes about delivering its objective. As such, this amendment would be redundant and duplicate existing requirements on the FCA.
Lastly, Amendment 20 would require the powers the Government will pass to the FCA to fulfil this objective to be subject to an affirmative statutory instrument. It is our intention that this will instead be achieved in line with existing precedent; previous regulations to grant similar powers to the FCA have been subject to the negative procedure. I hope colleagues agree that we should follow that precedent on this occasion. Subject to the outcome of the general election, the Government intend to publish draft regulations for consultation over the summer before laying the relevant secondary legislation to underpin OPBAS later in the year.
To pick up on some specific points noble Lords have raised, my noble friend Lord Hodgson talked about de-risking being excessive and impacting disproportionately on normal people, as he has previously. He gave some compelling examples. The Government encourage the financial sector to take a proportionate approach based on the risks faced. Guidance for the financial sector, which is written by industry, is being updated for the latest money laundering regulations and is open for consultation until the end of this week. It is of course open to my noble friend to make his views known through this process.
The noble Lord, Lord Rosser, asked why the Government are not splitting the supervisory and advocacy functions of professional body supervisors. I can advise him that the 2017 money laundering regulations, which transpose the fourth money laundering directive, will require all professional body anti-money laundering supervisors to ensure that their supervisory functions are exercised independently of the advocacy functions, including, for example, the Law Society and the Solicitors Regulation Authority.
The noble Lord also made the point that the Government are subverting scrutiny by using the negative procedure. As I have mentioned, providing the FCA with new powers via the negative procedure is not new. It is in line with the wider transposition of the fourth anti-money laundering directive. There are a number of other powers that have been conferred to the FCA by the negative procedure. For example, the Money Laundering Regulations 2007 and the Money Laundering (Amendment) Regulations 2012 provide the FCA with powers to oversee financial institutions’ compliance with the money laundering regulations. The current set of MLRs provide the FCA with supervisory powers to oversee financial institutions’ compliance with the money laundering regulations. These include enforcement powers and supervision powers.
I am very grateful to the noble Lords for allowing me to address their points, which I hope I have. I hope, on that note, they will feel happy not to press their amendments.
Lord Hodgson of Astley Abbotts
My Lords, I thank the noble and learned Baroness, Lady Butler-Sloss, for her helpful intervention and my noble friend for her very full response. There is a really serious issue here that needs to be tackled. It is not just about bureaucracy and cost, but about unnecessary interference with people’s lives. Increasingly, it is also about damage to this country’s reputation as a place where you can get clarity. The question will be whether the new body can bring focus. The proof of that pudding will be in the eating. We shall have to wait to see whether it happens. My noble friend encouraged me to make my views known to the review. She need not worry; I have not missed that opportunity. I have written a letter already, so it has my views. We will have to see how it develops, but it will require vigilance, focus and care by the FCA to improve the regime, which is currently not working as well as it should. With that, to continue the cricket analogy, I will return to the pavilion and withdraw the amendment.
Lord Rosser
I support what the noble Baroness, Lady Kramer, has said in setting out the case for her amendment. She has already made reference to recent further examples of serious concern over the approach to whistleblowing and whistleblowers—she referred specifically to the situation at Barclays Bank in the light of apparent actions by its chief executive in seeking to unmask a whistleblower. There are meant to be strict regulations in the financial services industry for encouraging and protecting whistleblowers, but it does not look as though they are very effective.
It is difficult to believe that the apparent attitude at the top of Barclays Bank is an exceptional one-off, as opposed to being indicative of a rather more widespread culture, to which the noble Baroness referred, in the financial services sector. The reality is that whistleblowers will not come forward if they think that the reaction of the people at the top will be to try to find out who they are rather than investigate the issue to which they have drawn attention. Neither will people come forward if they think that being identified as a whistleblower will jeopardise their future employment prospects in the financial services sector, which is alleged to be the reality in that sector in particular. I hope that the Government in response will be able to offer something more than claims that existing arrangements and procedures address the concerns raised by this amendment, when it is clear that it is not the case.
Baroness Williams of Trafford
My Lords, I thank the noble Baroness for bringing forward this amendment, which would introduce new regulations so that the FCA could undertake the administration of arrangements to facilitate whistleblowing in the financial sector.
The FCA is already a prescribed person in relation to the financial sector. It actively promotes the whistleblowing framework to employees and employers in the sector so that prospective whistleblowers know where to turn and firms have appropriate internal whistleblowing policies in place. Other prescribed persons related to financial services include the Bank of England, the Serious Fraud Office, the Financial Reporting Council and the Prudential Regulation Authority. To each of them, whistleblowers will be one of several sources of information and intelligence about potential malpractice in support of their regulatory activities.
The Government believe that the right body to investigate the concerns of a whistleblower is the body that regulates the issue about which concerns are raised—I know I have said that before. That body is in the best position to see the disclosure in context; for example, to judge the seriousness of the allegations, to make connections with any related investigations under way and to consider whether some regulatory action is appropriate to prevent occurrence.
The amendment that the noble Baroness proposes would introduce a power to award compensation to any worker voluntarily providing information on wrongdoing to organisations in the financial sector. As I set out in Committee, we do not think that money is the main motivator for genuine whistleblowers. I do not think the noble Baroness thinks so either, but she expressed views on how a financial incentive system to encourage whistleblowing works well in the US. I can advise noble Lords that the FCA and Prudential Regulation Authority whistleblowing management teams visited the US in late 2013. At the time, there was limited empirical evidence of incentives leading to an increase in the number or quality of disclosures received by regulators. Introducing incentives would require a complex and costly governance structure.
Incentives could also undermine effective internal whistleblowing mechanisms, a requirement the FCA introduced in September 2016 for banks, insurers and deposit takers. If the FCA were to incentivise whistleblowers to report to the regulator, it could discourage them from reporting internally within their firms. It would risk delivering mixed messages by encouraging firms to set up costly systems which it then undermines by incentivising whistleblowers to disclose directly to the FCA. However, the FCA is considering reviewing the case for incentivisation again in financial year 2017-18. I would be happy to provide an update following that review.
The amendment also contains a provision with regard to retaliatory action against whistleblowers. I reiterate and reassure noble Lords that such a provision is unnecessary. Workers who have evidence that their employer has provided a negative reference, have been unfairly dismissed or have otherwise suffered detriment for making a public interest disclosure already have a route to seek compensation against their employer through an employment tribunal.
Some concerns were raised that we have seen a decline in the number of whistleblowing cases for the second year in a row, from 1,340 in 2014-15, to 1,014 in 2015-16 and 900 in 2016-17. The FCA does not have a target for the numbers of whistleblowing reports. Its aim is simply to ensure that those who prefer to report to an independent body know about its role and that, if they need to take the often difficult step of reporting on an employer, they and their information will be treated sensitively and professionally. New rules came into force in September 2016 that require banks, building societies and insurers to have internal whistleblowing arrangements in place and to appoint an internal champion. We understand many firms began to implement these measures earlier than the commencement date, so we believe that this has affected the numbers going directly to the FCA. This is a positive message as many complaints are resolved earlier and without regulatory intervention, or lead to self-reports by firms themselves.
I want to address one point made by the noble Baroness: how we became aware of the issue regarding the investigation of the whistleblower’s identity by the CEO of Barclays and what action the FCA is taking. I recognise the concern that the noble Baroness raised about the Barclays example and I agree that behaviour of the kind she described does not serve the reputation of the industry nor the interests of the country. We must do all we can to prevent this type of behaviour. As the noble Baroness said, I realise that time is short but this issue is not going away. I ask whether she would be amenable to withdrawing her amendment, fully aware that I will hear more about the subject after the general election, should the outcome return a Conservative Government.
“( ) section (Sharing of beneficial ownership information);”
Lord Rosser
I am not sure whether I should come in now but I just take this opportunity to thank the Minister and her ministerial colleagues in the Bill team for their willingness to meet and engage in what have been constructive and helpful discussions on not only provisions that are in the Bill but also provisions that are not, since it is with the latter that most differences of view or approach have centred. I also thank my Front-Bench colleagues for their hard work, not least—although he is not in his place—my noble friend Lord Kennedy of Southwark, who has not been exactly short of commitments in respect of other Bills as well. Finally, I thank the staff in our own office, not least Grace Wright, for their help and advice in navigating our way through this Bill.
Baroness Hamwee
My Lords, I echo those thanks to the Minister and the Bill team. As several people have said—most frequently the noble Lord, Lord Rosser —it is what is not in the Bill that has exercised us most. I can see an enormous amount of material for Private Members’ Bill in the next Session if we do not have government Bills that we can tack our—“demands” would be the wrong word—concerns on to. But the Minister has done an absolutely sterling job and I hope she gets five minutes to have a bit of a rest before she sets out campaigning. We have the luxury of knowing that we will be back to pursue these interests.
Baroness Williams of Trafford
As always with Bills such as this, it is what is not in the Bill. Also, sometimes we should have gone further. But we have had a challenge in this Bill and in the main the challenge has been lack of time, not of consensus. I place on record my thanks to the Front Benches—the noble Lords, Lord Rosser and Lord Kennedy, and the noble Baronesses, Lady Kramer and Lady Hamwee—and my noble friends behind me, who have kept me on my toes. I thank noble Lords for being so accommodating about having so little time to get through the business of the past 24 hours.
Immigration Act 2016 (Consequential Amendments) (Biometrics and Legal Aid) Regulations 2017
Baroness Williams of Trafford Excerpts(7 years ago)
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Baroness Williams of Trafford
That the draft Regulations laid before the House on 13 March be approved.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the statutory instrument before the House makes consequential amendments to two pieces of primary legislation. The first is the Legal Aid, Sentencing and Punishment of Offenders Act 2012, also known as LASPO. The second is the Immigration and Asylum Act 1999. These amendments are necessary for the commencement of the new immigration bail powers under Schedule 10 to the Immigration Act 2016.
LASPO is being amended in respect of access to legal aid for individuals liable to detention. The Immigration and Asylum Act is being amended in respect of the collection of fingerprints from some individuals in connection with the conditions of their immigration bail. The intention behind the amendments is to maintain the status quo for when legal aid may be accessed and when fingerprints may be taken. This statutory instrument is before your Lordships in the context of the commencement of Schedule 10 to the Immigration Act 2016. When commenced, Schedule 10 will create a new status of immigration bail to replace the complex legal framework under the Immigration Act 1971 in respect of individuals liable to immigration detention.
There are currently a total of six legal statuses relating to bail or release for individuals liable to immigration detention under the 1971 Act. It may be useful to noble Lords if I were to list these. They are: temporary admission or release, under paragraph 21 of Schedule 2; bail, under paragraph 22 of Schedule 2; bail, pending appeal, under paragraph 29 of Schedule 2; bail, pending removal, under paragraph 34 of Schedule 2; bail, pending deportation, under paragraph 3 of Schedule 3; and release on restrictions, under paragraphs 2(5) or 4 of Schedule 3.
Under Schedule 10, these six statuses will be simplified to one single status of immigration bail. This statutory instrument makes the necessary amendments to harmonise the legal framework surrounding release from detention, such that it complements the new system that will be introduced upon commencement of Schedule 10. It follows that the reason for this statutory instrument being before the House today is so that commencement of Schedule 10 can progress smoothly. These changes to primary legislation are necessary to enable the new bail regime to function.
The LASPO amendments are being made to ensure that access to legal aid for immigration bail is neither narrowed nor widened following the commencement of Schedule 10. Indeed, when Schedule 10 is commenced, the provisions to which LASPO refers will be repealed. As I have already made clear, this means that changes to LASPO are required. The changes I refer to are in relation to paragraphs 26 and 27 of Schedule 1 and I will provide some further detail in this respect. Paragraph 26 provides for a person who is temporarily admitted to the UK to be eligible for legal aid. Paragraph 27 provides for a person who has been released on restrictions to be eligible for legal aid. This statutory instrument amends both those paragraphs to reflect the new legal framework under Schedule 10. We are also inserting a new paragraph 27A into the relevant part of LASPO. This does not represent a change of substance, but is a necessary change in order to ensure that those who are currently eligible for legal aid remain so. I ask noble Lords to note that paragraph 25 of Schedule 1 to LASPO does not need to be changed since it relates to people who are being detained. Those in detention are already eligible for legal aid in respect of bail; the move to immigration bail under Schedule 10 does not change this.
This statutory instrument also makes minor changes to the Immigration and Asylum Act 1999 and I will give some context. Schedule 10 will change the reporting conditions that can be attached to what will become immigration bail. Section 141 of the Act provides a power for an authorised person to take fingerprints from an individual in given circumstances. One such circumstance concerns individuals who have been refused leave to enter but who, under current provisions, are temporarily admitted. The power is exercised if an immigration officer reasonably suspects that the individual might break the conditions of temporary admission relating to residence or reporting and must therefore have their fingerprints taken. Section 141 of the Immigration and Asylum Act currently refers only to a condition for reporting to the police or to an immigration officer. However, the new powers under Schedule 10 mean that immigration bail can instead be imposed, subject to a condition requiring a person to report to the Secretary of State or any other such person as may be specified. This statutory instrument makes the necessary amendment to reflect the new provisions.
In conclusion, the consequential amendments made by this statutory instrument are intrinsic to the smooth and orderly commencement of Schedule 10 to the Immigration Act 2016. The amendments ensure that the new power of immigration bail will not adversely impact on anybody. The amendments to LASPO mean that an individual who is subject to the new encompassing status of immigration bail under Schedule 10 will be treated no differently from the way in which they would have been treated had they fallen under one of the six discrete statuses under the Immigration Act 1971. At the same time, this statutory instrument ensures that biometrics will be taken from only the same cohort of individuals as before, in circumstances as outlined in the legislation. I commend this statutory instrument to the House.
Lord Kennedy of Southwark (Lab)
My Lords, the regulations before us are not in themselves controversial. As the Minister outlined, they make relatively minor changes in respect of provisions contained in the Immigration Act 2016, the Immigration and Asylum Act 1999 and LASPO. I have read the regulations and the Explanatory Notes and am content that the Government have the required powers. As I said, these are relatively minor changes. No concerns have been raised by the Joint Committee on Statutory Instruments. My noble friend Lord Campbell-Savours raised an interesting point. I look forward to the Minister responding to it. Paragraph 7 in the Explanatory Notes is particularly helpful as it sets out the policy background and why these regulations are needed. Therefore, I will detain the House no longer. I am content with the regulations.
Baroness Williams of Trafford
I thank the two noble Lords who have spoken. I say to the noble Lord, Lord Campbell-Savours, that these statutory instruments make consequential amendments to legislation. Legislation is constantly kept under review. As regards widening the scope of the measure, I cannot predict the decisions of a future Government, who may, of course, not be a Conservative Government. However, I am sure that a future Government will consider that measure when keeping legislation under review. At the moment, we have no plans to extend the current practice. Section 141 does not limit the number of digits from which fingerprints may be taken. However, officials who decide to take fingerprints must ensure that their actions are proportionate to the reasons why they are taking them.
Misuse of Drugs Act 1971 (Amendment) Order 2017
Baroness Williams of Trafford Excerpts(7 years ago)
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Baroness Williams of Trafford
That the draft Order laid before the House on 14 March be approved.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the Misuse of Drugs Act 1971 (Amendment) Order 2017 was laid in Parliament on 20 April. I am very grateful to the Advisory Council on the Misuse of Drugs for its very valuable advice. The council’s recommendations have prompted the order before you today.
This order relates to three groups of substances. The first is the synthetic opiate known as U-47700; the second consists of 12 methylphenidate-related new psychoactive substances; and the third is etizolam and 15 additional designer benzodiazepines. The effect of this order is to insert these 29 drugs into Schedule 2 to the 1971 Act. This will make it an offence to possess, produce, import, export, supply, or offer to supply these drugs without a Home Office licence.
U-47700 is a synthetic opiate which was originally developed as a research chemical but has found no legitimate use. It is reportedly 7.5 times more potent than morphine. The order will insert U-47700 into Part 1 of Schedule 2 to the Act as a class A drug, due to its high addiction potential.
On methylphenidate-related new psychoactive substances, the injecting of ethylphenidate, an amphetamine-type stimulant, was considered a public health issue in Edinburgh in 2015. Following ACMD advice, ethylphenidate and six similar substances were placed under a temporary class drug order. This temporary class drug order was relaid in 2016 for a further year, and the ACMD has now advised that these substances, plus an additional five related substances, be controlled under the Act. The order will insert these methylphenidate-related NPS into Part 2 of Schedule 2 to the Act as class B substances.
On etizolam and designer benzodiazepines—saying these things correctly is always a test for a Minister at the Dispatch Box—the abuse of benzodiazepines has been well known, and as such, many of these are controlled under the Act. The ACMD had become aware of increasing reports of the harms caused by designer benzodiazepines—those which are not licensed medicines in the UK but imported specifically for their psychoactive effects. Of particular concern was etizolam, which is related to a number of deaths in Scotland. The order will insert etizolam and the further 15 designer benzodiazepines into Part 3 of Schedule 2 to the Act as class C substances.
Etizolam has been identified by some countries, including Italy, as having some therapeutic benefits, so the Government have asked the ACMD to keep its scheduling under the Misuse of Drugs Regulations 2001 under close review. There are no legitimate or recognised uses of any of the other substances before your Lordships today beyond potential research. For these reasons, my honourable friend the Minister for Vulnerability, Safeguarding and Countering Extremism accepted the advisory council’s advice that these substances should be subject to the order before you today. It is intended that two further related statutory instruments will be made to come into force at the same time as the order to add these substances to the appropriate schedule to the Misuse of Drugs Regulations 2001 and to the Misuse of Drugs (Designation) Order 2001.
This order, if made, will provide enforcement agencies with the requisite powers to restrict the supply and use of these harmful substances in this country. It will also provide a clear message to the public that the Government consider these substances to be a danger to society. I beg to move.
Lord Kennedy of Southwark (Lab)
My Lords, I am supportive of the order before us this afternoon. I will not be attempting to pronounce any of the names in it. I have carefully read the order and the Explanatory Memorandum and am content to agree it. The Explanatory Memorandum is very helpful, particularly section 7, which sets out the policy background.
It is worth noting that the drugs are being permanently listed as controlled substances in each of the classifications today—namely, class A, class B and class C—on the advice of the independent experts who make up the Advisory Council on the Misuse of Drugs. This is being done following a review they carried out, and they are the experts in these matters. It is also worth noting—again, this is in section 7—that in each of these classifications these drugs have led to the loss of life. I suspect that those affected are more likely to be younger people, and of course that is devastating for their families. Losing anyone at any age is terrible, but in circumstances where that could have been avoided it is all the more heartbreaking.
In conclusion, I am content to approve the order and, with the other measures that are in force with the police, the NHS and the community drug projects, I hope that it will go some way towards ensuring that the people responsible for bringing these substances on to the street are caught and punished, and that their operations are shut down. Then the people taking these substances can get the help they need to get off them and deal with the problems they have in their lives. I am very happy to support the order.
The Earl of Sandwich (CB)
My Lords, I have to declare an interest in that my son suffered from benzodiazepines for several years and has only recently, mercifully, recovered from them. Therefore, I have been very well aware of this word.
I am delighted to hear the Minister say that the department is much more aware of the harmful effects of these legally prescribed drugs. However, is she also aware that a proposal has been put forward to the department on providing the minimum help of a helpline for people who are afflicted? This has been put on the table and, if she is not aware of it, she might be able to write to me about it.
Baroness Williams of Trafford
I am most grateful to the noble Earl and the noble Lord for their very constructive comments, and I am very glad to hear that the noble Earl’s son is now in recovery. On his point about a helpline, a number of tools are certainly available to people through websites. I am trying to think of the name of the website—
Baroness Williams of Trafford
That is it. FRANK is an aid to guide people—particularly young people—away from drugs and the consequences of their use. Helplines are available. I do not know the answer regarding the one to which the noble Earl referred but I can get him some information.
On that note, I thank noble Lords for their comments.
Criminal Finances Bill
Baroness Williams of Trafford ExcerptsMonday 3rd April 2017
(7 years ago)
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Lord Judge (CB)
My Lords, I had intended to speak at a little length but the noble Lord, Lord Beith, has said everything that I wished to say about the dangers of creating criminal offences by secondary legislation.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, I am very pleased to be able to return today to our debate in Committee, beginning with the very important issue of corporate criminal liability. Through this Bill the Government are building on the efforts of the last Labour Government, when they created the Bribery Act, by creating new corporate offences of failure to prevent the facilitation of tax evasion. These are significant proposals and I look forward to debating them further shortly. The amendments in this group relate to corporate criminal liability for other types of economic crime—that is, other than bribery and the facilitation of tax evasion. This issue has, of course, arisen a number of times in both Houses during the passage of the Bill, and these amendments have allowed us to have an insightful and constructive debate.
As noble Lords have said, the damage caused by economic crime perpetrated on behalf of or in the name of companies—to individuals, businesses, the wider economy and the reputation of the United Kingdom as a place to do business—is a very serious matter. As this House will be aware, the Bribery Act is widely respected as both a sound enforcement tool and a measure that incentivises bribery prevention as part of good corporate governance. As I have said, this Bill makes similar provision in regard to the facilitation of tax evasion. That provision has followed a process of full and lengthy public consultation, as did the implementation of the Bribery Act. As my noble friend Lord Leigh alluded to, these are very complex legal and policy issues with the potential for significant impact on companies operating in the UK.
I hope noble Lords will agree that this level of detailed consideration of both the existing legal framework and any proposals to extend it was crucial. That is why the Government announced, at the time of last year’s London Anti-Corruption Summit, that we would consult on the creation of new forms of criminal liability. The Government’s public call for evidence on corporate criminal liability for economic crime was published on 13 January. It openly requested evidence for and against the case for reform, and sought views on a number of possible options, such as the Bribery Act’s “failure to prevent” model, as an alternative to the current common law rules. The consultation closed only last week, on Friday 31 March. The Ministry of Justice is now assessing the responses received, but, as noble Lords will appreciate, it is too early to confirm the outcome. Should the responses received justify changes to the law, the Government would then consult on a firm proposal, as the noble Lord, Lord Rosser, articulated. I hope that reassures him that we are continuing to explore this issue as his amendment proposes. I trust noble Lords will agree that it would be wrong to rush into legislation, or to commit to doing so in the future, prior to giving the matter the appropriate consideration, as my noble friend Lord Hodgson said.
Amendment 161 provides for the novel approach that we could add additional offences to the legislation by regulations. I commend the noble Baroness on her ingenuity—I was promised she would show it—but, as I have said, these are complex issues with potentially significant implications for companies across the country. The Government do not, therefore, believe that it would be appropriate to extend the failure to prevent offences via secondary legislation, which would not allow for the appropriate level of parliamentary scrutiny of proposals such as this.
The noble Baroness, Lady Kramer, asked about the timing of the failure to prevent measures and why the Government do not act now. She said we cannot afford to delay and made a point about the upcoming Brexit legislation. I remind noble Lords that the Bribery Act offence has been on the statute book for a number of years, allowing us to assess its effectiveness. We are now legislating on tax evasion and already looking closely and openly at the question of extending it to wider economic crimes. The Government are not delaying, we are acting—and we are doing so in a sensible and considered way.
The noble Baroness, Lady Bowles of Berkhamsted, asked about the standard of proof for the failure to prevent economic crime. Her Amendment 163 allows for the defence of reasonable procedures to be satisfied by the civil standard—that is, the balance of probabilities. I can confirm, as she wanted, that it mirrors the approach in the Government’s proposed offence of corporate failure to prevent the facilitation of tax evasion.
The noble Lord, Lord Rosser, asked whether HMG will legislate to create corporate liability for failure to prevent serious harm or human rights abuse. I wrote to the noble Lord about this—it is obviously seared in his brain or, probably, was passed straight to his outbox. All businesses are expected to comply with the legislation that comes under the jurisdiction of the UK, including that which relates to human rights. While the Government have no ability to regulate UK businesses operating in overseas jurisdictions, we encourage them to honour the principles of internationally recognised human rights wherever they operate. More broadly, in 2013, we were the first country in the world to produce a national action plan in response to the United Nations guiding principles on business and human rights.
Large UK-domiciled businesses must also comply with laws that require them to report certain human rights issues, including the Companies Act and our world-leading Modern Slavery Act, which requires them to produce annual statements on what they have done to ensure that such issues do not occur in their business and supply chains.
I hope I have fully answered noble Lords’ questions and that the noble Baroness, Lady Bowles, will feel free to withdraw the amendment.
Lord Rosser
My Lords, I suspect I am on a mission that is not going to succeed, but it is unfortunate that a number of key decisions are likely not to be taken by the Government until this Bill becomes an Act. The Minister said that the closing date of the public call for evidence in relation to corporate criminal liability has just gone, but do the Government expect to give any indication before Report as to whether or not they will be moving to consultation on a firm proposal or, alternatively, are they likely to indicate before Third Reading whether they will be moving to consultation on a further proposal?
Baroness Williams of Trafford
Perhaps I may look into that and let the noble Lord know because I am reluctant to make sweeping promises at the Dispatch Box without knowing exactly what the timescales will be. I will let him know, certainly before Report, what the expected timescales are.
Baroness Hamwee (LD)
Before my noble friend responds, the Minister referred to the Modern Slavery Act. I do not want to be overly pedantic but I do want to be a bit pedantic because this is an important point. She mentioned the requirement on certain companies to report on the steps that they are taking under Section 54 with regard to their supply chains. I think that she will agree that their statement as regards the steps they are taking can be a statement,
“that the organisation has taken no such steps”.
That would be regrettable. However, there seems to be a feeling that every organisation has got to report the detail of the steps when that is not quite the case.
Baroness Williams of Trafford
My Lords, I would say that the statement a company makes reflects the company, and if a statement of no effort is made, it will be for others to judge the efficacy of that company.
Baroness Bowles of Berkhamsted
My Lords, I thank the Minister and other noble Lords for this debate and of course I appreciate that it is a little awkward that the call for evidence and consultation process are lagging behind the progress of the Bill. That is why I had my novel idea that we could put in place a framework here which is only an option. The circumstances are such that it would not be an outcry if the decision was that you had to do it in a different way, so as in my Amendment 163, the provision would just fall away. Of course, that provision would not be introduced by statutory instrument, it is just a delayed commencement. I still feel that there is some mileage in taking a further look at this kind of provision.
As a result of this debate, I think we have the answer to one of the questions in the call for evidence because of what the Government have said that they are thinking of introducing for the four criminal offences I have picked up on and that it may be by statutory instrument for the others. We have heard some good reasons as to why statutory instruments are not such a good idea, and indeed I think the Minister has conceded that. That may be the outcome of the ticks in the call for evidence. I would like to know how many ticks were made in that box; perhaps she could count them and let me know.
I reserve the right to have another go along the lines of Amendment 163, but at this stage I beg leave to withdraw the amendment.
Baroness Kramer
My Lords, perhaps I may add one phrase only to this debate. I want to speak to Amendment 170 and suggest to the Government that this is frankly a no-brainer. We cannot afford to have inappropriate directors continuing to run companies, particularly when their inappropriate or inadequate behaviour has been exposed in the kind of circumstances discussed under Amendment 170. It is really important that the courts have a full range of tools. We no longer live in a world where the old-school tie and friendships determine who the appropriate directors of companies are. They have to be held to professional and appropriate standards. This proposed new clause would enable that to happen and I frankly cannot see why it should present any difficulties to the Government.
Baroness Williams of Trafford
My Lords, I am pleased that the amendments in this group have allowed us to have an extended debate on the tax evasion offences in Part 3 of the Bill. I am pleased to say that the Government are supportive of the intentions of these amendments, although that is not to say that further legislation is necessarily required.
Amendment 164 seeks to require the Secretary of State to publish an annual report on the number of companies that have, under the Public Contracts Regulations 2015, been excluded from tendering for public contracts, or had existing contracts terminated after being charged under the new offences. I fully agree that contracting authorities should be able to exclude bidders that have been convicted under the new offence. The Public Contracts Regulations allow for this in appropriate cases. They grant contracting authorities discretion to refuse to award a public contract to an entity that has been involved in grave professional misconduct. Such misconduct may include committing the new offences of corporate failure to prevent the criminal facilitation of tax evasion. However, government does not collect information centrally on the number of organisations that have been excluded from public contracts under the 2015 regulations. This is because these decisions to exclude are taken by individual contracting authorities on a case-by-case basis, and this may include the new corporate offences.
Introducing a reporting requirement would create a burden on contracting authorities. Each contracting authority would have to make a return to central government, detailing the occasions that exclusion from a bidding process has occurred, and central government would then have to collate all these reports in order to compile national statistics to be published in the report. Such a reporting requirement would go against the Government’s drive to simplify the public procurement process and to cut red tape.
Current efforts are focused on ensuring that contracting authorities have the necessary information to know whether those bidding for contracts have relevant convictions so that contracting authorities can make more informed decisions on whether to exclude them. This includes the introduction of a robust conviction-checking process to prevent bidders with convictions for relevant offences—including the new offences—winning public contracts. This was announced at last year’s anti-corruption summit and is about to be piloted by the Crown Commercial Service.
Amendment 165 seeks to introduce a system of corporate probation orders. This would allow a court to require relevant bodies found guilty of the new corporate offences to amend their prevention procedures. I welcome the noble Lords’ amendment. It is absolutely right that relevant bodies convicted of the new offences, and thus found to have inadequate prevention procedures, should be required to implement changes to those procedures. In response, I draw noble Lords’ attention to Clause 48(2) of the Bill, which adds the corporate offences to the list of offences for which a serious crime prevention order can be imposed under the Serious Crime Act 2007. This enables a court passing sentence on a person, including a legal person such as a corporate body, to impose a serious crime prevention order to prevent, restrict or disrupt their involvement in serious crime by imposing prohibitions, restrictions or requirements on them. The terms of these orders may require the relevant body to allow a law enforcement agency to monitor how it provides services in the future.
Relevant bodies convicted of the new offences are criminals. They do not require special or different sentencing powers. They can be adequately sentenced under the existing criminal law, using a serious crime prevention order to enforce change to prevention procedures. Such an order can do anything that a corporate probation order would. Alternatively, similar provision can be included within the terms of a deferred prosecution agreement. I trust therefore that noble Lords will see that their commendable objective can already be achieved within existing law.
I thank the noble Baroness, Lady Bowles, for Amendment 170. I share concerns about ensuring that those who are unfit to be directors are identified and disqualified from holding such posts. The amendment seeks to amend the Company Directors Disqualification Act 1986 in order to allow a company director to be disqualified by the court when a relevant body is found to have committed one of the new corporate offences, or a similar failure to prevent an offence under the Bribery Act 2010.
At present, under the Company Directors Disqualification Act 1986, a company director can be disqualified on conviction by the sentencing court. Alternatively, the Secretary of State for Business, Energy and Industrial Strategy can apply to the High Court for an order that a company director be disqualified. In either case, the company director would be a party to the proceedings, and thus given the opportunity to present their defence.
Baroness Bowles of Berkhamsted
The point is that a procedure exists when there is a breach of competition law. That does not have to be referred back to the Secretary of State. There is a subsequent hearing as to whether the director was culpable by not having established the right procedures. It does not automatically say that, if the company is guilty, the directors are guilty. If the circumstance is such that the judge says, “I think we should look further at this”, why should it not then be in the prosecutor’s toolbox to say, “We want to continue smoothly on to the next stage”, which the prosecutor has probably already investigated? It is a civil procedure to disqualify a director, I remind the Minister, so the human rights implications are slightly different. If it works for competition, why can it not work for criminality? It seems to be saying that there is a stricter rule, where directors sit up and take notice of the fact that it looks a little bit more automatic even though the same defence is there. Therefore, it has a huge impact on corporate governance in making sure that the procedures are there. It may even be on a piece of paper on the boardroom table. I have personally heard, “Oh, this is something we can get disqualified for if we don’t get it right”. That is exactly how more boards should be thinking. This kind of procedure induces that. Maybe the Minister can write to me and explain why it is good for competition and not for criminality.
Baroness Williams of Trafford
The noble Baroness foxed me when she asked that question the first time and she is still foxing me. I shall write to her before Report because I really do not know the answer.
Lord Kennedy of Southwark
My Lords, I thank all noble Lords who have spoken in this short debate, and I am pleased that the Minister understands the spirit and intention behind our amendment. The comments of the noble and learned Baroness, Lady Butler-Sloss, and the noble and learned Lord, Lord Judge, are points well made. They have vast legal experience and if I bring the issue back at all on Report, I shall take on board their comments and wise legal advice and draft my amendment accordingly. I certainly thank all noble Lords for their contribution today, and beg leave to withdraw the amendment.
Baroness Williams of Trafford
My Lords, I thank all noble Lords who have taken part in an excellent debate. I pay particular tribute to the noble Baroness, Lady Stern, along with others who have spoken with passion and given considered contributions on a crucial issue.
I have addressed much of what has been raised in correspondence with noble Lords, but I hope that the House will allow me to put certain points on the record. As David Cameron said last year, international corruption,
“is the cancer at the heart of so many of the world’s problems”.
The Panama papers revealed the extent to which anonymous shell companies are used to hide large sums of wealth and circumvent sanctions. The UK is a global leader in the fight against corruption, and we are proud to be at the forefront of international efforts to increase corporate transparency. This includes working with all UK overseas territories with financial centres, and with the Crown dependencies, to tackle money laundering, terrorist financing, corruption and fraud. The territories and dependencies are, in turn, committed to fully meeting international standards, and in some respects are going beyond them, and to working with us to ensure that they do not act as a hiding place for illicit financial flows.
Last year, the UK signed an exchange of notes with all overseas territories with significant financial centres and with the Crown dependencies, setting out new arrangements on law enforcement access to beneficial ownership data. The exchange of notes provides that, when they have not already done so, overseas territories and Crown dependencies must all set up central registers or similarly effective systems of beneficial ownership information. It also provides that UK law enforcement authorities should have the automatic right to access this information, which means that beneficial ownership information will be available within 24 hours, or within one hour in urgent cases. Ensuring that law enforcement authorities are able to establish who is the ultimate owner of companies registered in the overseas territories and Crown dependencies is a crucial part of tackling the complex criminal networks that can exploit the system.
These arrangements are due to be implemented no later than June this year and will put them well ahead of most jurisdictions in terms of transparency, including many of our G20 partners and other major corporate and financial centres, including some states in the United States. Once in place, these arrangements will bring significant law enforcement benefits. They will prevent criminals hiding behind anonymous shell companies and mark a significant increase in UK law enforcement authorities’ ability to investigate bribery and corruption, money laundering and tax evasion.
The noble Baroness and other noble Lords started off by asking for a global standard definition, and I thought that I might address that up front. There is no single definition of a global standard for reach and coverage, but organisations such as the OECD and the Financial Action Task Force are key to the development of international standards in this area. As the noble Lord, Lord Eatwell, said, the UK believes that a public register is a powerful tool, and we will continue to make that point in international fora. However, the OECD has focused on accurate, independently verifiable data as an important standard, which all the overseas territories are looking to implement.
The EU has also played an important role in advocating transparency, but the fourth anti-money laundering directive does not require EU states to make their registers public. In this context, I reiterate that the overseas territories and Crown dependencies are actually ahead of the current standard in implementing the exchange of notes. I will come back to this when I address the point made by the noble and learned Baroness, Lady Butler-Sloss. We are not saying that the global standard means that every country must have a public register, but we would certainly expect it to reflect the recommendations of groups like the OECD and FATF. The UK is leading the way in this area and we are, of course, working on transparency issues with international partners through these groups. I make it clear that the UK firmly believes that public registers are the gold standard. Our position has not changed, but putting a timeline on this work simply does not reflect the scale and complexity of these issues. The OTs and Crown dependencies will be significantly ahead of the global standard as it stands. They have their existing commitments and this, in itself, is moving the standard in the right direction.
Many noble Lords have asked about progress to date and I am pleased to be able to talk about that. We have been working closely with both the overseas territories and the Crown dependencies on implementation by the deadline. I can confirm that significant progress has been made and I will briefly share some highlights with noble Lords. The British Virgin Islands, one of the overseas territories, has already completed the technical construction and testing of its new cloud-based platform. It is now taking forward engagement with corporate service providers to ensure that data formatting is fully standardised in order to enable beneficial ownership data to be uploaded on to the system in advance of the deadline.
In December, the Cayman Islands Government passed an amendment to the Police Law, which is necessary for law enforcement co-operation, and have recently successfully amended three key pieces of legislation to underpin the functioning of their new system: the Companies Management Law, the Companies Law and the Limited Liability Companies Law. Bermuda has a long-standing central registry of beneficial ownership data. It is currently moving legislation through its legislature to enhance the register, including a requirement on legal entities in Bermuda to maintain registers of up-to-date information on their beneficial owners, and to file updated beneficial ownership information with the Bermuda Monetary Authority. Gibraltar is already committed to implementing the EU fourth anti-money laundering directive and has prepared legislation to take forward these commitments and the exchange of notes. The technical construction of its system is well advanced and it is now considering steps to populate the registry with data.
All these jurisdictions have also committed to the automatic exchange of beneficial ownership information, along with 50 other countries. This is important progress, but there is more to be done and we are not resting on our laurels. We are committed to following up on these arrangements to ensure that they deliver in practice. The exchanges of notes with all overseas territories and Crown dependencies make explicit provision for the Secretary of State and the Premier or Chief Minister to undertake a review of the arrangements six months after they come into force—that is, on 31 December 2017—and for further reviews to take place annually thereafter. The arrangements also provide for continuous monitoring by both parties. I hope this provides clear assurance that the effectiveness of the arrangements will be kept under careful scrutiny to ensure that they are meeting our law enforcement objectives.
The NCA has confirmed that it is already seeing enhanced co-operation from some overseas territories, and much shorter turnaround times for processing requests for information. We expect to see this further improved to meet the agreed standards by June this year. This progress demonstrates what can be achieved by working consensually with the overseas territories and Crown dependencies. It is reaping benefits and I believe it will continue to do so.
I turn to the amendments. Amendment 167 is similar to one tabled on Report in the Commons, in that it envisages a timetable for the adoption of public registers of beneficial ownership by the overseas territories. If they have not done so by the end of 2019, it would require the Government to force them to do so. The key difference with this amendment is that it does not cover Gibraltar.
Amendment 169 also requires the Government to support the Crown dependencies to establish public registers of beneficial ownership by the end of 2019, and to report to Parliament on the progress made. However, it does not require the Government to impose public registers on them.
A key feature of the Government’s approach is that it creates a level playing field between all of the overseas territories with financial centres and the Crown dependencies. By taking a different approach to the Crown dependencies and territories, these amendments risk disrupting this level playing field, creating weaknesses in certain jurisdictions that could be exploited and damaging the spirit of co-operation we have been able to create between them.
The noble and learned Baroness, Lady Butler-Sloss, made the point that Gibraltar need not be covered by Amendment 167 as it is committed to implementing the EU’s fourth anti-money laundering directive. However, it is important to note, as I said earlier, that the fourth anti-money laundering directive does not require member states to establish publicly accessible registers of beneficial ownership information, so to impose such a requirement on the overseas territories and Crown dependencies would go beyond what has been agreed with our neighbours in Europe. The provisions in the exchange of notes also go beyond the fourth anti-money laundering directive in providing UK law enforcement with access to information within 24 hours, and within one hour in certain cases.
Rather than imposing new requirements on the overseas territories, the Government feel strongly that we should continue to work with them and focus our efforts on the implementation of the existing arrangements, including the passage of new primary legislation in the territories and complex technological improvements. I recognise that it is the wish of some noble Lords that a timetable be set for public registers. However, the UK Government respect the constitutional relationship with the overseas territories and the Crown dependencies. My noble friend Lord Faulks queried whether there might be a legal issue. I suspect that he is right but I shall look into that before Report.
As I noted earlier, legislating for the overseas territories is something we have done only very rarely. It is done on issues such as the abolition of the death penalty, which raised issues of compliance with human rights obligations for which the UK retains responsibility. While tackling this kind of complex criminality and its consequences is extremely serious, there is a clear constitutional difference in the fact that financial services is an area that is devolved to territory Governments and, in the case of the Crown dependencies, the UK has never legislated for them without their consent. That may be the point to which my noble friend Lord Faulks referred.
Baroness Williams of Trafford
I am so glad that I read it right. The UK is directly responsible for the OTs’ and the CDs’ compliance with international obligations, including the European Convention on Human Rights. It is our responsibility in international law, as the overseas territories have no legal personality under international law. That was a key factor in the UK taking the rare step to legislate for the OTs on the issue of, for example, the decriminalisation of homosexuality. While I acknowledge the moral dimension of tackling criminal finances, the same responsibility does not exist for financial services policy, which is OT government responsibility.
Lord Rosser
Perhaps I may ask the Minister to clarify a couple of points. First, in the light of what she has said and what has been said in this debate about competitive disadvantage, are the Government arguing that accepting Amendment 167 would place the overseas territories at a competitive disadvantage and that that is a key reason for the Government opposing the amendment? Secondly, in view of what the Government have said about wanting to work with the overseas territories in particular, is the reality that if either the overseas territories or the Crown dependencies do not agree to public registers of beneficial ownership, then that will not happen in relation to the overseas territories and Crown dependencies?
Lord Rosser
Certainly. My question relates to what the Government have said about working with the overseas territories. Does that mean that if either the overseas territories or the Crown dependencies decline to agree to public registers of beneficial ownership, then that will not happen in relation to the overseas territories and Crown dependencies? Is that the Government’s position?
Baroness Williams of Trafford
My Lords, they are all committed to working towards the same end. It would be perverse if, having signed up to this arrangement, they then decided that they were not going to work with the Government. If they suddenly stalled on working with the Government, the Government would encourage them to do so in strong terms.
Lord Rosser
I did not realise they had signed up to public registers. Since the Government say they want to work with the overseas territories in particular, I am simply asking what would happen if either the overseas territories or Crown dependencies declined to agree to have public registers of beneficial ownership. Is the Government’s position that it would therefore not happen as far as the overseas territories and Crown dependencies are concerned?
Baroness Williams of Trafford
My Lords, the Government are fully committed to working with the Crown dependencies and overseas territories to achieve the ultimate end of public registers. I have now forgotten what the noble Lord asked me on Amendment 167.
Lord Rosser
I was simply saying that, in the light of what has been said in this debate by a number of noble Lords about the overseas territories being placed at a competitive disadvantage if the amendment was accepted, are the Government arguing that to accept Amendment 167 would place the overseas territories at a competitive disadvantage and that that is a key reason for them opposing the amendment? Or is the reason for the Government’s opposition to the amendment a dislike of what they would describe as imposing something on the overseas territories rather than working with them?
Baroness Williams of Trafford
The noble Lord’s latter suggestion is correct: we do not want to impose on the overseas territories but want to work consensually with them to achieve the aims that we seek. The overseas territories may face competitive disadvantage in the short term, but in the long term, the transparent and open way in which the territories intend to work, and we with them, will be to their advantage.
Baroness Stern
I thank all noble Lords who have spoken in this debate, which has been a cornucopia of oratory, wisdom and detailed, reliable knowledge. I am very grateful to my co-signatories for their strong support. I appreciate the words of the right reverend Prelate the Bishop of Peterborough that this is a moral issue, and the contribution of the noble Lord, Lord Thomas of Gresford, about the United States and the abolition of slavery. I am most grateful for the detailed information from the Minister on progress; it was a bit much to digest in one go, but I will read it with interest. There is much that has been said in this debate to reflect on and consider before Report.
I would also like to say that today is the birthday of the noble Lord, Lord Leigh, and I wish him many happy returns. On that note, I beg leave to withdraw the amendment.
“ _(1) Section 18 of the Civil Jurisdiction and Judgments Act 1982 (enforcement of UK judgments in other parts of UK) is amended as follows.(2) In subsection (2)(f), at the end insert “or an unexplained wealth order made under that Part (see sections 362A and 396A of that Act)”.(3) ”
“( ) section (Reconsideration of discharged orders)(2) and (3);”
“( ) section (Reconsideration of discharged orders)(4);”
Brexit: Crime Prevention
Baroness Williams of Trafford Excerpts(7 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Paddick
To ask Her Majesty’s Government whether they plan to continue sharing sensitive personal information with other European Union member states for the purposes of crime prevention and detection following the United Kingdom’s withdrawal from the European Union.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the Government are clear that our commitment to co-operation with European allies on security and law enforcement will be undiminished as a result of leaving the EU. The effective use of data to underpin that co-operation will be an important consideration as we look to establish a new relationship with the EU, but it is too early to say what the future arrangements might look like.
Lord Paddick (LD)
My Lords, the issue of information exchange has taken on an added significance this week. I hope the House will forgive me but I take the avoidable death of one of my former police colleagues very seriously. Less than a week after four people died as a result of terrorism on our doorstep, does the Minister think that the implied threat made by the Prime Minister in her Article 50 letter—backed up yesterday by the Home Secretary—that the UK will withhold security co-operation with the EU if it does not get the trade deal that it wants, was insensitive, reckless, an empty threat, or all three?
Baroness Williams of Trafford
My Lords, I too pay tribute to the people who lost their lives last week and who still lie in hospital injured. However, I take exception to what the noble Lord says. The letter says that both sides would cope, but our co-operation would be weakened. We want and we believe that the EU wants security to be part of a new partnership. That is why it is part of the negotiation. The “threat” was not a threat at all—it was a matter of fact.
Lord Reid of Cardowan (Lab)
My Lords, does the Minister agree that the best way to enhance our capability in countering crime and counterterrorism and the ability to share that with our European allies would be to give full support to the Investigatory Powers Act?
Baroness Williams of Trafford
The noble Lord is absolutely right. Co-operation going forward will be crucial in all the areas that he talks about.
Lord Howell of Guildford (Con)
Would it assist my noble friend in answering the noble Lord, Lord Paddick, if she explained to him that, far from withdrawing or departing from anything, we are arriving at and entering a global network of new technologies in which the methods of crime detection and prevention are likely to be very much expanded and improved?
Baroness Williams of Trafford
My noble friend is absolutely right. It is in the spirit of the improved technologies and improved sharing of data that we enter into co-operation around all these areas as we exit the EU and enter a new phase in this country’s journey.
Lord Kinnock (Lab)
Will the Minister, in the service of the House, read the two sentences in the letter before the one that she selectively read out? Those sentences make it absolutely clear that the Government’s intention and the implied threat is that unless there is agreement on trade—a “comprehensive agreement” as they have called it—there will not be an agreement on security. By that means, they would imperil not only our economic capability but, even more seriously, our security capability.
Baroness Williams of Trafford
The noble Lord is quite wrong. The letter says that both sides would cope, but our co-operation would be weakened. We want, and we believe that the EU wants, security to be part of the new partnership. That is why it will be part of the negotiation. That is the right way forward.
Lord Tebbit (Con)
My Lords, does my noble friend realise that the appropriate reply to the noble Lord, Lord Kinnock, lies in The Gospel According to St Matthew, chapter 6, verse 21?
Baroness Williams of Trafford
Perhaps the right reverend Prelate would like to comment.
Baroness Jones of Moulsecoomb (GP)
My Lords, perhaps I can bring us back to the Question. Will the Minister clarify whether, if sensitive information is going to be passed to the EU, that will exclude information that is held by the security services and by the police on environmental campaigners, journalists, photographers and even politicians who have committed no crime?
Baroness Williams of Trafford
The information that is shared is for the purposes of investigating crime, so someone who had not committed a crime would be unlikely to have their information shared with other countries.
Baroness Janke (LD)
My Lords, what assessment have the Government made on the future role of the European Court of Justice for the future of joint working with the EU on security after Brexit?
Baroness Williams of Trafford
My Lords, we will not be bound by the European Court of Justice after we leave the EU; we will be bound by the UK court system.
Lord Blair of Boughton (CB)
My Lords, does the Minister not agree with me that the best way of answering the Question asked by the noble Lord, Lord Paddick, is to ensure that the Government arrange with our European partners to deal with security issues first and foremost, separately from trade, to make sure there is no moment when we fall off a security cliff?
Baroness Williams of Trafford
The noble Lord is quite right in the sense that the Prime Minister put these aspects of the negotiation right at the forefront. I have been in debates in the last few weeks talking about this co-operation. The fact that we have been world leaders in those areas is so important as we go forward, but of course it is all part of a whole deal, bearing in mind the context in which we operate.
Lord Cormack (Con)
My Lords, to reinforce what the noble Lord, Lord Blair, just said, would my noble friend agree that as we begin this long and difficult process, intemperate remarks are hardly helpful?
Baroness Williams of Trafford
It depends which intemperate remarks my noble friend is referring to, but yes, I think we all have to be very careful about what we say.
Lord West of Spithead (Lab)
My Lords, I am afraid I disagree with my noble friend Lord Kinnock on the reading of this particular piece. For some seven decades now, the US and the UK have been the prime safety net for Europe in defence and security terms. We must not allow this very complex web of agreements somehow to be damaged in these negotiations. The security of Europe is crucial for us. Everyone knows that, and we must not be let it be damaged by some silliness in the negotiations. Does the Minister agree?
Baroness Williams of Trafford
I am very pleased that the noble Lord has put this in the broader context. He is absolutely right about our co-operation beyond the EU. The sharing of intelligence with the EU and international partners is far broader than simple measures within EU laws. He is right in that broader context.
Criminal Finances Bill
Baroness Williams of Trafford ExcerptsTuesday 28th March 2017
(7 years, 1 month ago)
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Lord Kennedy of Southwark (Lab)
My Lords, the Bill was welcomed by all sides of the House at Second Reading. Unexplained wealth orders are a device to give law enforcement agencies powers to require a person suspected of involvement in or association with serious criminality to explain the origin or source of assets which appear disproportionate to their income.
Amendment 1, in the name of the noble Lord, Lord Hodgson of Astley Abbotts, seeks to insert the words, “beyond reasonable doubt” after the word “satisfied”, when requiring a person to comply with an order. This raises an important point, but I am not convinced that introducing this higher test is needed here. It would make it more difficult for law enforcement agencies to get permission to seek the source of the wealth which has led them to suspect that the person’s lawfully obtained income would be insufficient for the purposes of obtaining their assets. I agree with the remarks made about this amendment by the noble Lord, Lord Faulks, who said that the higher evidential test would not be welcome in this regard. I also agree with the comments made by the noble and learned Lords, Lord Brown of Eaton-under-Heywood and Lord Phillips. I also agree with the comments by the noble Lord, Lord Blair of Boughton, on the investigatory role—the test and procedure would be difficult there as well.
Amendments 2 and 7, in the name of the noble Lord, Lord Faulks, give a better definition in relation to a person’s connection to a property, and the Government should reflect carefully on this during the passage of the Bill and possibly bring an amendment forward on Report.
Amendment 5, also in the name of the noble Lord, Lord Faulks, would provide an additional power to require a person to answer questions under oath. Again, that seems a reasonable additional power to take, which could be used at the discretion of the court. I very much take the point that the noble Lord made about the William Hill defence in terms of how one acquires assets and wealth. We need to look at that important point.
On Amendments 8 and 9, I thought that the £100,000 value in respect of a property was about right, that the £50,000 figure proposed by the noble Baroness, Lady Williams of Trafford, was too low, and that the figure proposed by the noble Baroness, Lady Hamwee, was far too high. However, having sought advice from law enforcement agencies, I understand the motivation behind the amendment of the noble Baroness, Lady Williams of Trafford, and I am content that the figure she proposes may well be right.
There is a whole series of government amendments in this group which I am content with, as they seek to prevent a person subject to one of these orders seeking to circumvent it through complicated financial means and transactions.
This has been a very useful debate, with some well-informed contributions that posed a number of questions for the noble Baroness. I am sure that she will reflect on those as we may want to come back to some of those points on Report.
The noble Lord, Lord Leigh of Hurley, made important points about property and the problems associated with it. I think that we shall debate an amendment in the name of the noble Lord, Lord Faulks, in the next group which concerns property.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, I thank all noble Lords who have taken part in this excellent debate. We have had some very good contributions from noble Lords from around the Committee on the significant new powers of the unexplained wealth order. I will do my best to respond to all the points that were made. I apologise in advance if I take some time to do so.
As noble Lords will know, the measures in this Bill are largely focused on serious and organised crime, but it also provides important new powers to tackle terrorist financing. Last week’s horrific attack reminds us all of the very real nature of this threat. I would like to take a moment to pause and think about the families of those who have been killed and those who still lie injured in hospital. I again pay tribute to the men and women of the police and other law enforcement and intelligence agencies who are so committed to keeping us safe—to PC Keith Palmer, but also to his many colleagues who work in Parliament and across the country. We must ensure that they have the powers they need to investigate and disrupt terrorists and terrorist groups. The powers in Part 2 of the Bill, which we will come to later, will do just that.
I return to the amendments in this group on unexplained wealth orders—or UWOs. The UK is a world leader in the fight against global corruption and the UWO is a substantial new power that will assist UK law enforcement agencies to do so. I welcome the continued cross-party support for these measures. I remind noble Lords that a UWO is a court order that requires a person to provide information which shows that they obtained identified property legitimately. If the person provides information in response to a UWO, the enforcement authority can then decide whether to investigate further, take recovery action under POCA or, if they are satisfied, take no further action. If the person does not comply with a UWO, either by not responding or not responding fully to the terms of the order, the property identified in the order is presumed to be recoverable under any subsequent civil recovery proceedings.
There are a number of government amendments in this group and I turn to them first. These are, by and large, technical changes to the provisions to help them function most effectively, but I will highlight a few for the benefit of noble Lords. As regards trusts, we have tabled government Amendments 3, 4, 6, 12, 14, 15, 17, 19, 21, 30 to 32, 36, 38 to 40, 52, 53, 174 and 175. Perhaps the biggest addition to the provisions made by the government amendments are the measures to ensure that a UWO can be served in situations where property of interest is held in trust or involves corporate structures. This, I believe, picks up some of the concerns raised by my noble friend Lord Faulks. The amendments will also allow subsequent UWOs to be obtained on additional individuals such as trustees in complex cases where this is necessary. The amendments are not a silver bullet in cases where trusts and corporate entities are involved. However, they are a significant improvement and will close a potential gap.
UWO thresholds are addressed by government Amendments 8 and 33, which would reduce the threshold for a UWO to be obtained from £100,000 to £50,000. Noble Lords rightly questioned how we settled on the balance. It followed representations from authorities in Scotland—including from the SNP during Commons consideration of the Bill—and Northern Ireland. It reflects the fact that the higher threshold could disadvantage law enforcement agencies in certain parts of the country where financial returns may not be as high or may be spread more evenly across criminal groups, and where property, in particular, has a lower value.
The threshold, however, is still an important safeguard, together with the other qualifying criteria that must be met before a UWO can be made by the court. It remains our view that the orders should be used in the most complex cases, where obtaining evidence has proved difficult, and this will be reflected in the supporting guidance.
The noble Baroness, Lady Hamwee, tabled a related amendment to push the threshold up rather than down. She helped us to reflect on the balance that must be struck in circumscribing the new power. However, based on our consultation with law enforcement agencies, I suggest that her proposed threshold of £500,000 would be prohibitive. It would stop the agencies using this power in significant cases involving serious and organised crime, and noble Lords have been clear that they want to see the most effective use of UWOs. I hope that the noble Baroness will be satisfied that our approach strikes the appropriate balance.
Baroness Hamwee
I could repeat my question about the temptation to get at the low-hanging fruit and not use the orders to deal with grand corruption, as I understand it.
Baroness Williams of Trafford
The noble Baroness is right that both ends of the scale should be tackled, so I hope that law enforcement agencies will use the orders in a proportionate way to tackle criminal activity at both ends of the scale. I hope that that will satisfy the noble Baroness. She looks satisfied.
Lord Faulks
When questions were raised at Second Reading about the scope of the orders and how many might be issued, I referred to an assessment that was provided—with some difficulty—by the Government that only about 20 might be sought during the year. The Minister understandably said that that was only an estimate, based on general experience of civil recovery. However, does it not indicate that, rather than grasping low-hanging fruit, if anything this will be considerably resource-heavy and will probably be directed only at cases where the amount of wealth is significant enough to make the expenditure of time and money worth while?
Baroness Williams of Trafford
My noble friend and the noble Baroness have made the case for both ends of the threshold. My noble friend talked about resources generally. One thing that came from the law enforcement agencies was that the issue was not resources but the tools to be able to tackle criminals. Also, law enforcement agencies do benefit from a proportion of the money recovered, so they are incentivised at both ends of the scale—and it will be up to legislators in this House and the other place to decide on the right balance to strike. But that was our rationale for the lower amount—and I know that the Government originally suggested £100,000.
The point about compensation is covered in government Amendments 28 and 56, and Amendments 29 and 57, in the name of the noble Baroness, Lady Hamwee. Amendments 28 and 56 introduce a compensation scheme in relation to the interim freezing orders that can support a UWO. Other powers to freeze property in POCA have connected compensation provisions. It is absolutely right that a person who has genuinely suffered a loss should have the ability to seek compensation where there has been serious default on the part of the enforcement agency. The “serious default” test is already used in POCA and is applicable here too. I hope that on that basis, the noble Baroness will agree that her amendments probably are superfluous in this instance.
Lord Thomas of Gresford (LD)
In support of my noble friend, the experience of POCA has been that the amount recovered has been very little more than the cost, so that the question of resources is very germane. In practice, both sides are anxious to come to an agreement early on to avoid the expense of a lengthy hearing, never mind the lengthy investigation. Therefore, setting the level at a high point is a very sensible thing to do and will ensure that resources are properly used.
Baroness Williams of Trafford
Is the noble Lord talking about the high point with regard to the UWO triggering point? The Government have considered all options; they have suggested £100,000. The point was made that £50,000 was more appropriate, particularly in some of the devolved Administration areas, where property prices are generally lower, and the noble Baroness, Lady Hamwee, has made an argument for setting the bar higher. However, my noble friend also made the point that by setting the bar lower we might end up having more success, reaching not only the low-hanging fruit but the high-hanging fruit as well. I therefore hope that the noble Lord accepts that explanation. It is an objective consideration, but there are obviously many views about where the threshold should be set.
On Amendments 2, 5, 7, 16 and 18, tabled by my noble friend Lord Faulks, Amendments 2 and 7 seek to replace the term “holds” with “has a financial interest in” as the test for the High Court to consider. It is only fair that in serving a UWO the respondent must have some direct connection with the property that is of interest. “Holds” is a well-established concept in civil law, including in the Proceeds of Crime Act 2002, and we believe that requiring a person to “hold” property is a proportionate approach. It is also our view that “holding” property includes holding an interest in that property. I hope that noble Lords are reassured by that assessment.
Lord Faulks
I am sorry to interrupt the Minister. I thought that the answer to this point was provided by the Government’s Amendment 21, therefore there is no need to refer to the provisions of POCA, because there is an internal reference to what “holding” means.
Baroness Williams of Trafford
That is correct, but I thought I might go through it. I am just being thorough.
Amendment 5 seeks to add the ability to interview a person “under oath” as a possible requirement of a UWO. It would already be a criminal offence for the respondent to knowingly or recklessly provide false or misleading information. We must also remember that this is only an investigative power; if the case leads to criminal proceedings, it would be subject to the usual rules of giving evidence and allow for interviews “under caution”.
Amendments 16 and 18 address the issue of “purported compliance”. If a person does not comply with a UWO, their property is presumed to be recoverable under civil recovery proceedings. Given the severe consequences of not complying, it is right that this rebuttable presumption should not apply to a person who purports to provide a response. This avoids any legal ambiguity as to when the presumption will apply. However, where that individual provides responses that do not satisfy the enforcement agency, he or she then runs the risk that the poor quality of the responses will encourage the agency to take further action, and in those circumstances the burden of proof switches back to law enforcement, as is normal.
Purported compliance applies to a scenario where all the requirements of a UWO have been met but where the response is less than satisfactory. The agency is able to tailor the request for information very specifically, so will have some control over this. We do not want to get into arguments before the courts as to whether the presumption should apply and whether the individual has complied.
Finally, the UWO provisions will allow the enforcement authority to make very specific requests for information, reducing the risk of a low-value response being provided. I hope that my noble friend will feel that this addresses the point he has so expertly raised. He also raised a point about gambling. With regard to the Ladbrokes test or the William Hill defence, we would expect a high level of evidence to prove that, and we would expect it to meet the requirements of the UWO. The UWO will have achieved its purpose by flushing out information.
My noble friend also asked whether we would publish the code of practice before Report. The answer is yes. I undertook to discuss publication of the update to the relevant code of practice with my officials and ministerial colleagues, and it is my intention that the draft code will be available to noble Lords prior to Report.
I now turn to Amendment 1, moved by my noble friend Lord Hodgson of Astley Abbotts. This would require the High Court to be satisfied “beyond reasonable doubt” with regard to each of the requirements before issuing a UWO. This is an investigative power, as the noble Lord, Lord Blair, said, so the test of “reasonable suspicion” is quite normal and consistent with existing law, including Part 8 of POCA. The balance of probabilities applies here, as the noble Lord, Lord Blair, and my noble friend Lord Faulks said, and I hope that my noble friend will agree that it would not be appropriate to impose a criminal law standard in such cases.
My noble friend Lord Hodgson asked about the reversal of the burden of proof. We accept that there is a reversal of the burden of proof but it is in very specific and narrow circumstances. There has to be a link to a PEP or a serious criminal. This is a proportionate use of operational need. As an investigation power, there is the opportunity to address this issue in any subsequent proceedings. As my noble friend said, Transparency International has approved this approach.
My noble friend also asked about the use of legal advisers if a client is subject to a UWO, but we do not consider that an amendment is required to the laws on legal privilege. The lawyer role is unchanged, and the lawyer has the same responsibility to file a SAR if he has a relevant suspicion. It will be a question of the facts in each case.
I now turn to Amendments 10, 13, 20, 22, 23, 24, 25, 35 and 37, tabled by the noble Lord, Lord Sharkey. I think that these broadly separate out into two topics: first, the application of UWOs to PEPs, and, secondly, the court process in Northern Ireland. UWOs can be made either where there is suspicion of involvement in serious crime or in relation to non-EEA politically exposed persons. In that sense, I want to make it clear that politicians and senior officials in the UK and the EEA are covered by the first element of this power where they are suspected of being involved in serious criminality.
The reason for the second limb is to plug a gap experienced by law enforcement agencies when they investigate politically exposed persons. The issue arises in cases where critical evidence is available only in the PEP’s home country, which lacks the capabilities necessary to gather it itself. Conversely, in relation to UK PEPs and those across the European Economic Area, if the evidence exists it will be obtainable, so the same issues do not arise. There is no gap in these cases. That means it should be possible to evidence suspicion of involvement in serious crime.
On the noble Lord’s point about the FCA guidelines, these relate to the regulatory obligations of banks and other institutions. UWOs are not to do with the regulatory burden and responsibilities of the financial industry, so reference to the FCA is not strictly relevant here.
On increasing the sentence on summary conviction in Northern Ireland to 12 months, the current provisions reflect the approach taken to sentencing for other “either way” offences in the Bill, and which also correspond to offences in POCA already. The 12-month point for England and Wales arises from an amendment to the approach to sentencing in the magistrates’ courts which derives from Sections 281 and 282 of the Criminal Justice Act 2003. Those amendments did not extend to Northern Ireland. In relation to the ability to make rules of court and other procedures in the High Court, including the variation or discharge of a UWO, specific provisions are not required in the Bill for England and Wales. However, express provision is required for the High Court in Northern Ireland to put them on the same footing.
The noble Lord also asked about Scotland. There is a constitutional division of powers between Scottish Ministers and the Lord Advocate, which is obviously specific to Scotland. We need to be certain that there is an ability of the Scottish Minister to disclose information onwards. The provisions presume that if a response is made to a UWO, this information could be disclosed onwards for consideration of a criminal investigation and/or prosecution. Therefore, in the Scottish context, Scottish Ministers apply for UWOs so that they will receive any information in response to such. If they consider that this information suggests that a criminal investigation and proceeding may be appropriate, they would need to refer the material to the Lord Advocate. The amendments provide that Scottish Ministers can disclose the information to the Lord Advocate for this very purpose. They also make certain that there is no suggestion that Scottish Ministers are tasking the Lord Advocate, merely that the material can be referred for independent consideration by the Lord Advocate. That is important due to the constitutional structure in Scotland.
Amendment 24 provides for any person affected by a UWO to apply for its variation or discharge, and not just the applicant and respondent. As a specifically focused investigation order, only the applicant and respondent are directly affected by the UWO. This is because the UWO requires the respondent to provide information, but does not itself affect any other interests in the property.
Finally, we reach the other amendments from the noble Baroness, Lady Hamwee. Amendments 26 and 54 would provide that the application to freeze property need not be made at the same time as the application for a UWO. It is right that all matters relating to the person and property should be dealt with in one hearing. This also gives certainty to the respondent. Should the enforcement agency wish to freeze the property at any other time, it will be able to do so under the main freezing order provisions in POCA, provided that the relevant test can be met.
With reference to UWOs, the noble Baroness asked about the need for the ownership register. Open source material that already exists can be of assistance; for example, the Land Registry, public accounts and records at Companies House. Other countries may already have public registers of ownership and income. In these circumstances, our law enforcement agencies would have access to them. We should also note that the UK has public registers of beneficial ownership.
I turn finally to the point raised by the noble and learned Lord, Lord Brown of Eaton-under-Heywood. He talked about altering the threshold but still having the safeguards. On the threshold, it must be remembered that the High Court has to be satisfied that there is still a link to serious crime or that someone is a PEP. That is a significant test. It focuses the use of the power in relation to the amount, and that is dropped by our amendments. The court has to show not only the value of the property but that the respondent does not have any obvious legitimate income.
Baroness Hamwee
My Lords, on that last point, I was not clear whether the Minister was saying that defendants’ living expenses were covered or not. I would be happy to discuss that with her after today. I raised it because I was aware that they are specifically referred to in other legislation.
Baroness Williams of Trafford
The noble Baroness is right: they are provided for because they are in line with existing powers in POCA.
Baroness Hamwee
The Minister said that it would be right to have everything dealt with in the same hearing. I questioned whether “proceedings” meant “hearing” because to me they are not the same thing. Did the Minister say “hearing”? That might require a tweak.
Lord Hodgson of Astley Abbotts
My Lords, we began with my modest amendment an hour and 40 minutes ago, and we have obviously ranged pretty widely. That is not surprising with nearly 60 amendments in this group. I asked in my opening remarks for reassurance that the government amendment,
“that there is reasonable cause to believe”,
provided adequate protection and we did not need “beyond reasonable doubt”. I asked for more experienced legal expertise than I have to provide me with that reassurance. I got not one but two noble and learned Lords to provide that in the shape of the noble and learned Lords, Lord Brown of Eaton-under-Heywood and Lord Phillips of Worth Matravers, for which I am very grateful.
I was slightly surprised that the noble Lord, Lord Blair, was dismissive of what I put in my amendment but will, I imagine, accept government Amendment 6, which provides a slightly lower level of inhibition to police activity, but that is as it may be. I was grateful to my noble friend on the Front Bench for her reassurance that there was no change to the issue of legal privilege. I beg leave to withdraw the amendment.
“(c) where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order, and(d) setting out such other information in connection with the property as may be so specified.”
Baroness Williams of Trafford
I thank all noble Lords who have taken part in this short debate. I am grateful for their contributions. As we have already covered, the court may issue a UWO in cases where either there is a link to serious criminality or the respondent is a politically exposed person from outside the European Economic Area. Amendment 11 seeks to add a third limb to those covered by UWOs. This amendment would mean that a UWO could also be served on a person who has a financial interest in land or property which is registered in the name of an overseas company. This would be quite a significant step, and I encourage noble Lords to consider it carefully. The UWO has been specifically designed as a reaction to the real operational difficulties that law enforcement agencies have had in individual cases.
First, there are those who are known to have a link to serious criminality, such as there being known links to organised criminal groups. The senior criminal, if I can call them that, is often able to keep themselves distant from any actual individual instance of criminality. The UWO will force them to explain their wealth. Secondly, there are non-EEA PEPs. PEPs are targeted in this way because they are widely acknowledged to be a high corruption risk. The ability to get evidence from certain countries—
Lord Lea of Crondall (Lab)
I hesitate to intervene, but this is a point of general relevance to the Bill. The Minister referred to us being a member of the European Economic Area. I take it that nothing will happen to this Bill when it goes on to the statute book, but this question is germane and substantive. The Bill refers to the European Economic Area, of which we are a member. Would we require legislation to stop being a member? Does that bear on the substantive issues in the Bill?
Lord Lea of Crondall
Will the Minister make sure that this question is looked at? Otherwise, we will have on the statute book something that depends upon us being a member of the European Economic Area.
Baroness Williams of Trafford
I am much clearer about this. Obviously negotiations will be conducted as the Brexit negotiations go on. I did a debate the other week about the co-operation around law enforcement; we are absolutely committed to continue that co-operation—if that gives comfort to the noble Lord—in fighting crime, corruption, fraud, slavery, people trafficking and all that sort of thing. We are a world leader at this point in time.
I did not initially get where the noble Lord was coming from, so I apologise. I was talking about the non-EEA PEPs—those outside the European Economic Area at the moment—who are targeted in this way because they are widely acknowledged to be a high corruption risk. The inability to get evidence from certain countries has rendered action against those persons almost impossible in some cases, even though they have obvious unexplained wealth and there are other suspicions relating to them. In both cases, there are clear reasons to justify the use of this novel investigative power. Based on clear evidence, we judge it to be proportionate in these cases to reverse the burden of proof, which is a major departure from the normal operation of our law, and to put their property at risk of recovery purely on the basis that they do not respond to a UWO.
I fully recognise that those in the third grouping proposed by noble Lords—those with a financial interest in property owned by an overseas company—have given rise to concerns relating to corruption. However, very importantly, it must be remembered that the vast majority of people with a financial interest in an overseas company are law-abiding. Many of them are British citizens, for whom there will, if relevant, be other avenues to progress an investigation. I am not satisfied that the situation relating to this third suggested group of persons is so stark, or that a real operational need has been identified. As I said earlier, there is nothing inherently suspicious about having a financial interest in an overseas company.
Despite that, I take on board the points that noble Lords have made and am very grateful for the amendment, which highlights a very important area. My officials will, of course, liaise with law enforcement colleagues to ensure that they have the tools that they need to investigate cases of this type, but I assure noble Lords that they have not indicated a gap in their existing powers that would justify extending UWOs in the way that is proposed.
I will go through some other points that noble Lords have made. My noble friend Lord Faulks—I thought he was noble and learned, and it has quite shattered my illusions to learn that he is not—talked about the “envelope tax”, which he also brought up at Second Reading. I undertake to discuss it with colleagues at the Treasury and come back with a response, either on Report or by letter to him. He also talked about UWOs and the London property market, and what they will do to help with empty properties—which I see every night on my way back to my small flat in north London. In terms of how a UWO will be used against property held by foreign companies, it must be noted that the UWO provisions can be used against legal persons—companies—wherever they are located, subject to international law on service. In addition, it will be possible to focus on the individual if he holds an interest. Our new amendments will mean that foreign-owned property is not excluded from the UWO provisions.
My noble friend also talked about the supervisory regime and the obligations of regulated bodies with respect to the London property market. The Government consulted on reforms to the anti-money laundering supervisory regime in the autumn and have considered the responses. The Treasury published the outcome of that review on 22 March and is currently conducting further consultation on the creation of a new office for professional body anti-money laundering supervision, which will be overseen by the FCA and is expected to be fully operational by the start of 2018.
The noble Lord, Lord Rooker, asked about the latest available data on prosecutions, convictions and sentencing, broken down by offence from 2015. In 2015, 2,307 defendants were proceeded against for money laundering offences in the magistrates’ court; 1,336 defendants were found guilty at all courts for money laundering offences; and 1,300 were sentenced. Where a bank’s anti-money laundering regime is found to have failed, significant fines can be, and have been, applied. I think that is the chart that he was referring to. Banks are also required to fix their regimes, and banks operating in the UK have been fined for failures in their anti-money laundering regimes.
Lord Rooker
The Minister is missing the point, although I am sure she is not doing so deliberately. No bank has been prosecuted. That is the background to the question I asked. I did not ask about cosy deals with the Financial Conduct Authority—like those reported today with Tesco and the one with Rolls-Royce, which I referred to at Second Reading—to have deferred prosecutions, so that they pay but do not get prosecuted. I asked about banks being prosecuted. The one way to stop or curtail this, as the noble Lord, Lord Deben, said, is to get them where it hurts, not with cosy deals. These fines are not the result of prosecutions. If she is implying that, she is wrong, and is close to misleading the Committee. I am not asking about deals; I am asking about prosecutions which take place in court, not through cosy deals and a fine from the Financial Conduct Authority.
Baroness Williams of Trafford
I hope the noble Lord does not think that I have ever tried to mislead the House. I talked about fines, but where a bank was found to have committed a criminal offence, a prosecution could be undertaken. Investigations and prosecutions are a matter for law enforcement agencies and prosecutors. I take the point that he is making, but this is open to law enforcement. Last month, a £163 million fine was issued to Deutsche Bank, and I would suggest that hitting them where it hurts probably involves hitting them in their pockets. It is open to law enforcement to prosecute banks, but I take the noble Lord’s point in that, today, I know of no prosecutions of banks. But the fines regime is in place.
I am very grateful for the amendment but hope that my noble friend has been assured that there is not a gap in existing powers that would justify extending UWOs in the way proposed. I hope he will feel content to withdraw his amendment.
Lord Faulks
My Lords, I am grateful to all noble Lords who took part in the debate and for the general support for what lay behind this amendment, which is a widespread concern about the London property market in particular and the degree to which it is clear that corrupt money has entered it. The noble and learned Lord, Lord Brown, made a number of important points—particularly that I am not learned. He was also correct to say that the word “or” was missing from the amendment, and made some other drafting suggestions. He was also right to suggest that this is not a panacea, but it was not designed to be. The amendment was intended to provoke the sort of debate we have had and to ask the Government whether they are truly satisfied that the evil we have identified is being answered, and in particular whether anything in the Bill can be used to deal with the problem.
My noble friend the Minister has said that the provision covers those who are PEPs within the definition of the Bill or those suspected of serious criminality. But what, I ask, about those who may not easily be defined as being “suspected of serious criminality” but are in fact gangsters? What of those who have high office but do not come within the definition of PEPs? With many of the properties, it will be difficult to determine precisely who owns them. All that we ask for is an unexplained wealth order—it is not a criminal offence; it is a civil procedure which results, if there is no adequate explanation, in civil recovery. That, I suggest, will help deter the incursion of corrupt money. The provisions contain safeguards on self-incrimination and compensation. Let us not be too pusillanimous about this. My noble friend said that she had received my request for information about the envelope tax at Second Reading and she has again, but she has not yet replied. On the face of it, that is in stark contradiction to the policy that underlies the UWOs.
We will miss a legislative opportunity if we do not do something through the Bill to sort out the problem we have identified. I hope that my noble friend will speak to her officials and be satisfied that there is no gap, no lacuna, in this approach.
“(e) where the property is an interest in other property comprised in a settlement, the reference to the respondent obtaining the property is to be taken as if it were a reference to the respondent obtaining direct ownership of such share in the settled property as relates to, or is fairly represented by, that interest.”
“(d) otherwise connected with a person within that paragraph.”
“(5A) Subsections (5B) and (5C) apply in determining the respondent’s interest for the purposes of subsection (3) in a case where the respondent to the unexplained wealth order—(a) is connected with another person who is, or has been, involved in serious crime (see subsection (4)(b)(ii) of section 362B), or(b) is a politically exposed person of a kind mentioned in paragraph (b), (c) or (d) of subsection (7) of that section (family member, known close associates etc of individual entrusted with prominent public functions).(5B) In a case within subsection (5A)(a), the respondent’s interest is to be taken to include any interest in the property of the person involved in serious crime with whom the respondent is connected.(5C) In a case within subsection (5A)(b), the respondent’s interest is to be taken to include any interest in the property of the person mentioned in subsection (7)(a) of section 362B.”
“362GA Holding of property: trusts arrangements etc(1) This section applies for the purposes of sections 362A and 362B.(2) The cases in which a person (P) is to be taken to “hold” property include those where—(a) P has effective control over the property;(b) P is the trustee of a settlement in which the property is comprised;(c) P is a beneficiary (whether actual or potential) in relation to such a settlement.(3) A person is to be taken to have “effective control” over property if, from all the circumstances, it is reasonable to conclude that the person— (a) exercises,(b) is able to exercise, or(c) is entitled to acquire,direct or indirect control over the property.(4) Where a person holds property by virtue of subsection (2) references to the person obtaining the property are to be read accordingly.(5) For further provision about how to construe references to the holding of property, see section 414.”
“362PA Compensation(1) Where an interim freezing order in respect of any property is discharged, the person to whom the property belongs may make an application to the High Court for the payment of compensation.(2) The application must be made within the period of three months beginning with the discharge of the interim freezing order.(3) The court may order compensation to be paid to the applicant only if satisfied that—(a) the applicant has suffered loss as a result of the making of the interim freezing order,(b) there has been a serious default on the part of the enforcement authority that applied for the order, and(c) the order would not have been made had the default not occurred.(4) Where the court orders the payment of compensation—(a) the compensation is payable by the enforcement authority that applied for the interim freezing order, and(b) the amount of compensation to be paid is the amount that the court thinks reasonable, having regard to the loss suffered and any other relevant circumstances.”
“(c) where the property is held by the trustees of a settlement, setting out such details of the settlement as may be specified in the order, and (d) setting out such other information in connection with the property as may be so specified.”
“( ) where the property is an interest in other property comprised in a settlement, the reference to the respondent obtaining the property is to be taken as if it were a reference to the respondent obtaining direct ownership of such share in the settled property as relates to, or is fairly represented by, that interest.”
“(d) otherwise connected with a person within that paragraph.”
“396QA Compensation(1) Where an interim freezing order in respect of any property is recalled, the person to whom the property belongs may make an application to the Court of Session for the payment of compensation.(2) The application must be made within the period of three months beginning with the recall of the interim freezing order.(3) The court may order compensation to be paid to the applicant only if satisfied that—(a) the applicant has suffered loss as a result of the making of the interim freezing order,(b) there has been a serious default on the part of the Scottish Ministers in applying for the order, and(c) the order would not have been made had the default not occurred.(4) Where the court orders the payment of compensation—(a) the compensation is payable by the Scottish Ministers, and(b) the amount of compensation to be paid is the amount that the court thinks reasonable, having regard to the loss suffered and any other relevant circumstances.”
Lord Hodgson of Astley Abbotts
My Lords, I support Amendment 72, in the name of the noble Lord, Lord Rosser. It has been common ground in our discussions this evening that the volume of SARs is rising all the time. There are now over 1,500 a working day and it slightly defies belief that those are all getting anything like the attention that they should. Those of us who have had experience of this find that the National Crime Agency is extremely reluctant to allow any inhibition on its ability to call for SARs at every level. It should be possible to have discussions about automatically asking for a time limit—not that the information could not be asked for subsequently—of 25 or 50 years. One of my most recent PEP inquiries involved events 53 years ago. I simply cannot believe that collecting that sort of information is a good use of my time or the bank’s. There would be a great deal of virtue in my noble friend trying to persuade the NCA that some focus was a good idea. Getting the focus that is badly needed, and things like time and a de minimis figure, would make the whole system much more effective. The amendment tabled by the noble Lord, Lord Rosser, is a first step towards that and is worthy of serious consideration.
Baroness Williams of Trafford
My Lords, these amendments cover measures in Chapter 2 of Part 1 of the Bill. I thank noble Lords who have taken part in the debate. As the Action Plan for Anti-money Laundering and Counter-terrorist Finance set out, the Government see public/private partnership as central to tackling money laundering and terrorist financing. A major part of this approach is to provide support for the effective exchange of information, both within the private sector, and between the public and private sectors, to increase our collective knowledge of threats and vulnerabilities; to help the regulated sector to protect itself, and to improve the quality of the UK’s financial intelligence. The provisions in Chapter 2 assist this approach, and our amendments will enhance their ability to do so.
I hope noble Lords will agree that the government amendments in this group are technical and uncontroversial. Clause 11 permits the UK Financial Intelligence Unit—or UKFIU—hosted in the National Crime Agency, to request further information in relation to a suspicious activity report, or following a request from a foreign authority, from any member of the regulated sector. Clause 35 allows the police to do the same in relation to terrorist finance. At present, the clause will allow the NCA and police to direct that further information is provided through issuing a further information notice. If the information is not provided in accordance with the direction, the NCA will be able to apply to a court for a further information order to require the person to provide the information requested. However, following further consultations with operational partners, we have concluded that a further information notice is not required, as the NCA can already request information to be provided voluntarily under existing powers. Government Amendments 64 to 69, 130 to 137 and 173 will therefore remove further information notices. If the regulated sector entity declines to provide information on a voluntary basis, the NCA or police can still apply to a magistrates’ court for a further information order.
Lord Rosser
Is the noble Baroness satisfied that this matter has been dealt with as expeditiously as possible bearing in mind that the review was in 2015 and we now have a Bill in front of us to which the SARs regime is directly relevant? However, when we put forward proposals to try to make the regime more effective by prioritising matters, we were told that the Government were still considering the situation. The difficulties in finding space for legislation over the next couple of years have already been raised, so could the noble Baroness address that point and reflect further that we are four weeks away from Report? If the Government really put their mind to it, surely they could come forward with an amendment of their own on this issue.
Baroness Williams of Trafford
My Lords, I recognise that the issue was considered in 2015. It is now 2017. I totally take on board what the noble Lord says. This issue is complex but I will go back to the department to see what is in the art of the possible before Report. I cannot promise anything at this stage other than that I will try to expedite it if possible.
Prioritisation and the allocation of resources are operational matters. The NCA already has processes in place to take tasking decisions and allocate its resources. It is very unlikely that a SAR would be the only factor taken into account when deciding whether to open an investigation. Putting this matter into legislation could, if anything, impose additional restrictions on law enforcement agencies, which already have the type of flexibility to prioritise cases that the noble Lord’s amendment seeks to achieve.
I hope that he is at least partly satisfied with my explanation. I invite the noble Baroness, Lady Hamwee, to withdraw her amendment.
Baroness Hamwee
My Lords, as regards the bad things in subsection (5), I would feel more comfortable if these were a matter of discretion for the court. However, if a court has to be satisfied about something, the provision goes against my instincts—of course, I do not have the experience of other noble Lords in this area—as it would not be in a position to hear arguments on the other side. I specifically mentioned there being no alternative provisions because, in another part of the landscape, we are accustomed to there being special advocates, although that may not be a perfect system and I am not sure that I want to go down that route.
I will have to read the Minister’s response on legal professional privilege. It did not immediately answer my questions. Clearly, we are not going to make further progress on that today but it may well be something that I would like to come back to on Report, which, as I understand it from the provisional arrangements, will be very inconveniently held on the day after the day that we return from the Easter Recess. Therefore, I may disturb somebody’s holiday. I am sorry about that. I beg leave to withdraw the amendment.
“(3A) Subsection (1) applies whether or not the conditions in section 339ZB were met in respect of the disclosure if the person making the disclosure did so in the reasonable belief that the conditions were met.”
“Further information orders339ZH Further information orders(1) A magistrates’ court or (in Scotland) the sheriff may, on an application made by a relevant person, make a further information order if satisfied that either condition 1 or condition 2 is met.(2) The application must—(a) specify or describe the information sought under the order, and(b) specify the person from whom the information is sought (“the respondent”).(3) A further information order is an order requiring the respondent to provide—(a) the information specified or described in the application for the order, or(b) such other information as the court or sheriff making the order thinks appropriate,so far as the information is in the possession, or under the control, of the respondent.(4) Condition 1 for the making of a further information order is met if—(a) the information required to be given under the order would relate to a matter arising from a disclosure made under this Part,(b) the respondent is the person who made the disclosure or is otherwise carrying on a business in the regulated sector,(c) the information would assist in investigating whether a person is engaged in money laundering or in determining whether an investigation of that kind should be started, and(d) it is reasonable in all the circumstances for the information to be provided.(5) Condition 2 for the making of a further information order is met if—(a) the information required to be given under the order would relate to a matter arising from a disclosure made under a corresponding disclosure requirement,(b) an external request has been made to the National Crime Agency for the provision of information in connection with that disclosure,(c) the respondent is carrying on a business in the regulated sector,(d) the information is likely to be of substantial value to the authority that made the external request in determining any matter in connection with the disclosure, and(e) it is reasonable in all the circumstances for the information to be provided.(6) For the purposes of subsection (5), “external request” means a request made by an authority of a foreign country which has responsibility in that country for carrying out investigations into whether a corresponding money laundering offence has been committed.(7) A further information order must specify—(a) how the information required under the order is to be provided, and(b) the date by which it is to be provided.”
Baroness Williams of Trafford
My Lords, the amendments in this group have raised some important points around regulation and supervision of the regulated sector. I am also pleased to able to update noble Lords on some of the recent developments in this area.
Amendment 108, in the name of the noble Lord, Lord Sharkey, would require the FCA to withhold a proportion of any discount to a penalty applied to a financial firm until that firm has completed any internal disciplinary actions agreed in the settlement. We agree with the principle that such firms should be held accountable for their actions, or lack of them. The Government already have in place, through the FCA, powers to increase a penalty that it would otherwise impose on a firm in light of a range of potentially aggravating factors, including,
“disciplinary action against staff involved”.
A firm that had, by the time the FCA imposed its relevant penalty, failed to take such appropriate action, could therefore already have that penalty increased as a result.
The Financial Services and Markets Act 2000 allows the FCA to impose requirements on such firms. If the FCA considers that a firm needs to take disciplinary action—if appropriate and following all due employment process—after a penalty is imposed, the FCA can require that the firm properly and fully considers doing so. If the firm then fails to do so, that would become misconduct in respect of which the FCA could, subject to all other relevant factors, impose an additional penalty. Therefore, we believe that we already have in place powers to take action in the way the proposed amendment suggests.
Lord Sharkey
Does the Minister accept that there is a big difference between having the powers to do something in addition and having an automatic system of withholding, which makes it directly in the interests of the firms to take the action that they are supposed to take, rather than have the FCA make an assessment later and come back to discuss whether it ought to impose an additional penalty? One is automatic, giving an immediate incentive for the firms to do something, while the other requires additional supervision.
Baroness Williams of Trafford
I take the noble Lord’s point that one is perhaps much simpler, but of course each case is different. One firm might be a lot more compliant and it might not take much effort; another might take a lot more effort. However, I take his point.
I move on to Amendments 126 and 127 in the name of my noble friend Lord Hodgson of Astley Abbotts. These relate to the role of the NCA. The NCA leads, co-ordinates and supports the national law enforcement response to money laundering. The prosperity command of the NCA houses the UK Financial Intelligence Unit, or UKFIU, and receives suspicious activity reports, or SARs, from the regulated sector. The intelligence gathered from these is used to support investigations into both money laundering and the predicate offences.
The amendments seek to require the NCA to act in a regulatory manner by ensuring that the provisions of the Money Laundering Regulations, such as customer due diligence and monitoring of transactions, are implemented effectively, and to ensure that the NCA acts with regard to the principles of regulatory best practice. The NCA can and will act where there is criminal activity relating to money laundering. However, it does not have a regulatory remit, and to require it to have one would deflect it from its purpose of tackling serious and organised crime.
My noble friend also asked me for some figures on the moneys recovered. I can tell him that in 2015-16 £255 million was recovered under the Proceeds of Crime Act, of which £208 million was in confiscation. However, I will write to him with further details on that.
Finally, I turn to Amendment 70, moved by the noble Baroness, Lady Hamwee, and Amendment 73, tabled by the noble Lord, Lord Rosser.
Lord Hodgson of Astley Abbotts
I thought I heard the Minister say that the NCA is not a regulator, but I do not understand why it cannot abide by regulatory principles in executing its duty as an enforcer on money laundering regulations. I do not understand why the two are mutually exclusive. If I heard my noble friend aright, she appeared to say that it could not abide by regulatory principles because it is an enforcer.
Baroness Williams of Trafford
That is correct.
I now turn to Amendment 70, moved by the noble Baroness, Lady Hamwee, and Amendment 73 in the name of the noble Lord, Lord Rosser. I can update the Committee on the significant action that the Government are taking to improve the effectiveness of anti-money laundering regulation by strengthening the obligations on all supervisors through the new Money Laundering Regulations 2017. The Treasury published a consultation on these regulations shortly after Second Reading and it is open until 12 April.
The Government set out in a Treasury publication earlier this month their proposals for the new office for professional body anti-money laundering supervision. However, it would not be right for the Government simply to legislate without proper public consultation on the detail of this proposal, and I hope the noble Lord will recognise that that is the appropriate way forward.
We have also recognised the need for more co-ordination between regulators and supervisors of the regulated sector in relation to tackling money laundering. The new office for professional body anti-money laundering supervision will therefore work with professional bodies to help, and ensure, compliance with the regulations. The office will be hosted by the FCA and will liaise with other bodies across the regime to discuss and share best practice to help ensure consistent high standards across supervisors—especially where statutory and professional body anti-money laundering supervisors monitor the same sectors—and to strengthen collaboration between professional body anti-money laundering supervisors, statutory supervisors and law enforcement agencies.
The Government will consult on the draft regulations that will underpin the office over the summer, and they will be finalised and laid before Parliament in the autumn. The Government expect the office to be fully operational by the start of 2018.
The new arrangements will also support the enforcement capability of the supervisors. The supervisors can take a range of actions in relation to failings identified in the areas they supervise. Professional bodies have sanctions specific to their supervisory population—for example, the ability to expel firms from membership. The removal of professional accreditation in this way can incentivise compliance.
HMRC and the FCA have powers under the regulations to require information, enter and inspect premises, and administer monetary civil penalties to their supervised population. The UK is leading the way in improving transparency and accountability in anti-money laundering supervision by publishing an annual report on money laundering supervision on GOV.UK.
The Treasury’s annual report, which is now in its fifth year, sets out how the UK’s supervisors are contributing to the fight against money laundering and terrorist financing. The most recent report shows that supervisors are increasingly focusing on educating businesses on how to meet their anti-money laundering obligations, and ensuring that systems and controls are effective and proportionate to the risks. The actions that supervisors are reporting help to ensure that the UK’s financial system is a hostile environment for illicit finance.
The report shows the positive collaboration between the Treasury and the supervisory authorities, which include the FCA, HMRC, the Gambling Commission and the professional bodies. As set out in the Government’s response to the review of the supervisory regime, the annual report will be strengthened with a new requirement for supervisors to provide relevant information to inform the annual report. This will be expanded to include two new questions on enforcement activity.
I hope that noble Lords will recognise and commend the considerable government activity in relation to the anti-money laundering regime. On that basis, I hope that the noble Baroness will withdraw her amendment.
Lord Rosser
For clarification, the Minister referred to the Government’s intention to create a new office for professional body AML supervision, hosted by the FCA. If my memory serves me right, she said that it would be in existence in early 2018. That of course is still out for consultation, is it not? That is the document where responses were called for by 26 April. It may be that all the responses about the proposed body were negative, in which case presumably the Government may wish to think again. Does that mean that setting up this new office will not require any legislation and that there will not be a need for legislation, for example, to define its powers and responsibilities?
Baroness Williams of Trafford
It may be helpful to the noble Lord if I reiterate the point that I made. The Treasury published the outcome of the review on 22 March and is now conducting further consultation on the creation of the new body, which will be overseen by the FCA and will be up and running by the start of 2018.
On his question of whether legislation—secondary or otherwise—will be required, perhaps I may write to him. I think that it will be secondary legislation but I cannot be certain.
Lord Rosser
Is the Minister saying that setting up a new body that will have powers over other bodies can be done through secondary legislation—by a statutory instrument?
Baroness Williams of Trafford
I do not know, which is why I will write to the noble Lord, if he is happy with that.
Baroness Hamwee
That will be helpful. As I understood it, the proposal was for regulations, and the further consultation has a limited number of questions to flesh out the earlier work. The Minister obviously has some more information.
Baroness Williams of Trafford
I have just had an answer from the Box. It will in fact be secondary legislation that is laid before Parliament.
Baroness Hamwee
My Lords, perhaps I should accept that it will be up to us to ensure that transparency and accountability are included in those regulations. I will set myself some more homework. I am grateful for the Minister’s responses. The story is obviously not ending here but I beg leave to withdraw the amendment.
Lord Kennedy of Southwark
My Lords, the noble Baroness, Lady Kramer, raised the issue of whistleblowing in her contribution at Second Reading and now proposes this new clause today with the noble Baroness, Lady Hamwee. As we have heard, it would establish an office of the whistleblower. The purpose would be to offer much-needed protection to whistleblowers who expose criminality, corruption, fraud and other illegal activity. The price that whistleblowers often pay for alerting the authorities to illegal and criminal activity is to lose their jobs and have their careers ruined and destroyed.
The noble Baroness is right to highlight that we need to do more to offer protection and compensation to people who come forward and alert the authorities to the illegal activity. The noble and learned Lord, Lord Phillips, supported action and I agree. However, I agree with the noble Lord, Lord Faulks, that setting up an office may not be the right way to go about that. What is definitely needed is further protection in statute and regulation. It may not need an office to be established. I will be interested to hear the response from the noble Baroness, Lady Williams of Trafford, to this amendment. I entirely accept that it is a probing amendment and I think that we should take the opportunity that this Bill affords us to do something to address the issue of whistleblowers and the precarious position that they can find themselves in, which the noble Baroness, Lady Kramer, has highlighted to the House today. I accept that whistleblowing goes across a variety of sectors, but we are dealing with the financial services sector and this would be a good place to start.
Baroness Williams of Trafford
My Lords, I am grateful to the noble Baroness for allowing us to debate this important issue. Whistleblowers play a valuable role in society by bringing wrongdoing to light that could otherwise go unchallenged. Individuals should be able to report malpractice in the workplace without fear of reprisal; and employers should be prepared to work with staff to resolve concerns, particularly by means of effective internal procedures.
The Employment Rights Act 1996, as amended by the Public Interest Disclosure Act 1998 and subsequently, provides employment protection for workers in all sectors who have blown the whistle. It enables them to seek redress if they are dismissed or suffer detriment at the hands of the employer because they have made a “protected disclosure” about wrongdoing that they have witnessed at work. To qualify for the protections, a worker must generally make their disclosure either to their employer or the relevant “prescribed person”. “Prescribed persons”’ are typically regulatory bodies for the sector in which the whistleblower works or the type of wrongdoing involved.
I assure noble Lords that, over recent years, the Government have taken steps to support a cultural change in relation to whistleblowing in all sectors, including financial services. A number of statutory and non-statutory improvements have been made. This includes guidance for whistleblowers on how in practice to make disclosures while preserving their employment protections; and guidance for employers including a non-statutory code of practice which we will review this year. We have fulfilled the commitment to keep the prescribed persons list up to date with annual reviews, and we now have guidance in place for prescribed persons. The next update will require prescribed persons to report annually on the number of whistleblowing disclosures they have received and broadly the action that resulted.
Lord Kennedy of Southwark
I agree with the Minister that the office is not the right way forward, but is she saying that everything is fine?
Baroness Williams of Trafford
I am saying that the Government looked at this in 2014, certainly in terms of the financial incentives, and there are various mechanisms in the different sectors for whistleblowers to come forward. The ultimate sanction for employers is unlimited compensation, depending on the type of wrongs that that employer engages in.
Lord Kennedy of Southwark
I am sorry to come back on this, but I take it that the Government do not think that anything further needs to be done on this at the moment.
Baroness Williams of Trafford
The Government are never complacent in any area of law they introduce; I would never say that everything is perfect.
Baroness Kramer
My Lords, obviously I am going to withdraw the amendment, but I want first to make a couple of points. I am not going to give up on this issue. Let me point out that a moment ago the Minister talked about an office for money laundering to be set up within the FCA. As far as I am concerned, that is an ideal pattern to follow. The notion that this proposal would create an extraordinary and hefty bureaucracy is not credible because, frankly, the entire bureaucracy would probably be paid for by one whistleblower revealing one scandal on the scale that we have seen in recent years. I reject the idea that this is onerous. There are plenty of templates to follow that would allow us to do this sensibly.
On the financial incentive, I do not believe for a moment that whistleblowers do it for the money. The money is a recognition that they have destroyed their future. There may be some protection within the company they work for which ensures that they are not dismissed, but neither I nor anyone else can be persuaded that people do not look at whistleblowers and decide that they are not quite right for this promotion, that project or opportunity. If they try to change companies they go with what is almost a black spot on their hand, marking them out as someone it is perhaps better not to take a risk on. That is a reality which the Government have never faced up to.
When dealing with detriment, I would recommend the Minister and others who are interested to connect with the charity Whistleblower.co.uk, which would be delighted to provide them with a great deal of detail. I hesitate to mention individuals without their specific permission, but all the protections have turned out to be completely useless for them. People’s lives have been wrecked. Frankly, even the regulator would agree that despite all the systems that are in place, people’s lives have been wrecked, and there has only been some tinkering at the edges. Nothing has happened to bring about fundamental change. All this comes together in the poor statistics that I set out when moving the amendment. Very few people are coming forward and blowing the whistle on substantive issues that can affect our absolutely massive financial services sector. This allows the industry to be rather complacent, and that is exceedingly dangerous.
I hope that the Minister will recognise that while I will withdraw the amendment, we are nowhere near coming to the end of this issue.