Prevention and Suppression of Terrorism
Ben Wallace Excerpts(7 years, 11 months ago)
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The Minister for Security (Mr Ben Wallace)
I beg to move,
That the draft Terrorism Act 2000 (Proscribed Organisations) (Amendment) (No. 3) Order 2016, which was laid before this House on 12 December, be approved.
The threat level in the UK, which is set by the independent joint terrorism analysis centre, remains at severe. That means that a terrorist attack in our country is highly likely and could occur without warning. We can never entirely eliminate the threat from terrorism, but we are determined to do all we can to minimise it and keep the public safe. The nature of terrorism is constantly evolving. There are organisations that recruit, radicalise and promote and encourage terrorism, as well as those that commit terrible acts of violence against innocent people.
Proscription is an important part of the Government’s strategy to disrupt the full range of terrorist activities. The group we propose to add to the list of terrorist organisations, amending schedule 2 to the Terrorism Act 2000, is National Action. This is the 21st order to be made under section 3(3)(a) of the 2000 Act. Hon. Members will be aware that this is the first time we have laid a proscription order for a far-right group. The Government are committed to tackling terrorism, regardless of what motivates it. National Action is a group whose views and ideology stand in direct contrast to the core values of Britain and the United Kingdom.
Keith Vaz (Leicester East) (Lab)
I welcome the decision to ban this group. Have there been any deproscriptions since the last time the House passed an order proscribing an organisation in July?
Mr Wallace
It has not happened since July. Two groups have been deproscribed. The People’s Mujaheddin of Iran or the MEK was deproscribed at the High Court and a Sikh group linked to allegations of extremism made representations and was deproscribed as a result.
Despite its name, National Action seeks to divide communities and stir up hatred—actions that are entirely contrary to the interests of our nation. Proscribing this neo-Nazi group will prevent its membership from growing and prevent it from spreading propaganda, which allows a culture of hatred and division to thrive. It will also help to prevent National Action from radicalising people who may be vulnerable to extreme ideologies and at risk of emulating the terrorist acts it glorifies.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Does the Minister share my view that we should all revile this group because its members stood on the steps of St George’s Hall in Liverpool during one of its demonstrations and did Nazi salutes, which filled the whole of Liverpool with hatred and disgust for them? People will welcome this move today.
Mr Wallace
Anyone who seeks to glorify the Nazis is a threat to this country and our values. Members of this House died fighting Nazis to keep this country and Europe free. I would describe people who think that this country would somehow like to follow a Nazi course of action as twisted to say the least.
Under section 3 of the Terrorism Act 2000, the Home Secretary has the power to proscribe an organisation if she
“believes that it is concerned in terrorism.”
If the statutory test is met, the Home Secretary may exercise her discretion to proscribe the organisation. The Home Secretary takes into account a number of factors in considering whether to exercise that discretion, including the nature and scale of the organisation’s activities and the need to support other members of the international community in tackling terrorism.
The effect of proscription is that a listed organisation is outlawed and is unable to operate in the United Kingdom. It is a criminal offence for a person to belong to, support or arrange a meeting in support of a proscribed organisation, or to wear clothing or carry articles in public that arouse reasonable suspicion that they are a member or supporter of a proscribed organisation. Proscription acts to halt fundraising and recruitment, and makes it possible to seize cash associated with the organisation.
Given its wide-ranging impact, the Home Secretary exercises her power to proscribe only after thoroughly reviewing the available evidence on an organisation, including open source material, intelligence material and advice that reflects consultation across Government, including with intelligence and law enforcement agencies. The cross-Government proscription review group supports the Home Secretary in the decision-making process. The decision to proscribe is taken only with great care and after careful consideration of the particular case. It is appropriate that it must be approved by both Houses.
Having carefully considered all the evidence, the Home Secretary believes that National Action is currently concerned in terrorism, and that discretionary factors weigh in favour of proscription.
Luciana Berger
The Home Secretary told us just the other week that she was particularly concerned about the increasingly sophisticated methods that this group was using on the internet both to recruit new members and to promote its warped ideology. Will the Minister share a little more about how, if the order is passed, he and the Home Office will ensure that this organisation is held to account and any material it puts online is removed?
Mr Wallace
I have to be careful that we do not undermine the operational capability and effectiveness of the law agencies, which may take action. But it is certainly the case that, when an organisation is proscribed, it allows us to bring the full force of those agencies to bear on the threat posed by the proscribed organisation and the individuals within it. Within that, I would expect measures to make sure that any use of the internet for what is a kind of grooming is restricted or, I would hope, stopped completely, along with other measures. But I will leave that up to the security services and the police, as that will get the best effect, and it would be wrong of me to speculate further about what they may or may not do.
Although I cannot comment on the specific intelligence behind the decision to proscribe, I can provide the House with a summary of the group’s activities. National Action is a racist neo-Nazi group that was established in 2013. It has a number of branches across the United Kingdom, and conducts threatening street demonstrations and activities aimed at intimidating local communities. Its activities and propaganda materials are particularly aimed at recruiting young people. National Action’s ideology promotes the idea that Britain will inevitably see a violent race war, which the group claims to be an active part of.
The group rejects democracy, is hostile to the British state and seeks to divide society by implicitly endorsing violence against ethnic minorities and perceived race traitors. National Action has links to other extreme right-wing groups abroad, including in Europe. In May 2016, National Action members attended the Buchenwald concentration camp, where they made Nazi salutes and posted images online.
The Government’s counter-extremism strategy challenges extremism in all its form. Alongside the strategy, our Prevent work will continue to monitor whether extremist groups have crossed into terrorism. The group is relatively small and has been in operation in the UK for only a few years, but the impact of its activities has been felt in a number of United Kingdom communities.
Keith Vaz
In the evidence presented to the Home Secretary by the agencies before the decision was made to proscribe the group, was there any evidence of any links with other organisations in different parts of Europe? We have seen that far-right groups tend not to operate in only one country.
Mr Wallace
I cannot expand on the intelligence behind this particular decision, but I agree that we see far-right groups with a European network, and being active both here and abroad. Far right groups from abroad are active in the United Kingdom as well.
Sir Nicholas Soames (Mid Sussex) (Con)
Will my hon. Friend tell the House whether any other groups similar to this particularly unpleasant group are near to having the same sort of decision made about them by the Government?
Mr Wallace
There are obviously other groups out there promoting hate. We keep them under review where they wander close to terrorism, and I would come straight back to this House should we gather the evidence or intelligence that meant we must do so. As I have said, other European far-right groups are active in the United Kingdom, either at other people’s rallies or through having a presence among their ethnic grouping here—the Polish far right, for example, would be active in the United Kingdom or have a branch.
Since early 2016, National Action has become more active, and its activities and propaganda material have crossed the threshold from extremism into terrorism. Its online propaganda material, disseminated via social media, frequently features extremely violent imagery and language, and condones and glorifies those who have used extreme violence for political or ideological ends. This includes two tweets posted in 2016 in connection with the murder of our friend Jo Cox, which the prosecutor described as a terrorist act. One stated:
“Only 649 MPs to go”.
Another, containing a photo of Thomas Mair, reads:
“don’t let this man’s sacrifice go in vain. #Jo Cox would have filled Yorkshire with more subhumans!”
The group also disseminated an image doctored to condone and celebrate the terrorist attack on the Pulse nightclub in Orlando and another depicting a police officer’s throat being slit. People might have become aware of these messages who could reasonably have been expected to infer that these acts should be emulated, and therefore such propaganda amounts to the unlawful glorification of terrorism. The Orlando massacre was an atrocity in which 49 people lost their lives. Jo Cox’s murder was a tragedy, familiar to us all, and closer to home. Both are examples of attacks committed for the purpose of advancing a political, religious, racial or ideological cause, and both were terrorist attacks. If we allow such events to be celebrated and encouraged, we live with the risk that they will be repeated.
Our strategy to combat terrorism looks at the full spectrum of activity, and that includes ensuring that groups that unlawfully glorify horrific terrorist acts are prevented from continuing to stir up hatred and encourage violence. It is right that we add National Action to the list of proscribed organisations in schedule 2 to the Terrorism Act 2000. Subject to the agreement of the House and the other place, the order will come into force on Friday 16 December.
Louise Haigh (Sheffield, Heeley) (Lab)
I am very pleased that we are having this debate today, but I am surprised and a little disappointed that we did not have it earlier. In the wake of Jo’s murder, the entire media coverage was dominated by issues about Thomas Mair’s mental health and the idea that he was a lone wolf. It was exactly the same after the atrocities committed by Anders Breivik. We should compare and contrast that with when Muslims commit terrorist atrocities, and the entire public discourse is about the ideology that motivated them to commit those horrendous crimes. There are demands for Muslim leaders to condemn and apologise on their behalf. Yet here we are, six months after Jo’s murder, and only now are we debating the extremist perverted ideology that inspired Thomas Mair to commit his horrific crime.
Mr Wallace
It was felt that bringing this proscription forward earlier could have jeopardised a fair trial. To avoid undermining the trial of Jo Cox’s murderer, it was best to delay to ensure that the trial was completed, given the murderer’s link to far-right groups and far-right ideology.
Louise Haigh
I am grateful to the Minister for that intervention. I was by no means criticising the Government when I mentioned the delay in bringing the proscription forward; my comment was more about the media’s treatment of this atrocity and the general public discourse. I wholeheartedly support the Government’s intention today and welcome the proscription of National Action. It is clearly a terrorist organisation, and I note that it changed its slogan in the wake of Jo’s murder to “Death to traitors, freedom for Britain!”, in the light of Thomas Mair’s plea hearing.
I also want to take this opportunity to call on the Government to give time to debate the proscription of Britain First. I called for such a debate last month. I did not call for Britain First’s proscription; I just called for the House to be given evidence and to look at the details of the group’s paramilitary activity and anti-democratic behaviour. As a result of that and of how the media covered my call, I have received very explicit death threats. I have been called a traitor and a Muslim-lover. On Friday, an individual went through every one of my YouTube videos and said he would not rest until I was murdered. If that is not evidence that Britain First should be proscribed as a terrorist organisation, I am not sure what is. I hope that the Minister will consider seeking time in the House to debate just that.
Mr Wallace
As I said at the outset, the Home Secretary and I strongly believe that National Action should be added to the list of proscribed organisations in schedule 2 to the 2000 Act. I am grateful for the contributions from right hon. and hon. Members to this short debate. I am grateful to the Labour party and the hon. Member for Hackney North and Stoke Newington (Ms Abbott) for their support, and I can assure her that we will continue to do all we can to monitor people who pose a risk, and want to link violence to their cause and to inspire hatred on whatever part of the spectrum it may be.
I am grateful for the support of the Scottish National party, and I can confirm that my predecessor did indeed get in touch with the BBC. I also say to the hon. Member for Dumfries and Galloway (Richard Arkless) something that may frustrate us from time to time: the BBC is editorially independent. We both need to continue to press the case on the point he makes; the media have to be very careful with language in all these areas.
The hon. Member for Sheffield, Heeley (Louise Haigh) rightly made the point that the media have a strong role to play. We did not take our eye off the far right. We have been making sure we watch where these people go, and when they cross from hate speech into extolling terrorism. We have all been involved. The Prevent programme has involved a considerable number of referrals of people on the far right, but the media have for a long time chosen to focus on one section of society, sometimes too much so and at the expense of others.
The lesson from this, as I see when I go out and about around the country, is: if you do not think this applies to your area, think again. People are being radicalised and groomed, perhaps in their bedrooms, on the internet, and this knows no boundaries, be it class, background, race or religion. The ability for the internet to radicalise people and for those behind this to manipulate the internet to do that is incredible. Tragically, in today’s society we are going to have to deal with more of that, not less. I go to local authorities that clearly do not think this applies to them, but I am afraid I know that it does.
What we have seen with the far right is that there are parts of this country where it is successfully recruiting people and they are part of that Prevent programme. The good news is what can happen when they get into that programme. The hon. Member for Liverpool, Wavertree (Luciana Berger) mentioned the Channel referrals. I spoke to someone in the north of England recently who had referred a 15-year-old to that programme for the far right, and that child is now back in mainstream education, has gone on to further education and has built a future for himself. Prevent is there to help; it is there not only to prevent people from being radicalised into extremism and terrorism, but to make sure that people are given help and support.
The points the right hon. Member for Leicester East (Keith Vaz) made about the internet are absolutely right. We use the counter-terrorism internet referral unit to work with internet providers to remove material as it comes online, and since 2010 they have removed 220,000 pieces of terrorist-related material online. That work is ongoing and constant, and we must make sure we do it.
The hon. Member for Strangford (Jim Shannon) does not need lessons from me on Northern Ireland-related terrorism, as the people involved have not gone away and it is still an active problem that we are trying to deal with. I am afraid that they have moved with the times and used many of the smooth, slick recruitment materials that we see across the board.
I am grateful to the House for its support. We should also take this opportunity to remember that some people will not be celebrating Christmas this year. Some of our security services and police will be on duty keeping us safe while we are having our breaks at home. They will be making sure that hon. Members in this House who are under threat and the wider public are protected. I want to place it on the record that we greatly appreciate the work that they do. They are not allowed to shout about it. They get almost no recognition in public. I know from the job that I do how important they are to keeping us safe. Proscription is one of the measures that we can give them to tackle the threat.
Proscription is not targeted at any particular faith, social group or ideological motivation. It is based on clear evidence that an organisation is involved in terrorism. It is my firm opinion and that of the Home Secretary that, on the basis of available evidence, National Action has promoted and encouraged acts of terrorism. This includes the unlawful glorification of the murder of Jo Cox, committed by Thomas Mair, and the unlawful glorification of the massacre at the Pulse nightclub in Orlando. It is therefore appropriate for the Home Secretary to exercise her discretion to proscribe this group. The proscription of this group demonstrates our condemnation of its activities. Proscribing it will also enable the police to carry out disruptive action and ensure that it cannot operate here. It will prevent National Action’s membership growing, or help to stop those who might be vulnerable to radicalisation and possibly at risk of emulating terrorist attacks. Being drawn into the group’s extreme and distorted ideology is what we are trying to stop. Therefore, I commend this order to the House.
Question put and agreed to.
Al-Qaeda: Alternative Name
Ben Wallace Excerpts(7 years, 11 months ago)
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The Minister for Security (Mr Ben Wallace)
We have today laid an order under section 3(6) of the Terrorism Act 2000 which, with effect from tomorrow, will specify “Jabhat Fatah al-Sham” as an alias of the proscribed organisation known as Al Qaeda.
Jabhat Fatah al-Sham have previously operated under the name the Al Nusrah Front. Al Qaeda was proscribed in March 2001 and the Al Nusrah Front was recognised as an alias of the group by a name change order in July 2013.
We are clear that terrorist groups should not be able to claim a false legitimacy whilst continuing with their terrorist activities, by simply operating under an alternative name.
Despite the rebranding of the group, we continue to assess that Jabhat Fatah al-Sham is a violent terrorist organisation that retains strong links to AQ and promotes a global extremist ideology. We have no evidence to suggest that Jabhat Fatah al-Sham has changed its methods, aims or ideology.
The effect of this order is to put it beyond any doubt that being a member of or supporting any group operating under this name will be a criminal offence, contrary to sections 11 and 12 of the Terrorism Act.
[HCWS333]
Oral Answers to Questions
Ben Wallace Excerpts(7 years, 11 months ago)
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Mrs Sheryll Murray (South East Cornwall) (Con)
The Minister for Security (Mr Ben Wallace)
We have established a joint fraud taskforce, bringing together Government, law enforcement and the financial sector to tackle the crime of fraud. The recent arrest of 14 individuals involved in laundering the proceeds of international cybercrime also demonstrates how a multi-agency approach, including international partners, is crucial in tackling cybercrime and cyber-enabled fraud.
Mrs Murray
Fraud, both in person and online, is of great concern to my constituents in South East Cornwall, particularly among the elderly and vulnerable. Will my hon. Friend join me in congratulating voluntary organisations such as citizens advice bureau and Victim Support on their work in supporting fraud prevention through education and in supporting victims of crime?
Mr Wallace
I am grateful to my hon. Friend for pointing out the very important work that many voluntary bodies do in raising awareness. Citizens Advice, Age Concern and Victim Support make sure, including in the lead-up to Christmas, that people are aware of the pitfalls that await them online and of the scandalous fraudsters who pick on some of the most vulnerable people in society.
Toby Perkins (Chesterfield) (Lab)
I certainly welcome any voluntary work that can be done, but as the level of fraud now stands at £193 billion a year and as local police forces are clearly completely unable to cope, we really need a far more serious strategy from Government to tackle the spectre of online crime. Will the Minister tell us what more can be done to support local police forces and provide some protection for our constituents?
Mr Wallace
First, that is why we established the joint fraud taskforce, which includes police and crime commissioners, police forces and victims groups, to make sure that we co-ordinate better our response. It is also why the Government have sponsored and supported the Cyber Aware campaign and Cyber Essentials, to help to make businesses aware of the fraud that awaits them, and banks have sponsored the Take Five campaign. In addition, the national cyber-security strategy sets out a programme in which the Government have invested billions of pounds to make sure that our law enforcement agencies have the capacity to tackle that crime when it is presented to them.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Police have described so-called binary options betting websites that masquerade as investment vehicles as the biggest scam and fraud being perpetrated in the UK. What do the Government intend doing about them?
Mr Wallace
When one of those websites is reported through Action Fraud, our law and order agencies set about trying to make sure we either dismantle it or signpost people away from such areas. In Scotland that is devolved, and it is up to Police Scotland. The broader picture is to make sure that the public and the consumer are aware of what awaits them online, and that they take some very basic steps to protect themselves when they are, for example, Christmas shopping to ensure that fraudsters do not take their money away.
Nigel Mills (Amber Valley) (Con)
Sir Simon Burns (Chelmsford) (Con)
The Minister for Security (Mr Ben Wallace)
The internet presents new opportunities for terrorists, and we must ensure we have the capabilities to confront this challenge. The Investigatory Powers Act 2016 ensures that law enforcement and the security and intelligence agencies have the powers they need in the digital age to disrupt terrorist attacks, subject to strict safeguards and world-leading oversight. The Criminal Finances Bill will add to the ability of UK law enforcement to identify, investigate and disrupt terrorist finance activity.
Sir Simon Burns
Does my hon. Friend agree that the passing of the Investigatory Powers Act 2016 is important for ensuring that our security services and law enforcement agencies are able to combat those who wish to do us harm?
Mr Wallace
Yes, it is. It is also important to recognise that it is all very well the agencies having the capability, but they must also have the capacity. That is why, over the next five years, the Government are making an extra £2.5 billion available to the security agencies. We will use that to strengthen our counter-terrorism network abroad and at home.
John Glen (Salisbury) (Con)
Mr Wallace
Overall counter-terrorism and police spending has been protected in real terms against the 2015-16 baseline over the spending review period. Following the recent European attacks, we revised our risk assessments and are delivering an uplift in our specialist response capability, which includes a £144 million programme over the next five years to uplift our armed policing so that we can respond more quickly and effectively to a firearms attack.
Mr Speaker
We are past 3.15, but that has never bothered me, and it would be unkind to the point of cruelty to exclude the hon. Member for Chippenham (Michelle Donelan), from whom the House will wish to hear.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
What steps are the Government taking to identify and address criminal activity associated with Scottish limited partnerships?
The Minister for Security (Mr Ben Wallace)
That question has been raised by other SNP Members during the passage of the Criminal Finances Bill. I shall be meeting them shortly to discuss it, and the Department for Business, Energy and Industrial Strategy has agreed to conduct a review.
Several hon. Members rose—
Chris Bryant (Rhondda) (Lab)
Many Russian nationals who were involved in the murder of Sergei Magnitsky and the corruption that he unveiled have harboured their assets in the UK. An opportunity to deal with that issue has been provided by the hon. Member for Esher and Walton (Mr Raab), my right hon. Friend the Member for Barking (Dame Margaret Hodge) and 27 other Members in the form of an amendment to the Criminal Finances Bill. Will the Government now support that so that we can keep Russian corruption out of London?
Mr Wallace
I am grateful to the hon. Gentleman for his question. I met his colleagues and my hon. Friend the Member for Esher and Walton (Mr Raab) to discuss that matter. The Department is looking at the amendment as tabled. We already have a number of powers to deal with people who have been accused in this area. However, we will look at the amendment and reflect on it. We will get back to Members on Report.
Kate Green (Stretford and Urmston) (Lab)
I am sure that Ministers will want to join me in welcoming the first Syrian family to arrive in my constituency under the community sponsorship scheme and to congratulate St Monica’s parishioners, who are providing support to the family, but will Ministers also look at the wider funding and commissioning arrangements across all Greater Manchester local authorities for the support of asylum seekers and refugees to ensure that we can look after all these people properly?
Criminal Finances Bill (Fifth sitting)
Ben Wallace ExcerptsTuesday 22nd November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2016 - (22 Nov 2016)
The Chair
With this it will be convenient to discuss the following:
Government amendments 61 to 72.
That schedule 3 be the Third schedule to the Bill.
Clause 33 stand part.
That schedule 4 be the Fourth schedule to the Bill.
Government new clause 18—Forfeiture of terrorist cash.
Government amendments 73 to 75.
The Minister for Security (Mr Ben Wallace)
Good morning, Mrs Main. I am delighted to serve under your chairmanship. This group deals with the provisions in the Bill that allow for the seizure and forfeiture of terrorist property. I suggest that we covered some of this ground in our debates last week on clauses 12 and 13, which will do likewise for proceeds of crime, and I will seek to avoid repeating all the same points.
Clause 32 and schedule 3 cover the seizure and forfeiture of moveable personal items such as precious metals and gemstones where they are earmarked for terrorism, are the resources of a proscribed organisation or are intended for use in terrorism. Clause 33 and schedule 4 give law enforcement agencies new powers to freeze funds held in bank or building society accounts that are suspected to be terrorist money, and provide for such funds to be forfeited if law enforcement agencies or the courts are satisfied that that is the case. Hon. Members will know that the threat from terrorism is constantly evolving. In the same way that we should have a mechanism to deal with criminals who launder money to evade disruption, we should have the ability to seize items that represent terrorist property.
Although this is a powerful new measure, several safeguards are built into the Bill to ensure that the interference with individuals’ rights to enjoy private property is managed in a way that is proportionate and guards against innocent parties being disadvantaged. Seized property may initially be detained for only 48 hours before an application must be made to a magistrates court in England, Wales or Northern Ireland, or to the sheriff in Scotland, for further detention for up to two years. There is therefore judicial oversight of this provision. Individuals who are joint owners of property will be able to claim back the value of their share.
Denying access to funding is already a key part of our counter-terrorism strategy, but the current powers in the Terrorist Asset-Freezing etc. Act 2010 may not always be the most appropriate operational route for combating the financing of terrorism, as they are designed to freeze the entirety of someone’s economic assets, carry a relatively high threshold for use and do not include forfeiture powers. That is why we have tabled several amendments to this part of the Bill.
New clause 18 will ensure that UK law enforcement agencies have the ability to seek forfeiture of terrorist cash without requiring a court order. An administrative forfeiture power is already provided for in the Proceeds of Crime Act 2002, as amended by the Policing and Crime Act 2009. However, the terrorist cash provisions in the Anti-terrorism, Crime and Security Act 2001 were not amended at that time, and we seek to address that anomaly. The new clause will ensure that the best use is made of both the courts’ and the police’s time and resources by providing that there is no need for law enforcement bodies to involve the courts where forfeiture is uncontested.
However, these provisions are not without oversight. Where terrorist cash is seized, extended detention beyond an initial 48-hour period is already subject to oversight by a magistrates court, or the sheriff in Scotland. There is therefore early judicial involvement in the detention and forfeiture process. In addition, the administrative forfeiture of cash will be exercisable only by a senior officer who is a police officer of at least the rank of superintendent.
The other amendments in this group make several technical and consequential changes to complement those provisions. In particular, they address inconsistencies in the definition of “senior officer” in the Anti-terrorism, Crime and Security Act 2001 and the Terrorism Act 2000 to ensure that such a person is at least the rank of superintendent. The amendments will also ensure that a court can order that property be detained under the powers in ACSA for up to six months per application, with an overall cap of two years, which is consistent with the Proceeds of Crime Act, and that these administrative forfeiture powers can be applied for and implemented in Scotland. Taken together, these measures will strengthen law enforcement agencies’ ability to disrupt terrorist financing in a proportionate and effective way.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
I apologise for being slightly late, Mrs Main. Her Majesty’s Opposition support the amendments.
Question put and agreed to.
Clause 32 accordingly ordered to stand part of the Bill.
Schedule 3
Forfeiture of certain personal (or moveable) property
Amendments made: 61, in schedule 3, page 117, line 36, leave out “3” and insert “6”.
This amendment has the effect that an order for the detention of seized property under new Part 4A of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 may be made for a period of up to 6 months, rather than 3 months. This is in line with the provision made by Part 5 of the Proceeds of Crime Act 2002.
Amendment 20, in schedule 3, page 122, line 28, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 62, in schedule 3, page 122, line 38, leave out “inspector” and insert “superintendent”.
This amendment has the effect that a police officer must be of at least the rank of superintendent, rather than inspector, in order to be a senior police officer for the purposes of new Part 4A of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001.
Amendment 63, in schedule 3, page 126, line 33, at end insert—
“(5) If sub-paragraph (6) applies, the court or sheriff may order the property to which the application relates to be released to the applicant or to the person from whom it was seized.
(6) This sub-paragraph applies where—
(a) the applicant is not the person from whom the property to which the application relates was seized,
(b) it appears to the court or sheriff that the property belongs to the applicant,
(c) the court or sheriff is satisfied that the release condition is met in relation to the property, and
(d) no objection to the making of an order under sub-paragraph (5) has been made by the person from whom the property was seized.
(7) The release condition is met—
(a) in relation to property detained under paragraph 10C or 10D, if the conditions in paragraph 10C or (as the case may be) 10D for the detention of the property are no longer met, and
(b) in relation to property detained under paragraph 10G, if the court or sheriff decides not to make an order under that paragraph in relation to the property.”
This amendment adds to new paragraph 10O of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001, which concerns the release of property seized under new Part 4A of that Schedule, provision which is equivalent to section 301(4) and (5) of the Proceeds of Crime Act 2002.
Amendment 21, in schedule 3, page 127, line 18, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 22, in schedule 3, page 127, line 20, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 23, in schedule 3, page 127, line 28, leave out “designated” and insert “counter-terrorism”.— (Mr Wallace.)
See the explanatory statement to amendment 16.
Schedule 3, as amended, agreed to.
Clause 33 ordered to stand part of the Bill.
Schedule 4
Forfeiture of money held in bank and building society accounts
Amendments made: 24, in schedule 4, page 129, line 1, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 64, in schedule 4, page 129, line 7, leave out “inspector” and insert “superintendent”.
This amendment has the effect that a police officer must be of at least the rank of superintendent, rather than inspector, in order to be a senior officer for the purposes of new Part 4B of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001.
Amendment 65, in schedule 4, page 131, line 37, leave out “: England and Wales and Northern Ireland”.
This amendment is consequential on amendment 66.
Amendment 66, in schedule 4, page 131, line 38, leave out “made by a magistrates’ court”.
This amendment has the effect of extending the application of the provision in new Part 4B of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 about the administrative forfeiture of terrorist money held in bank and building society accounts from England and Wales and Northern Ireland to the whole of the UK.
Amendment 67, in schedule 4, page 134, line 11, leave out “a magistrates’” and insert “the relevant”.
This amendment is consequential on amendment 66.
Amendment 68, in schedule 4, page 134, line 16, after “the”, insert “relevant”.
This amendment is consequential on amendment 66.
Amendment 69, in schedule 4, page 134, line 22, after “the”, insert “relevant”.
This amendment is consequential on amendment 66.
Amendment 70, in schedule 4, page 134, line 26, after first “the”, insert “relevant”.
This amendment is consequential on amendment 66.
Amendment 71, in schedule 4, page 134, line 29, after first “the”, insert “relevant”.
This amendment is consequential on amendment 66.
Amendment 72, in schedule 4, page 134, line 35, leave out “, is to be paid into the Consolidated Fund.” and insert—
“—
(a) if, before being forfeited, the money was held in an account in relation to which an account freezing order made by a magistrates’ court had effect, is to be paid into the Consolidated Fund;
(b) if, before being forfeited, the money was held in an account in relation to which an account freezing order made by the sheriff had effect, is to be paid into the Scottish Consolidated Fund.”
This amendment is consequential on amendment 66.
Amendment 25, in schedule 4, page 138, line 15, leave out “designated” and insert “counter-terrorism”.— (Mr Wallace.)
See the explanatory statement to amendment 16.
Schedule 4, as amended, agreed to.
Clause 34
Extension of powers to accredited financial investigators
Amendments made: 26, in clause 34, page 90, line 28, leave out from beginning to end of line 17 on page 91 and insert—
“Counter-terrorism financial investigators
63F Counter-terrorism financial investigators
(1) The metropolitan police force must provide a system for the accreditation of financial investigators (“counter-terrorism financial investigators”).
(2) The system of accreditation must include provision for—
(a) the monitoring of the performance of counter-terrorism financial investigators,
(b) the withdrawal of accreditation from any person who contravenes or fails to comply with any condition subject to which he or she was accredited, and
(c) securing that decisions under that system which concern—
(i) the grant or withdrawal of accreditations, or
(ii) the monitoring of the performance of counter-terrorism financial investigators,
are taken without regard to their effect on operations by the metropolitan police force or any other person.
(3) A person may be accredited if he or she is—
(a) a member of civilian staff of a police force in England and Wales (including the metropolitan police force), within the meaning of Part 1 of the Police Reform and Social Responsibility Act 2001;
(b) a member of staff of the City of London police force;
(c) a member of staff of the Police Service of Northern Ireland.
(4) A person may be accredited—
(a) in relation to this Act;
(b) in relation to the Anti-terrorism, Crime and Security Act 2001;
(c) in relation to particular provisions of this Act or of the Anti-terrorism, Crime and Security Act 2001.
(5) But the accreditation may be limited to specified purposes.
(6) A reference in this Act or in the Anti-terrorism, Crime and Security Act 2001 to a counter-terrorism financial investigator is to be construed accordingly.
(7) The metropolitan police force must make provision for the training of persons in—
(a) financial investigation,
(b) the operation of this Act, and
(c) the operation of the Anti-terrorism, Crime and Security Act 2001.”
This amendment provides for a new system of accreditation and training of financial investigators for the purposes of exercising certain powers under the Terrorism Act 2000 and the Anti-terrorism, Crime and Security Act 2001.
Amendment 27, in clause 34, page 91, line 24, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 28, in clause 34, page 91, line 36, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 29, in clause 34, page 91, line 38, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 30, in clause 34, page 91, line 45, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 31, in clause 34, page 92, line 2, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 32, in clause 34, page 92, line 5, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 33, in clause 34, page 92, line 7, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 34, in clause 34, page 92, line 11, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 35, in clause 34, page 92, line 14, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 36, in clause 34, page 92, line 16, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 37, in clause 34, page 92, line 20, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 38, in clause 34, page 92, line 22, leave out “designated accredited” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 39, in clause 34, page 92, line 26, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 40, in clause 34, page 92, line 28, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 41, in clause 34, page 92, line 36, leave out “designated” substitute “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 42, in clause 34, page 92, line 42, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 43, in clause 34, page 92, line 44, leave out “designated” and insert “counter-terrorism”.— (Mr Wallace.)
See the explanatory statement to amendment 16.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Wallace
Across UK policing, more use is being made of skilled individuals who are not warranted police officers to support the full range of police work, allowing warranted officers to focus on the activities that need their specific training and experience. The financial aspects of terrorism investigations are unlike proceeds of crime investigations—this is not about identifying illicit wealth and taking the profit out of crime. For terrorism, financial investigation allows the police to disrupt terrorist activity by removing access to funds, and to make links in terrorist investigations.
As I set out last week, clause 34 provides for the creation of a new category of civilian financial investigator, to be known as a counter-terrorism financial investigator, which will exercise certain existing investigatory powers, including applying to a court for production orders, financial information orders or account monitoring orders, and to seize terrorist cash or moveable stores of value. The investigator will also be able to use new disclosure order powers being created under the Terrorism Act 2000 and the new bank account seizure and forfeiture powers in the Anti-terrorism, Crime and Security Act 2001.
The new provisions do not confer on counter-terrorism financial investigators any of the search powers available in the legislation for terrorist investigations, and the Government amendments we debated last week will ensure that the investigators will be subject to training and monitoring by the Metropolitan Police Service. The changes are entirely consistent with the changes currently being brought in through the Policing and Crime Bill, which will give chief officers a greater ability to designate civilians with the powers of constables.
Finally, clause 35 introduces offences of obstructing or assaulting the investigators. It is important that a civilian performing the functions of, and exercising the same powers as, a police officer is afforded the same legal protections from assault or wilful obstruction as their police counterparts. That is consistent with the approach taken in the Proceeds of Crime Act 2002 and elsewhere in the Bill. I hope the clauses stand part of the Bill.
Dr Huq
We support the clauses but we also have tabled a forthcoming new clause that questions a couple of things. If we are looking at increasing workload, we like the idea of the extension of powers of the accredited financial investigators, but we would like to see some commensurate resources. On the other stuff, public servants should never be assaulted in the line of duty, so we wholeheartedly support that provision.
Question put and agreed to.
Clause 34, as amended, accordingly ordered to stand part of the Bill.
Clause 35
Offences in relation to accredited financial investigators
Amendments made: 44, in clause 35, page 93, line 3, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 45, in clause 35, page 93, line 4, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 46, in clause 35, page 93, line 7, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 47, in clause 35, page 93, line 36, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 48, in clause 35, page 93, line 37, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 49, in clause 35, page 93, line 41, leave out “designated” and insert “counter-terrorism”.—(Mr Wallace.)
See the explanatory statement to amendment 16.
Clause 35, as amended, ordered to stand part of the Bill.
Clause 36
Meaning of relevant body and acting in the capacity of an associated person
Question proposed, That the clause stand part of the Bill.
Mr Wallace
Mrs Main, this is like an auction—the speed at which you are dealing with matters. The only person who can understand these things is the auctioneer.
Clause 36 defines essential terms that establish the scope of the new corporate offences of domestic and foreign failure to prevent tax evasion. It defines those entities that can be liable under the new offences, and those persons for whom a corporation can be liable if it fails to prevent them from facilitating tax evasion. The relevant bodies that can be liable under the new offences are defined as bodies incorporated and partnerships, not individual men or women, reflecting the responses to HMRC’s consultation on the provisions. The new offences can therefore be committed by companies, whether established to make a profit or for charitable purposes; partnerships; and similar entities established under foreign law. Indeed, the not-for-profit sector publically welcomed the offence applying to its sector, recognising that charities can be misused to facilitate tax evasion. Individuals involved in facilitating tax evasion will of course continue to face prosecution under existing tax evasion offences.
We will go on to debate the provisions in greater depth, but for now it is important to stress that part 3 of the Bill creates offences of corporate failure to prevent the criminal facilitation of tax evasion. They are not offences of corporate failure to prevent tax evasion itself and do not create a legal obligation for corporations to prevent their client’s tax evasion.
The clause also defines broadly the persons who could attract liability for a relevant body. Those include an employee, an agent and any other person who provides services for, or on behalf of, the relevant body. That mirrors the similar offence of corporate failure to prevent bribery in the Bribery Act 2010. That is important because we have seen in the past that corporations structure their affairs to try to insulate themselves from liability by deliberately contracting out the most risky services, typically to persons based in the most secretive jurisdictions. The definition of associated persons in the clause addresses that and closes that potential loophole.
However, it is important to appreciate that not every act of, say, an employee will give rise to criminal liability for the relevant body. For example, where an employee who has gone home from work and is acting in their private capacity criminally facilitates a tax evasion offence by their partner, that will not give rise to any liability for the employing relevant body because the criminal facilitating act was not done in the capacity of employee. I hope that that explanation provides a useful introduction to how the subsequent clauses will function.
Dr Huq
We support the clause. The Minister mentioned the Bribery Act 2010, from which there has been an unusually small number of successful convictions. Does he have any thoughts as to whether there will be a beefed-up number from this legislation? That is largely what I wanted to ask about it. Many big companies have been blogging that it is a bad idea, which makes me think that it must be a good one.
Mr Wallace
In response to what has been said by the Opposition spokeswoman, it is important to note that the Bribery Act has two effects: prosecution, but also change of behaviour. If one goes out to many parts of the world where British companies are engaged in export or trying to win orders, it is clear that the message has gone out loud and clear not to bribe them and not to be involved in bribery. I was in Kenya a couple of weeks ago, and it is clear that British businesses there—people wishing to do business—do not even ask. That is a cultural change so, as I said, the effect is twofold. One thing that can be said about the Bribery Act is that it certainly went to the heart of things. There were no favours drawn: the first person convicted under the Bribery Act was an employee of the Ministry of Justice, and was convicted quite soon after the introduction of the legislation, so we all work under it, whether we are a civil servant or a business.
Question put and agreed to.
Clause 36 accordingly ordered to stand part of the Bill.
Clause 37
Failure to prevent facilitation of UK tax evasion offences
Amendment made: 50, in clause 37, page 95, line 40, after “England” insert “and Wales”.—(Mr Wallace.)
This amendment corrects an omission in clause 37(8)(b).
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Wallace
Clause 37 creates a new offence that will apply to relevant bodies who fail to prevent persons acting in the capacity of persons associated with it from criminally facilitating a UK tax evasion offence. It also provides a defence for the relevant body of proving that it had in place reasonable procedures designed to prevent persons associated with it from criminally facilitating tax evasion, or that it was not reasonable in the circumstances to expect them to have such procedures.
The offence will apply to any legal person, based anywhere in the world. It does not matter where in the world a relevant body is based. If people are criminally facilitating UK tax fraud, that body can commit the offence and be tried by the UK courts. The offence was first announced in March 2015 and has been subject to two public consultations, including one on draft clauses and guidance. A succession of high-profile data leaks has shown the lengths to which some people will go to hide their taxable income and gains from HMRC, and that there are professionals willing to help them to perpetrate that fraud. There has been unprecedented international action to increase tax transparency around the globe, but that must be coupled with action to tackle those professionals and corporations who are complicit in tax crime.
The existing criminal law already makes it an offence to evade tax. When an individual taxpayer evades their tax, they can be prosecuted. When a professional such as a banker or an accountant is complicit in the fraud, that individual can also be prosecuted. However, for the relevant criminal acts to be attributed to the corporation itself, the existing law on corporate criminal liability requires the most senior members of a corporation to be involved in and aware of those acts. At present, they can simply say, “I did not commit the crime” and blame the individual employee for the offence. That current approach to corporate criminal liability simply does not reflect the decentralised way in which decisions are made in large multinational organisations, and it can leave them beyond the reach of the criminal law.
The new offence will change that. By moving beyond seeking to attribute specific criminal acts to the relevant body, and by focusing instead on its failure to prevent those who act in its name from breaking the criminal law, we can better ensure that relevant bodies take reasonable steps to ensure that crimes are not committed when services are being provided on their behalf. The improved approach to criminal corporate liability has already been adopted with success in relation to the Bribery Act 2010. Businesses are already accustomed to the offence of corporate failure to prevent bribery and much of the new offence will be familiar. I know that hon. Members would like the approach that we are taking to go further still, to cover fraud more generally, money laundering and false accounting. That is an issue to which we will come later, in the debate on new clause 6, which has been tabled by the hon. Member for Ealing Central and Acton.
It is important to note that the offence we are considering is one of tax fraud—tax crime. It is not about tax non-compliance that falls short of being criminal, such as accidental non-payment of taxes. There has been much discussion about how the offence will operate in relation to tax avoidance. Tax avoidance, and even aggressive avoidance, is not a crime and falls outside the scope of this measure. The Bill is, after all, about criminal finances. However, it is right that we distinguish between actions that are within the letter if not the spirit of the law, and fraudulent acts dressed up and marketed as tax planning. We must robustly challenge those who mislabel their criminal behaviour as avoidance or planning; and the Act will address such behaviour.
The clause is not intended to criminalise conduct that is not currently against the criminal law. It is not primarily about what is a crime, but rather about who is held to account before the criminal courts. It seeks to ensure that when crimes are committed in the name of a relevant body, that relevant body can be placed in the dock, alongside the taxpayer evading their tax and the professional enabler criminally facilitating that offence.
I stress that reasonable prevention procedures are needed for the defence to be available. “Reasonable” does not mean excessively burdensome, unduly expensive, disproportionate or foolproof; nor does it demand the impossible. It means taking a risk-based and proportionate approach. Under clause 39, the Government will issue guidance to help business to assess its risks and put prevention procedures in place.
As is the case for the individual accountant, it will not matter where the relevant body is based. British businesses have welcomed the global reach of the new offence as it requires businesses providing services to UK taxpayers, regardless of where in the world those businesses are based, to operate to the same high standards as British businesses. I welcome the cross-party support, and support from the NGOs that I have met, that has been expressed for the measure.
Richard Arkless (Dumfries and Galloway) (SNP)
We support the clause and, like the Opposition spokesperson, we commend its international reach. We look forward to discussions, perhaps this afternoon, on new clause 6, but instinctively, like Opposition Members, we are minded to take the clause further.
As time goes on, we ought to monitor the issue of designing processes that demonstrate that reasonable measures have been taken not to facilitate tax evasion. As a consumer finance lawyer, I have seen large multinational organisations roll out various folders of processes, procedures and protocols, but we were not always convinced that those had been followed to the letter. Some sort of monitoring mechanism would be most helpful.
We ask the Government to take note of the evidence we heard last week that these measures could disproportionately impact smaller organisations; larger organisations may be more suited to gathering this information in order to set out processes and procedures. We should keep an eye on those two things. We look forward to discussions on new clause 6 and support the clause.
Mr Wallace
To clarify, I think that statutory guidance is first published in draft. Given the hon. Gentleman’s experience, I would welcome his input on whether that guidance is appropriate. We did that with the Bribery Act; I remember when that came out. Statutory guidance is an important tool for small businesses, because big businesses have big compliance departments and can do all the work even without the statutory guidance, but for small or medium-sized businesses, the statutory guidance is a good starting point. It is really important both that we get it right, and that we get it written in plain English.
I reiterate the offence created by the clause: if someone in a Crown dependency or overseas territory—I know that hon. Members are interested in those—is advising UK citizens to evade UK tax, it does not matter that they have no nexus here; they are criminally at risk. As regards trying to change the behaviour of overseas territories or tax havens, this offence will allow us to prosecute people anywhere in the world who are encouraging people to evade UK tax. That is a major and significant step. If someone on a Caribbean island calls themselves a tax consultant and encourages British people to evade tax, we will come after them. That is a major change that goes beyond the shores of the United Kingdom. I hope that the action that we have taken to stop that will go some way to alleviating colleagues’ concerns about the behaviour of some tax havens around the world.
Question put and agreed to.
Clause 37, as amended, accordingly ordered to stand part of the Bill.
Clause 38
Failure to prevent facilitation of foreign tax evasion offences
Dr Huq
I beg to move amendment 5, in clause 38, page 96, line 6, after “United Kingdom” insert—
“Crown dependency or British overseas territory”.
This amendment would extend the offence of failure to prevent facilitation of foreign tax evasion offences to companies incorporated in a British Overseas Territory or Crown Dependency.
Richard Arkless
We are interested in hearing what the Minister has to say on the clause before we make any submissions. We take the point about the link to a UK company, but we are also concerned about this House’s authority to legislate—or be seen to be legislating—over Crown dependencies.
Mr Wallace
I understand the importance that Members attach to the amendments, and what they are trying to do. They allow us to begin the debate on the response of the British overseas territories and Crown dependencies to tax evasion, and fraud and corruption more broadly. I am sure that that debate will continue as we consider other amendments later today.
The Opposition’s amendments 5, 6 and 7 are designed to give the foreign tax evasion offence a broad scope, and to ensure that corporate complicity in tax evasion is tackled effectively. On that objective, I share the intentions of the hon. Member for Ealing Central and Acton. Before addressing the amendments specifically, I want to clarify that the foreign tax evasion offence in clause 38 would, as drafted, apply to a relevant body that is incorporated under the law of the UK, or carrying out part of a business activity from the UK, and where a person acting in the capacity of an associated person of the relevant body criminally facilitates tax evasion from within the UK, regardless of where the relevant body is based. The offence would, therefore, require there to be some nexus with the UK for our authorities to exercise jurisdiction; that would include a bank that is based or doing business in the overseas territories and Crown dependencies also doing business in the UK.
However, the hon. Lady’s amendments would criminalise, under the UK law, a situation where there is no link to the UK. For example, if a Norwegian were to set up a business in a tax haven, and that business were to advise an American citizen on how to evade tax, and it had nothing to do with the UK at all—we had no loss of revenue and no business with either the Norwegian or the American—the hon. Lady would be asking us to criminalise that person, and effectively to become the world’s policeman on that issue. We would have no nexus whatsoever to go after that individual; neither they nor the company helping them to evade tax would be British. We would perhaps have some ability, in some instances, to help our neighbour’s tax authorities, as we share data under agreements reached over the last year or so. For example, if we find out that someone is helping the French to evade tax, our law enforcement agencies do share information.
The amendment seeks to force Crown dependencies and overseas territories to change their law. It seeks to use neo-imperialism, to use the hon. Lady’s term, to force our will on territories with those statuses. That is a major step to take. As I said earlier, we have come a long way—90% of the way—with the establishment next year of automatic sharing of data via beneficial registers of ownership. Yes, that is not public, and I know that we will come on to that later in the Bill, but we have come a considerable way, and we should remember that.
We should also remember that because of the City of London, there will not be many financial organisations that do not have a nexus in this country. I am not going to finger a particular country, but the bank of a fictitious country with tax haven status would not be much of a bank if it did not have an operation in the UK. If that bank was encouraging people to evade tax, even if they were not British citizens or were not evading UK tax, we could deal with it, because it would have a branch here. If those concerned were convicted, they would most likely lose their banking licence. A bank that cannot trade in one of the major financial institutions of the United Kingdom is effectively a dud. In a sense, we could take quite considerable action. The fundamental difference is that we think there has to be a link. The alternative is to impose our will directly on these Crown dependencies and overseas territories.
I would like to correct the hon. Lady on two things. They are not “our” territories; we do not own them. The Crown dependencies have never been ours. They have never been part of the British Empire—well, they have never been part of our colonies. We do not even own the overseas territories. We have a governing oversight, but they have Parliaments and elections of their own, and they make their own decisions.
I think the direction of travel—my officials have been directly in touch with the Crown dependencies and the overseas territories—has been right. We are going some considerable way from where we were three or four years ago. Those places have smelt the coffee, and the world is moving forward.
The Chair
With this it will be convenient to discuss the following:
New clause 7— Corporate probation order—
‘(1) A court before which a relevant body (B) is convicted of an offence under section 37 or 38 of this Bill may make a corporate probation order in relation to B.
(2) A corporate probation order—
(a) shall require B to implement a compliance procedure or make changes to an existing compliance procedure to prevent persons acting in the capacity of a person associated with B for committing UK tax evasion facilitation offences or foreign tax evasion facilitation offences;
(b) may require B to appoint an external body to verify that compliance programme, costs of which shall be met by B.
(3) A corporate probation order may be made only on an application by the prosecution specifying the terms of the proposed order. Any such order must be on such terms (whether those proposed or others) as the court considers appropriate having regard to any representations made, and any evidence adduced, in relation to that matter by the prosecution and on behalf of B.
(4) Before making an application for a probation order the prosecution must consult such enforcement authority or authorities as it considers appropriate having regard to the nature of the relevant offending.
(5) An organisation that fails to comply with a corporate probation order is guilty of an offence, and is liable—
(a) on conviction on indictment, to a fine,
(b) on summary conviction in England and Wales, to a fine,
(c) on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum.
(6) For the purposes of this clause “relevant body” has the same meaning as in section 36.’
This new clause would allow courts to require bodies found guilty of a UK or foreign tax evasion facilitation offence to make steps to improve their internal procedures to minimize the chance of persons working for that company committing the same offence in the future.
New clause 8—Facilitation of tax evasion offences: disqualification of directors—
‘(1) Where a body (B) has been convicted of an offence under sections 37 and 38 of this Act the Secretary of State must arrange for the relevant enforcement authorities to investigate the conduct of the directors of B.
(2) The purpose of the investigation under this subsection is to determine whether the directors of B were grossly negligent by failing to ensure that B had in place reasonable prevention procedures.
(3) In section 8 of the Company Directors Disqualification Act 1986, after sub-paragraph (ii) insert—
(iii) an investigation under section [Facilitation of tax evasion offences: disqualification of directors] of the Criminal Finance Act”
(4) For the purposes of this section—
“enforcement authorities” means one or more the bodies listed in subsection 362A(7) of the Proceeds of Crime Act 2002.
“prevention procedures” has the same meaning as in subsection 37(3) where B was convicted of an offence under section 37, or as in subsection 38(4) where B was convicted of an offence under section 38.’
This new clause would require the Secretary of State to investigate the directors of a company found guilty of a UK or foreign tax evasion offence to see whether the directors should be subject to a disqualification order for the failure to have proper procedures in place to prevent agents of that company facilitating tax evasion.
Mr Wallace
Perhaps I may clarify for the hon. Member for Ealing Central and Acton that I said she used the word “neo-imperialism”—I never implied that she wanted to be neo-imperialist, but some people could describe it as that if we were to impose our will on Parliaments in some of our overseas territories.
Clause 38 creates a new offence that will be committed by relevant bodies that fail to prevent persons associated with them from criminally facilitating evasion of taxes owed to a country other than the United Kingdom. We have seen that criminals seeking to provide services to further their clients’ tax evasion will try to operate between the gaps between the legal systems of different countries. The measure will ensure that the UK is not a safe harbour for professional facilitators or the businesses for which they work. The new overseas tax evasion offence can be committed by relevant bodies that are formed or incorporated in the UK, or which are carrying out a business activity in the UK, or where the criminal act of facilitation occurs within the UK.
There is a necessarily broad scope for the new offence. It holds corporations that carry out a business in the UK, or the representatives of which are acting in the UK, to operate to the same high standards as UK businesses. The message is clear. Tax evasion is a crime. It is wrong. It is no less wrong where the revenue loss is suffered by another country. If a body is part of UK plc, or sends people to the UK, it is not okay to allow people to criminally facilitate the evasion of taxes, wherever they are owed.
The offence requires a dual criminality. Essentially, that means that, for a relevant body to be liable, the criminal law of the country suffering the tax loss must recognise tax evasion and the facilitating of tax evasion as criminal offences in their jurisdiction, and the laws must be broadly equivalent to those in the UK.
The offence does not require relevant bodies to have a thorough understanding of the tax laws in each jurisdiction, but rather to ask itself the question, “If we were providing these services to a UK taxpayer client, would this be legal?” If the answer is yes, there is no question of criminal liability under the new overseas fraud offence.
The offence is not about the UK policing the world’s tax affairs. We envisage that a prosecution for the overseas tax evasion offence will take place only where there would otherwise be a failure of justice—for example, where the country suffering the tax loss was unwilling or unable to take action because of an inability to handle a complex international fraud trial, or was unable to investigate and prosecute because of corruption concerns. I will leave my explanation of the clause there and allow the hon. Member for Ealing Central and Acton to speak to her new clauses before I respond.
Peter Dowd (Bootle) (Lab)
It is a pleasure to serve under your stewardship, Mrs Main. The Minister referred to this as the Criminal Finances Bill and the clue is in the name. People who commit an offence and go to prison come out and go on probation. New clause 7 would create a similar thing—a sort of corporate probation order that would allow courts to require bodies found guilty of a UK or foreign tax evasion facilitation offence to take steps to improve their internal procedures and minimize the chance of a person working for that company committing the same offence in future. That would be an important step in encouraging large organisations to take responsibility for those they hire and the actions they undertake, and more importantly in ensuring that financial crime and misconduct is not repeated by others in the organisation.
Before making an application for a probation order, the prosecution would have to consult enforcement agencies. Once a corporate probation order had been issued, any organisation that failed to comply with it would be subject to a fine. Currently, the only remedies a court may impose upon a company convicted of an offence is a fine, disgorgement of profit and compensation. Corporate probation orders would be an additional tool that prosecutors could seek. Courts could impose conditions requiring companies to undertake remedial action to their management and compliance procedures to ensure that the offending is not repeated.
Under the Corporate Manslaughter and Corporate Homicide Act 2007, courts can impose remedial orders on companies to require them to remedy any management failure that led to an offence occurring. This provides a workable pre-existing model for such orders. Under the Crime and Courts Act 2013, if a company is offered a deferred prosecution agreement, or DPA, a prosecutor can require a company to implement a compliance programme or make changes to an existing compliance programme. There is no equivalent power in relation to convictions. DPAs are reserved for companies that self-report their misdemeanours and co-operate with enforcement authorities.
Although prosecutors could, theoretically at least, use financial reporting orders to require a company to provide financial information, under the Serious Organised Crime and Police Act 2005, it is not clear that that would include information on compliance procedures. Additionally, such orders are heavy-handed, require separate court proceedings and require a prosecutor to prove that the risk of reoffending is sufficiently high.
The effect of that discrepancy is a ridiculous imbalance: companies that self-report and co-operate may be subject to greater monitoring of their compliance programme than companies that do not and are convicted. The result is that the companies that most need monitoring of their compliance procedures—those whose procedures did not pick up the wrongdoing in the first place—get none, which is a huge deterrent to self-reporting, and puts a greater burden on enforcement agencies.
The Opposition believe that corporate probation orders are required to remedy that clear anachronism. Companies and defence lawyers have noted the more stringent compliance programme monitoring requirements under DPAs as one factor, among others, that puts companies off self-reporting wrongdoing to the Serious Fraud Office. The discrepancy between what happens under DPAs and what happens on conviction is creating a disincentive for companies to self-report.
At the end of the day, we need to encourage self-reporting in a framework in which companies feel that they are able to work with enforcement agencies to deal with rogue elements or individuals. The alternative would see the continuation of a culture of secrecy in which those at the top deliberately turn a blind eye to what those at the bottom do, and in which financial misconduct is not limited to an individual, but instilled and passed on to others in an organisation.
Mr Wallace
I am grateful to the hon. Member for Bootle and pleased to say that the Government are supportive of what he is trying to achieve—that the new offences should be as effective as possible at changing corporate behaviour, and that law enforcement should have the tools it needs to police the new laws effectively. However, I hope to reassure him and his hon. Friends that those matters are already provided for.
As the hon. Gentleman said, new clause 7 would introduce a system of corporate probation orders, which would allow a court to require relevant bodies found guilty of the new corporate offences to make changes to their prevention procedures. Hon. Members should be aware that clause 43(2) adds those offences to the list of offences for which a serious crime prevention order can be imposed under the Serious Crime Act 2007. Serious crime prevention orders allow for a court passing sentence on a person or corporate body to impose prohibitions, restrictions or requirements to prevent, restrict or disrupt involvement in serious crime. Those orders are already available and can successfully disrupt tax fraud. Where such an order is made against a relevant body, its terms may require the body to allow a law enforcement agency to monitor how it provides services in the future.
Additionally, where the corporation in question is in the regulated sector, the regulator may, quite independently of a serious crime prevention order, undertake monitoring of the relevant body, relevant to failings in its systems and controls. For example, the Financial Conduct Authority could take steps to disqualify directors or put extra conditions on to the companies. It is the Government’s view that the hon. Gentleman’s objective can be achieved by applying the existing power to impose serious crime prevention orders on conviction of the new offences, or within the terms of the deferred prosecution agreement. Those orders can do anything that corporation probation would do.
New clause 8 would create a duty on the Secretary of State to investigate the directors of a company found guilty of a UK or foreign tax evasion offence, to see whether they should be disqualified. The existing law already allows the Secretary of State to apply to a court to have a director disqualified where he or she believes that that is in the public interest. A court can grant such an order when it is satisfied that the director’s conduct makes him unfit to be concerned in the management of the company. There is no evidence of which we are aware that the power is not being used in the appropriate cases. When not used, it is not used for appropriate reasons. When company directors are charged with offences, the sentencing court can consider disqualification.
Where the new offence is charged and the relevant body is not tried alongside a director, prosecutors will still be able to refer cases to the Secretary of State so that an application for disqualification can be considered. Indeed, there may be cases when sentencing judges recommend that this is done in their sentencing remarks. In short, rather than creating new law, we again consider it proper for the new offences to sit alongside, and work within, the existing legislative framework for disqualifying directors. If regulators have evidence that a director is unfit to be concerned in the management of the company, they can refer the case to the Secretary of State to make an application to have that director disqualified.
I hope that the hon. Members for Ealing Central and for Bootle, and others, agree that these points are therefore already accounted for, that they do not feel the need to move their new clauses, and that clause 38 can stand part of the Bill.
Question put and agreed to.
Clause 38, as amended, accordingly ordered to stand part of the Bill.
Clause 39
Guidance about preventing facilitation of tax evasion offences
Question proposed, That the clause stand part of the Bill.
Clause 39 requires the Government to produce guidance on reasonable prevention procedures, and empowers the Government to agree supplementary guidance produced by others, such as industry and trade bodies. The aim of the guidance is to help organisations to understand and avoid committing the new offences by undertaking a risk assessment and establishing reasonable prevention procedures to address their risks. The guidance is vital to the success of the offences and will mean higher levels of compliance with the new legislation, creating the desired culture change, and ultimately leading to a reduction in the criminal facilitation of tax evasion. In parallel, it will help to avoid an unnecessarily defensive approach to compliance, whereby excessive prevention procedures are adopted that constitute an undue regulatory burden.
Whether any relevant body can avail itself of the reasonable procedures defence will always be a matter for the criminal courts. The guidance will be only an illustrative set of principles, not a list of absolute requirements. Departure from the guidance will not mean that the defence is unavailable and that the relevant body is guilty. There may well be many different approaches—all equally reasonable—to preventing tax evasion facilitation offences by those who act in the relevant body’s name. Equally, following the guidance does not lead the relevant body to safe harbour rendering it immune from prosecution. Even full compliance with the guidance might not amount to having reasonable prevention procedures if the prevention procedures ignore a particular risk that the relevant body’s particular business carries.
Her Majesty’s Revenue and Customs consulted with industry extensively on what support was needed to ensure compliance with the new offences. The overwhelming feedback revealed a desire for guidance akin to that already produced for the similar offence of corporate failure to prevent bribery in the Bribery Act 2010. The last draft guidance was published at the same time as the introduction of the Bill and has received positive feedback. HMRC continues to work with a number of leading financial service trade bodies on developing detailed supplementary guidance for the sector. I hope the clause stands part of the Bill.
Dr Huq
We all need guidance in life. The measures sound eminently sensible and the Minister described them cogently. We support the clause.
Question put and agree to.
Clause 39 accordingly ordered to stand part of the Bill.
Clause 40
Offences: extra-territorial application and jurisdiction
Question proposed, That the clause stand part of the Bill.
Mr Wallace
Clause 40 provides for the extraterritorial application of the corporate failure to prevent offences. The UK’s criminal courts will have jurisdiction to try the domestic tax offence in clause 37, regardless of where the conduct took place. The UK courts claim jurisdiction as a result of the UK suffering the tax loss. With respect to the foreign tax offence, our courts again claim jurisdiction on the basis that the relevant body has a nexus with the UK, such that it can be regarded as part of UK plc and thus is required to abide by the criminal law of this country. We have seen, and our partners in other jurisdictions have confirmed that they have also seen, that those deliberately facilitating tax evasion will typically offshore illicit services to try to avoid detection and to hide in the gaps between domestic legal systems.
Those facilitating offshore tax evasion often do not provide those services from within the geographic borders of the country whose tax loss they are facilitating. It is therefore vital that both the domestic and the overseas tax evasion facilitation offences capture activity that takes place outside the United Kingdom. Failure to apply the laws in such a way would lead to loopholes that could be easily exploited. By its very nature, the foreign tax evasion offence is likely to raise a complicated range of competing interests and issues, including those relating to international relations and diplomatic affairs.
Clause 41 puts appropriate safeguards in place by requiring that a decision to prosecute the offence is taken only by, or with the authority of, the director of these prosecuting bodies: the Director of Public Prosecutions, the director of the Serious Fraud Office or the Director of Public Prosecutions for Northern Ireland. A similar protection is in place for prosecutions for the corporate failure to prevent bribery under section 7 of the Bribery Act. I hope the clauses stand part of the Bill.
Dr Huq
Her Majesty’s loyal Opposition support clause 40.
Question put and agreed to.
Clause 40 accordingly ordered to stand part of the Bill.
Clause 41 ordered to stand part of the Bill.
Clause 42
Offences by partnerships: supplementary
Question proposed, That the clause stand part of the Bill.
Mr Wallace
Clause 42 makes provision for rules of criminal procedure in relation to the prosecution of companies to apply to prosecutions of partnerships for the new offences in part 3. It mirrors section 15 of the Bribery Act 2010 and provides that proceedings for an offence under clauses 37 or 38 are to be brought in the name of the partnership and not that of an individual partner; and that any resulting fine is paid out of the assets of the partnership. The clause also applies existing rules of criminal procedure applicable where bodies corporate are prosecuted. They cover various matters including the transfer of cases from the magistrates court to the Crown court, the representation of the relevant body in court, the entering of pleas and the taking of action in the relevant body’s absence.
As I mentioned in debating an earlier group, clause 43 amends a number of pieces of existing legislation, adding the new offences created by part 3 to the lists of offences for which various powers are available, which will assist the effective investigation and prosecution of the offences. That includes allowing the CPS to require suspected persons to answer questions or provide information in relation to those offences; allowing for serious crime prevention orders to be imposed on relevant bodies; and providing for deferred prosecution agreements.
Clause 44 is simply an interpretation clause, defining terms within part 3. I hope the clauses stand part of the Bill.
Dr Huq
We support the clauses.
Question put and agreed to.
Clause 42 accordingly ordered to stand part of the Bill.
Clauses 43 and 44 ordered to stand part of the Bill.
New Clause 9
Immigration officers
‘(1) Section 24 of the UK Borders Act 2007 (seizure of cash) is amended as follows.
(2) For the heading substitute “Exercise of civil recovery powers by immigration officers”.
(3) For subsection (1) substitute—
(1) Chapters 3 to 3B of Part 5 of the Proceeds of Crime Act 2002 (civil recovery) apply in relation to an immigration officer as they apply in relation to a constable.”
(4) In subsection (2)(a), for “section 289” substitute “sections 289 and 303C and Chapter 3B”.
(5) In subsection (2)(c), for “and 297A” substitute “, 297A and 303E and in Chapter 3B (see section 303Z2(7))”.
(6) In subsection (2)(d), for “section 292” substitute “sections 292 and 303G”.
(7) In subsection (2)(e), for “and 293A” substitute “, 293A, 303H and 303I”.
(8) In subsection (2)(f), in the words before sub-paragraph (i), after “295(2)” insert “or 303L(1)”.
(9) In subsection (2)(f)(ii), after “298” insert “or (as the case may be) 303O”.
(10) In subsection (2)(g), after “298” insert “, 303O or 303Z14”.
(11) In subsection (2)(h), after “302” insert “, 303W or 303Z18”.” .—(Mr Wallace.)
Immigration officers exercise the civil recovery powers conferred by Chapter 3 of Part 5 of the Proceeds of Crime Act 2002 by virtue of section 24 of the UK Borders Act 2007. These amendments of section 24 provide for immigration officers to be able to exercise the civil recovery powers conferred by new Chapters 3A and 3B of Part 5 of the Proceeds of Crime Act 2002 (see clauses 12 and 13 of the Bill) in the same way.
Brought up, read the First and Second time, and added to the Bill.
New Clause 10
Forfeiture of cash
‘(1) In section 289(6) of the Proceeds of Crime Act 2002 (meaning of cash for purposes of Chapter 3 of Part 5 of that Act), after paragraph (e) insert—
“(f) gaming vouchers,
(g) fixed-value casino tokens,”.
(2) After section 289(7) of that Act insert—
“(7A) For the purposes of subsection (6)—
(a) “gaming voucher” means a voucher in physical form issued by a gaming machine within the meaning of the Gambling Act 2005 (see section 235 of that Act) that represents a right to be paid the amount stated on it;
(b) “fixed-value casino token” means a casino token that represents a right to be paid the amount stated on it.”
(3) In Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (forfeiture of terrorist cash), in paragraph 1 (meaning of terrorist cash)—
(a) after sub-paragraph (2)(e) insert—
(f) gaming vouchers,
(b) fixed-value casino tokens,”;
(b) after sub-paragraph (4) insert—
“(5) For the purposes of sub-paragraph (2)—
(a) “gaming voucher” means a voucher in physical form issued by a gaming machine within the meaning of the Gambling Act 2005 (see section 235 of that Act) that represents a right to be paid the amount stated on it;
(b) “fixed-value casino token” means a casino token that represents a right to be paid the amount stated on it.””—(Mr Wallace.)
This new clause provides for casino tokens and what are commonly referred to as “ticket in ticket out vouchers” to be treated as cash for the purposes of the civil recovery powers conferred by Chapter 3 of Part 5 of the Proceeds of Crime Act 2002 and by Schedule 1 to the Anti-terrorism, Crime and Security Act 2001.
Brought up, read the First and Second time, and added to the Bill.
New Clause 18
Forfeiture of terrorist cash
‘(1) Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (forfeiture of terrorist cash) is amended as follows.
(2) In paragraph 3 (detention of seized cash)—
(a) in sub-paragraph (2)(a), for “three” substitute “6”;
(b) after sub-paragraph (8) insert—
“(9) Where an application for an order under sub-paragraph (2) relates to cash seized under paragraph 2(2), the court, sheriff or justice may make the order if satisfied that—
(a) the condition in sub-paragraph (6), (7) or (8) is met in respect of part of the cash, and
(b) it is not reasonably practicable to detain only that part.”
(3) After paragraph 5 insert—
Part 2A
Forfeiture of terrorist cash without court order
Cash forfeiture notice
5A (1) This paragraph applies while any cash is detained in pursuance of an order under paragraph 3(2).
(2) A senior officer may give a notice for the purpose of forfeiting the cash or any part of it if satisfied that the cash or part is terrorist cash.
(3) A notice given under sub-paragraph (2) is referred to in this Schedule as a cash forfeiture notice.
(4) A cash forfeiture notice must—
(a) state the amount of cash in respect of which it is given,
(b) state when and where the cash was seized,
(c) confirm that the senior officer is satisfied as mentioned in sub-paragraph (2),
(d) specify a period for objecting to the proposed forfeiture and an address to which any objections must be sent, and
(e) explain that the cash will be forfeited unless an objection is received at that address within the period for objecting.
(5) The period for objecting must be at least 30 days starting with the day after the notice is given.
(6) The Secretary of State must by regulations made by statutory instrument make provision about how a cash forfeiture notice is to be given.
(7) The regulations may (amongst other things) provide—
(a) for a cash forfeiture notice to be given to such person or persons, and in such manner, as may be prescribed;
(b) for a cash forfeiture notice to be given by publication in such manner as may be prescribed;
(c) for circumstances in which, and the time at which, a cash forfeiture notice is to be treated as having been given.
(8) The regulations must ensure that where a cash forfeiture notice is given it is, if possible, given to every person to whom notice of an order under paragraph 3(2) in respect of the cash has been given.
(9) A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of either House of Parliament.
(10) In this Part of this Schedule—
“senior officer” means—
(a) a senior police officer;
(b) an officer of Revenue and Customs of a rank designated by the Commissioners for Her Majesty’s Revenue and Customs as equivalent to that of a senior police officer;
(c) an immigration officer of a rank designated by the Secretary of State as equivalent to that of a senior police officer;
“senior police officer” means a police officer of at least the rank of superintendent.
Effect of cash forfeiture notice
5B (1) This paragraph applies if a cash forfeiture notice is given in respect of any cash.
(2) The cash is to be detained until—
(a) the cash is forfeited under this paragraph,
(b) the notice lapses under this paragraph, or
(c) the cash is released under a power conferred by this Schedule.
(3) If no objection is made within the period for objecting specified in the notice under paragraph 5A(4)(d), and the notice has not lapsed, the cash is forfeited (subject to paragraph 5D).
(4) If an objection is made within the period for objecting, the notice lapses.
(5) If an application is made for the forfeiture of the whole or any part of the cash under paragraph 6, the notice lapses.
(6) If the cash or any part of it is released under a power conferred by this Schedule, the notice lapses or (as the case may be) lapses in relation to that part.
(7) An objection may be made by anyone (whether a recipient of the notice or not).
(8) An objection means a written objection sent to the address specified in the notice; and an objection is made when it is received at the address.
(9) An objection does not prevent forfeiture of the cash under paragraph 6.
(10) Nothing in this paragraph affects the validity of an order under paragraph 3(2).
Detention following lapse of cash forfeiture notice
5C (1) This paragraph applies if—
(a) a cash forfeiture notice is given in respect of any cash,
(b) the notice lapses under paragraph 5B(4), and
(c) the period for which detention of the cash was authorised under paragraph 3(2) has expired.
(2) The cash may be detained for a further period of up to 48 hours (calculated in accordance with paragraph 3(1A)).
(3) But if within that period it is decided that neither of the applications mentioned in sub-paragraph (4) is to be made, the cash must be released.
(4) The applications are—
(a) an application for a further order under paragraph 3(2);
(b) an application for forfeiture of the cash under paragraph 6.
(5) If within that period an application is made for a further order under paragraph 3(2), the cash may be detained until the application is determined or otherwise disposed of.
Application to set aside forfeiture
5D (1) A person aggrieved by the forfeiture of cash in pursuance of paragraph 5B(3) may apply to a magistrates’ court or (in Scotland) the sheriff for an order setting aside the forfeiture of the cash or any part of it.
(2) The application must be made before the end of the period of 30 days starting with the day on which the period for objecting ended (“the 30-day period”).
(3) But the court or sheriff may give permission for an application to be made after the 30-day period has ended if the court or sheriff thinks that there are exceptional circumstances to explain why the applicant—
(a) failed to object to the forfeiture within the period for objecting, and
(b) failed to make an application within the 30-day period.
(4) On an application under this paragraph the court or sheriff must consider whether the cash to which the application relates could be forfeited under paragraph 6 (ignoring the forfeiture mentioned in sub-paragraph (1)).
(5) If the court or sheriff is satisfied that the cash to which the application relates or any part of it could not be forfeited under that paragraph the court or sheriff must set aside the forfeiture of that cash or part.
(6) Where the court or sheriff sets aside the forfeiture of any cash—
(a) the court or sheriff must order the release of that cash, and
(b) the cash is to be treated as never having been forfeited.
Release of cash subject to cash forfeiture notice
5E (1) This paragraph applies while any cash is detained under paragraph 5B or 5C.
(2) The person from whom the cash was seized may apply to a magistrates’ court or (in Scotland) the sheriff for the cash to be released.
(3) On an application under sub-paragraph (2), the court or sheriff may direct the release of the cash or any part of it if not satisfied that the cash to be released is terrorist cash.
(4) An authorised officer may release the cash or any part of it if satisfied that the detention of the cash to be released is no longer justified.
Application of cash forfeited under cash forfeiture notice
5F (1) Cash forfeited in pursuance of paragraph 5B(3), and any accrued interest on it—
(a) if first detained in pursuance of an order under paragraph 3(2) made by a magistrates’ court or a justice of the peace, is to be paid into the Consolidated Fund;
(b) if first detained in pursuance of an order under paragraph 3(2) made by the sheriff, is to be paid into the Scottish Consolidated Fund.
(2) But it is not to be paid in—
(a) before the end of the period within which an application under paragraph 5D may be made (ignoring the possibility of an application by virtue of paragraph 5D(3)), or
(b) if an application is made within that period, before the application is determined or otherwise disposed of.”
(4) In paragraph 7(4) (release of cash on appeal against decision in forfeiture proceedings), after “of” insert “the whole or any part of”.
(5) In paragraph 9 (victims), after sub-paragraph (3) insert—
“(4) If sub-paragraph (5) applies, the court or sheriff may order the cash to be released to the applicant or to the person from whom it was seized.
(5) This sub-paragraph applies where—
(a) the applicant is not the person from whom the cash claimed was seized,
(b) it appears to the court or sheriff that the cash belongs to the applicant,
(c) the court or sheriff is satisfied that the release condition is met in relation to the cash, and
(d) no objection to the making of an order under sub-paragraph (4) has been made by the person from whom the cash was seized.
(6) The release condition is met—
(a) in relation to cash detained under paragraph 3, if the conditions in that paragraph for the detention of the cash are no longer met,
(b) in relation to cash detained under paragraph 5B or 5C, if the cash is not terrorist cash, and
(c) in relation to cash detained pending the conclusion of proceedings in pursuance of an application under paragraph 6, if the court or sheriff decides not to make an order under that paragraph in relation to the cash.”
(6) In paragraph 19 (general interpretation), in sub-paragraph (1), at the appropriate places insert—
““cash forfeiture notice” has the meaning given by paragraph 5A(3),”;
““senior officer” (in Part 2A) has the meaning given by paragraph 5A(10),”.”—(Mr Wallace.)
This new clause makes various amendments of Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 to bring it into line with the provision made by Chapter 3 of Part 5 of the Proceeds of Crime Act 2002, including amendments to provide for the forfeiture of “terrorist cash” by the giving of a forfeiture notice. This administrative forfeiture regime will apply throughout the UK; the equivalent regime under the 2002 Act is limited in its application to England and Wales and Northern Ireland.
Brought up, read the First and Second time, and added to the Bill.
New Clause 1
Review of Scottish Limited Partnership
“(1) The Secretary of State must undertake a review into the extent of financial criminal activity associated with Scottish Limited Partnerships, and lay a copy of the review before the House of Commons within six months of this Act receiving Royal Assent.
(2) In conducting the review the Secretary of State must consult—
(a) the Scottish Government;
(b) the National Crime Agency;
(c) the Serious Fraud Office;
(d) the Financial Conduct Authority;
(e) HMRC;
(f) interested third sector organisations; and
(g) any other persons he deems relevant.
(3) The review must set out what steps the Government intends to take to prevent Scottish Limited Partnerships being used for criminal purposes.”—(Roger Mullin.)
This new clause would require the Secretary of State to conduct a review of financial criminality associated with Scottish Limited Partnerships and set out what steps the Government intends to take to prevent Scottish Limited Partnerships being used for criminal purposes.
Brought up, and read the First time.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I beg to move, That the clause be read a Second time.
It is a great pleasure to serve under your chairmanship, Mrs Main. Before I go into the substance of the new clause, I place on the record our thanks to the Minister for his willingness to discuss the issue with us both before and after Second Reading. Although I am a relatively new Member of Parliament, this is the fifth Bill Committee on which I have served in just over a year, and this is the most listening Minister I have come across. I would like to acknowledge that.
Roger Mullin
Yes, this is the gentle dagger.
I rehearsed on Second Reading many of the specific instances of abuse using Scottish limited partnerships. I do not intend at this moment to repeat all that, but for the Minister’s benefit, I would like to add to what has already been said.
First, we have had further discussions with the Law Society of Scotland and others. They indicate a willingness to assist us in moving forward to address what the solutions may be to Scottish limited partnerships. I have also had discussions with an individual who was named in evidence to us, Mr Richard Smith, who has undertaken a lot of research into this matter. He, too, has indicated a willingness to assist.
Why do we consider that a review is needed? A lot of research has been undertaken, including by Mr David Leask, who gave evidence to the Committee just last week. However, in our view, before the Government move towards precisely how they will take action to secure SLPs from abuse in the future, it would do us a lot of good if we conducted a detailed review, sponsored by the Government, to ensure that all forms of abuse are properly understood. It would be good to do that before we move towards saying what the precise solutions will be. Therefore, it would be valuable if the Minister, when he comments on the new clause, indicates whether he thinks there is still scope for the Government to consider a detailed review such as that which we have discussed.
I shall conclude now and allow the Minister to respond. Our hope is that the response will be such that there will be no need for us to push the new clause to a vote.
Mr Wallace
I thank the hon. Gentleman for his kind words. As the son of a Fifer, I know that one always does well to listen to a Fifer—or one faces the consequences.
I am also grateful to the Scottish National party and The Herald newspaper for raising this issue. It is a genuine issue of abuse, as they have rightly pointed out. We have taken important steps to prevent the misuse of corporations for money laundering, corruption and tax evasion. The UK’s public register of company beneficial ownership went live this year—we were the first G20 country to put such a register in place. At the London anti-corruption summit, we committed to going further and creating a register of the beneficial ownership of foreign companies that own real property or wish to be involved in public sector procurement contracts in the UK.
However, we must not be complacent. Hon. Members have rightly raised the issue of Scottish limited partnerships a number of times. I hope they are assured that I take it very seriously. The stories in The Herald and the intelligence assessments that I have received from our law enforcement agencies are very concerning.
As I committed to do on Second Reading, I have spoken on this subject to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stourbridge (Margot James), who is responsible for small business, consumers and corporate responsibility, and she shares my concerns about the abuse of SLPs. We agreed that we need to get the balance right between ensuring that the UK remains a good place to do business for the law abiding and cracking down on abuse. Her Department recently published a discussion paper that invites views on a number of questions about transposing corporate transparency requirements under the fourth anti-money laundering directive. The catchy name is “Implementation of the Fourth Money Laundering Directive—Discussion paper on the transposition of Article 30: beneficial ownership of corporate and other legal entities”.
Mr Wallace
I can repeat it for those who want to write it down. That was launched on 3 November. I think that it is a six-week consultation. As a starting point, I strongly urge the Scottish National party to make a submission.
Roger Mullin
We are aware of that consultation with a snappy title, and it is our understanding that, appropriately, submissions have to be in by St Andrew’s day— 30 November. We intend to make a submission.
Mr Wallace
One issue raised in the paper is whether SLPs should be brought within the scope of the directive by including them on the UK’s public company beneficial ownership register, which would go some way to revealing the people behind some of those arrangements. The Government propose that SLPs should be on the register, although we must wait to see the responses to the consultation before we make a final decision. Hopefully my office will be in touch with hon. Members to arrange a meeting to discuss both that and some of the other issues they have raised.
New clause 1 proposes a statutory review of SLPs. The existing discussion paper already provides for interested parties to submit their views on identifying the beneficial owners of SLPs, which is a good first step. I reassure hon. Members that officials and Ministers in multiple Departments are looking closely at the wider issues related to SLPs, and I hope we will have more to say about that on Report. For now, I hope the hon. Gentleman feels suitably encouraged to withdraw his new clause.
Roger Mullin
I thank the Minister for his encouraging response. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 2
National Crime Agency: Report on staff training
“Section 3 of the Proceeds of Crime Act 2002 is amended as follows, after subsection (7) insert—
‘(8) The National Crime Agency must make an annual report to Parliament on the provision of training to persons under this section.’”.—(Dr Huq.)
This new clause would require the National Crime Agency to make a report to Parliament about the training it provides to its staff in financial investigation and the operation of the Proceeds of Crime Act.
Brought up, and read the First time.
Mr Wallace
The Government recognise the importance of ensuring that investigation and prosecution agencies have sufficient expertise and resources to carry out their functions under the Proceeds of Crime Act 2002. Section 3 of the Act places a statutory duty on the National Crime Agency to provide a system for the accreditation of financial investigators who use the powers under POCA. This is done through the National Crime Agency’s Proceeds of Crime Centre. The accreditation system includes provision for monitoring performance and, importantly, accreditation can be removed from an investigator who fails to meet the accreditation standards.
The training can be lengthy and expensive. The Home Affairs Committee, during its recent inquiry into asset recovery, identified the risk of the private sector poaching trained resources with the promise of better pay and benefits. It was a good report. I read it in full as well as the Public Accounts Committee report.
The NCA already publishes statistics on the training activities undertaken by the Proceeds of Crime Centre in its annual report. Their last report showed the delivery of 95 training courses, support for 760 delegates through that training, and the completion of 1,400 registrations and re-accreditations. Those statistics are already published annually.
New clause 5 provides for the use of agreements to tie accredited financial investigators to their agencies, so that they would pay the cost of their training if they voluntarily left the employment of the agency that has funded their training. However, these agencies have tried such agreements and found them difficult and costly to enforce. In most cases, the benefits of such agreements are minimal.
Even if an effective and enforceable form of cost training agreement could be found—I do not want to dismiss the idea out of hand today—making it a requirement in primary legislation would not be appropriate. The operational agencies who use financial investigators should be given the freedom to manage their workforce according to their needs.
In line with the hon. Lady’s concerns, the criminal finance board, which I chair with my hon. Friend the Economic Secretary to the Treasury, commissioned a working group to examine the retention and training of financial investigators. It has not gone away or been swept under the carpet; I assure hon. Members that nothing is swept under the carpet in my Department. There is no conspiracy either—we do not do conspiracies in my Department; we are the conspiracy, according to some. That group is also considering what actions can be taken to incentivise investigators to stay and develop their career within the public sector.
The hon. Lady also referred to ELMER—the database of the suspicious activity reports IT regime. We have committed to replacing the SARs IT regime by October ’18, but in the meantime we have taken steps to upgrade and maintain it as part of the SARs reform package. We have not finished reforming the SARs programme, and before we roll out a new system we need to know what the new suspicious activity reports will look like, because if we are going to have a software database in order to cope with that effectively, we need to know what we are planning to cope with.
I am therefore alive to the issues and will be following the issues raised by the right hon. Member for Leicester East. I will visit to look at the system directly; I will have to bring my 1980s computer knowledge up to date to see whether I can remotely understand what I am looking at. I will certainly make sure that it is on because, like the hon. Member for Ealing Central and Acton, it is not my or the Government’s intention for the system to grind to a halt. It is very important.
It is also important that we register that we are keen to make sure that all those people who benefit from that system—not just the Government but the banks and the other people who use it—perhaps make a contribution towards the new system. That is important. It is for their benefit as well for the system to work successfully and efficiently.
I hope that demonstrates to the hon. Lady that I take both matters seriously. I think the training has already been dealt with, because it is published in the National Crime Agency’s annual report. I hope she is inclined to withdraw her motion on that basis.
Dr Huq
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 3
Annual reporting: Adequacy of resources
“(1) In Part 12 of the Proceeds of Crime Act 2002 (miscellaneous and general), after section 455, insert—
“455A Annual reports on resources
(1) A relevant authority must, no later than 1 June in each calendar year, prepare an annual report on the adequacy of the resources available from money voted by Parliament for the exercise of any functions of that authority—
(a) under this Act;
(b) in connection with investigations into terrorist financing offences under the Terrorism Act 2000;
(c) under Part 3 of the Criminal Finances Act 2017.
(2) In this section, “a relevant authority” means—
(a) the National Crime Agency;
(b) the Director of Public Prosecutions;
(c) the Director of the Serious Fraud Office, and
(d) Her Majesty’s Revenue and Customs.
(3) The reports prepared in accordance with subsection (1) shall be sent—
(a) in the case of the National Crime Agency, to the Secretary of State;
(b) in the case of the Director of Public Prosecutions and the Director of the Serious Fraud Office, to the Attorney General, and
(c) in the case of Her Majesty’s Revenue and Customs, to the Chancellor of the Exchequer.
(4) The person receiving annual reports in accordance with subsection (3) must lay those reports before each House of Parliament in the form in which they were received no later than 30 June in the same calendar year, together with a statement on plans for future resources to be provided from money voted by Parliament.”.”.—(Peter Dowd.)
This new clause would require the National Crime Agency and other agencies to report annually to Parliament on the adequacy of its resource to fulfil its functions relating to combating financial crime.
Brought up, and read the First time.
Mr Wallace
In my response to the hon. Member for Ealing Central and Acton on new clauses 2 and 5, I explained what we are doing to assess the capacity and capability of investigator resource. The new tools in the Bill are a key part of strengthening our response to economic crime. The Government continue to invest in law enforcement agencies through the asset recovery incentivisation scheme, which returns recovered assets back to the frontline. A top-slice of £5 million has been set aside every year until the end of this Parliament to fund key national asset recovery capabilities, and I can announce today that we are going further. We made a manifesto commitment to return a greater percentage of recovered assets to policing, and we are implementing that commitment by investing in policing the whole Home Office share of amounts above a certain baseline collected by the multi-agency regional asset recovery teams. That will give the agencies greater financial resources, if performance continues to increase—100% of the Home Office share, rather than the 50% that they currently get. There we are: an announcement in a Bill Committee—a new way of venturing forward.
Let us be honest: I say to the hon. Member for Bootle that in Government, we never have enough resources across all our priorities, because different priorities are preyed on by events such as flooding in the west of England, or issues for the Home Office such as a surge in terrorism. I therefore question the use of the word “adequacy” in the new clause. We can scrutinise accounts or budgets, but asking a police officer whether he feels he has enough is like asking, “How long is a piece of string?” Of course we never have enough for crime fighting across the country. If I had millions of pounds, I could find things to spend that money on immediately, and so could every Member in this Committee Room.
I am concerned about whether it would be right and fair to publish a report to Parliament, as the new clause demands. The agencies that use their powers under the Proceeds of Crime Act already report on their resources and results through the departmental annual accounts, which are subject to scrutiny from the National Audit Office and the Public Accounts Committee. The use of criminal justice tools and powers is also subject to scrutiny by Her Majesty’s inspectorate of constabulary and, in the case of terrorism legislation, by the independent reviewer of terrorism legislation. The criminal finances board also closely monitors performance and resourcing issues. I hope that the hon. Members for Ealing Central and Acton, and for Bootle, can see that there is already significant scrutiny of resourcing. I invite the hon. Member for Ealing Central and Acton to withdraw the motion.
Dr Huq
I was interested to hear a groundbreaking announcement in this Committee. I completely get the Minister’s point that we will never feel satiated, and that there will always be inadequacy, but my hon. Friend the Member for Bootle made a really powerful case. He mentioned SARs and the ELMER IT regime. Originally, 20,000 SARs were anticipated, but there are now 381,882—my hon. Friend said there were “up to” 381,000 of them, but there are even more, and the figure is rising.
I want to mention the NCA’s ability to cope with the greater workload. It takes an increasing length of time to get investigations into the courts. We have heard that it could take more than 200 days, with the new SARs regime. The NCA was created as a successor to several different organisations. The budget of those it replaced was £812 million, but the NCA’s new annual budget was £474 million. Those figures put the situation into context. The Government have cut that budget even further since the NCA’s creation; it received £411 million in 2015-16. I accept that there was a one-off £200 million cash injection last year, but the agency needs steady long-term funding to carry out its functions effectively. It is no good just sprinkling blockbuster sums now and then; it needs a consistent funding model.
My hon. Friend the Member for Bootle made some powerful points. For effective crime fighting, we should not have agencies that are overworked and under-resourced. The announcement that 100% of assets will go to the Home Office conflicts with an amendment that we have tabled.
Dr Huq
Okay, so it is within the system. We have tabled new clause 20, which is about repatriating assets to the jurisdictions they came from. Some charities—Christian Aid and all those people—are saying that third-world health budgets get robbed when someone buys a house in Hampstead with such proceeds. Are we going to—
Richard Arkless
I would like to make a very small point about the Minister’s comments on new clause 3. He rightly suggests that if we were to ask any police officer or public servant whether they had enough resources, the answer would clearly always be no, but the new clause does not seem like a generic question about whether there is enough generally. The hon. Member for Bootle is asking whether adequate resources are available for specific functions to be exercised under the Proceeds of Crime Act 2002. That is a marked departure from asking any Department the generic question, “Have you got enough, guv?”, to which we would almost certainly know the answer. The new clause is about activities undertaken under the Act, and I do not think it is fair to categorise the suggestion as the Minister did.
Mr Wallace
Perhaps I can clarify some of the issues. Obviously the word “adequate” is subjective. We heard evidence in Committee from members of the law enforcement agencies, and they did use the word “enough”. My point is that we scrutinise the accounts in this place, and then compare that with agencies’ performance and outcomes. That is how we come to a decision—subjective, often—on whether there are adequate resources. It is not necessary to put that in primary legislation.
Perhaps I could clarify for the hon. Member for Ealing Central and Acton the issues around asset recovery and where those funds go. At the moment, if we recover assets from drug dealers, for example, the money is split, with 50% going to the Home Office, and 50% to the Crown Prosecution Service and all the other agencies—the National Crime Agency or the police—involved in that operation, so that they can invest it in their capabilities, and use it to increase their ability to fight crime. I can say today that further to our manifesto commitment, in future, instead of having that 50% of the cake, they will be able to keep 100% of the amount coming in above the baseline, which was set in 2015, if I am not mistaken. They have a very strong incentive to ensure that they are rewarded for their good work, and to make sure that we go after big sums as well as small. That is important.
On the point the hon. Lady raised about returning money that is stolen—we will come back to this—we sent back £27 million to Macau recently. Where we identify the ownership of stolen assets that we can return to a foreign country or wherever, we will, and we have already done that. My colleague the Minister for Immigration signed a memorandum of understanding with the Nigerian Government in August to make it even easier for us to return stolen property or assets to a country’s people. It is absolutely our intention to do that.
Across the money laundering piece, we can identify the owners of certain assets and take steps to return them. Other assets that accrue because of the high margins in the illicit trade of, say, drugs may be harder to return. In fact, the people who contributed to those sums may have committed a crime themselves, so there is a difference there. I recently saw in Mombasa some confiscated stuff that we will be returning, as soon as we can get through the paperwork. It is not our intention to divvy up the proceeds from the house in Knightsbridge and hand them all over to the National Crime Agency, and rob the third country from which the money was stolen.
Mr Wallace
No. As I said earlier, we have spent money updating and making sure that ELMER is maintained, but we are also in the process of drawing up a SAR reform policy. There are a number of reasons why there are so many referrals—380,000-odd—but the Bill will hopefully cut that number. We want quality, not quantity. At the moment, we are getting quantity, partly because in the suspicious activity regime, if a body makes the report, its defence is halfway there—that is the tick-box bit that is highlighted in the report. Also, many institutions currently report a fragment of the transactions, because they say that they are unable to report the complete transaction due to data-sharing barriers. That is why this Bill removes those barriers. Hopefully, instead of 15 pieces of a transaction being reported as 15 separate SARs, we will get one, because one institution will be able to report the transaction from beginning to end.
We are already taking steps to reduce demand on the system. The system is working; people should not think it has stopped working. The challenge is the analysis, and making sure that we act on the suspicious reports and are quick enough to discard the ones that are not, because we want quality, not quantity.
This time last year, we agreed a £200 million capital improvement budget for the National Crime Agency between 2016 and 2020. That is a huge sum of money for it to spend on a whole range of capital projects to bring them up-to-date. We all have lessons to learn—Labour Governments and Conservative Governments—from rushing into IT replacement projects that cost much more than anyone envisaged. It is therefore important we get the new SARs regime right before we replace the system. I assure hon. Members that that is at the forefront of my mind. We are not going to fall over—that is the main thing—and we will make sure that when we replace it, we do so with the right system, so that we are not all back in this Committee Room in a few years’ time saying, “The SARs regime is not working.” I hope that clarifies the point for the hon. Member for Ealing Central and Acton.
Peter Dowd
I started by talking about Parliament being able to have reports from the agencies concerned, given the seriousness of the issue facing us. The Minister, reasonably, told us that 100% of the proceeds will go to the appropriate agencies and be divvied up as appropriate. I completely accept that, in good faith, and repeat the point made earlier: that he is a reasonable man. I do not challenge the Minister’s reasonableness; my challenge is based on the fact that Parliament, given the nature of this issue, is perfectly entitled to receive reports from agencies—no doubt articulated through the Departments in some fashion—on their resources. A definition of “adequacy” is that something is proportionate, or sufficient for its purpose. That is a matter for Parliament to discuss. It will not necessarily be able to do anything other than discuss it, but the discussion may produce views and experiences for the Minister to consider.
As to the Minister’s point that this is not something to go into primary legislation, about this time last year I was on the Committee that for 17 sittings considered the Housing and Planning Bill. There were all sorts of things in that Bill far less important to the health and integrity of the nation. Indeed, in the past, local government Acts—primary legislation—have even included provisions on how many hours off a person in one local authority can have, compared with a person in another. Primary legislation can be used in a range of ways. It is for the Government of the day to say, “We have nothing to fear from the reports coming before Parliament, from openness and transparency, or from challenge.”
Mr Wallace
Anyone who is a victim of financial crime takes that crime incredibly seriously; the same goes for victims of violent crime. The National Crime Agency has a number of threats to deal with, including drugs, firearms, child sexual exploitation, financial crime and foreign national offenders. Our police forces deal with a range of threats. Are we to say, on the principle that the hon. Gentleman has set out, that primary legislation should require our law enforcement agencies to produce a report every year, under each heading across the whole range of crime, on whether they believe they have adequate funding to do their job? If so, I envisage that our law enforcement agencies will be full of people doing reports all year, arguing about whether resourcing is “adequate”, and submitting them to Parliament, rather than getting on and prosecuting the people we need prosecuted.
Peter Dowd
That is a fair point, but we know that, every day, Parliament debates issues that are far less important for the body politic, security and the safety of the country. The point that I am trying to make is that the issue is of great importance and significance. It is so different in degree as to be different in kind. My hon. Friends and I therefore say that Parliament should have this opportunity. This is not a technical proposal. I repeat that, given the nature of the threat to the country, and the importance that people place on the safety of the country, we would like the report to be made to Parliament.
Question put, That the clause be read a Second time.
Criminal Finances Bill (Sixth sitting)
Ben Wallace ExcerptsTuesday 22nd November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 22 November 2016 - (22 Nov 2016)
Dr Rupa Huq (Ealing Central and Acton) (Lab)
It is a pleasure to serve under your chairmanship again, Mrs Main. My hon. Friend the Member for Bootle made an excellent speech. New clause 6 is supported by Amnesty International, CAFOD, Corruption Watch, Global Witness, ONE, Rights and Accountability in Development, Tax Justice Network, The Corner House, Traidcraft and Transparency International UK. Those are some heavyweight organisations. Before we adjourned, my hon. Friend asked what happened to the consultation promised at the anti-corruption summit. I would be interested to hear the answer.
The Minister for Security (Mr Ben Wallace)
New clause 6 highlights an issue raised on a number of occasions when we heard from interested parties about the Bill last week. I am pleased that the Opposition have tabled it, because it allows me to restate that the Government appreciate those concerns and agree that the damage caused by economic crime facilitated by those working for major companies is serious and affects individuals, businesses and the wider economy, and indeed the reputation of the United Kingdom as a place to do business.
As the hon. Member for Ealing Central and Acton is aware, the Labour Government took action in the Bribery Act 2010 in respect of bribery committed in pursuit of corporate business objectives. The Act is widely respected as both a sound enforcement tool and a measure incentivising bribery prevention as part of good corporate governance. We have already debated the new corporate offence of failure to prevent tax evasion created in the Bill. The provisions followed a process of extensive consultation, as did the Bribery Act 2010. I trust that hon. Members will agree that such an approach is necessary when considering the adequacy of the existing legal framework in matters involving complex legal and policy issues.
In respect of the current law governing corporate criminal liability for economic crime, the Government announced that a consultation would take place in May this year. I confirm that we will publish a call for evidence on the subject. In keeping with the considered and methodical approach adopted for the reforms on bribery and tax evasion, the call for evidence will form part of a two-part consultation process. It will openly request and examine evidence for and against the case for reform and seek views on a number of possible options. Should the responses that we receive justify changes to the law, the Government will then consult on firm proposals. The Government believe that it would be wrong to rush into legislation in this area for the reasons I have given. In the light of my assurances and the forthcoming publication of the call for evidence, I invite the hon. Gentleman to withdraw the new clause.
Peter Dowd
As I have said, the job of the Opposition is to push the issue as much as we can. As to what the hon. Member for Dumfries and Galloway said about subsection (2), the reality is that we are building into the new clause the capacity for someone to defend themselves, but not stating categorically, “Someone commits an offence if this happens.” There is room for manoeuvre, which is only right. However, in the light of what the Minister has said and the assurance he has given, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 11
Unexplained wealth orders: reporting requirements
‘In Chapter 2 of Part 8 of the Proceeds of Crime Act 2002, after section 362H insert—
“362HA Unexplained wealth orders: reporting requirements
(1) The Secretary of State must make an annual report to Parliament setting out the number of unexplained wealth orders applied for by enforcement agencies under section 362A of this Act (and by Scottish Ministers under section 396A of this Act) during the previous 12 month period.
(2) The report must also provide information in respect of each unexplained wealth order about—
(a) the value of property subject to the order,
(b) whether the respondent was—
(i) a politically exposed person,
(ii) a person involved in serious crime (whether in a part of the United Kingdom or elsewhere)
(c) whether the order was granted,
(d) the value of the property reclaimed as a result of the order.
(3) For the purposes of this section “enforcement agencies” has the same meaning as in subsection 362A(7).”’—(Tristram Hunt.)
This new clause would require the Secretary of State to make an annual report to Parliament about the number of unexplained wealth orders made each year.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
I beg to move, That the clause be read a Second time.
The purpose of new clause 14 is to require the Secretary of State to establish a publicly accessible register of the beneficial ownership of UK property by foreign companies within six months of the commencement of the Act. That is another helpful intervention to support the Minister in his work.
As I read in The Observer on Sunday, money launderers use anonymous offshore companies to acquire properties in the UK with the proceeds of crime. That became evident from the Panama papers. More than 2,800 secret companies set up by Mossack Fonseca held 6,000 Land Registry titles in the UK with combined historical costs in excess of £7 billion. In London alone more than 40,000 properties —one in every 10 in the borough of Westminster—are owned by offshore companies with unknown beneficiaries. There is not only an impact on housing costs in the capital, which can, indeed, spread to St Albans, Mrs Main, but a fear about money laundering and the hiding of finance through the use of London property essentially as a reserve currency.
Requiring offshore companies holding property titles in the UK to declare their beneficiaries would be fully in line with the legal obligations of UK companies to disclose persons with significant control, which came into effect in June. Requiring the Government to set up a public register of the persons with significant control of non-UK corporations holding properties and other assets, or PSCs willing to do business in the UK, will naturally tie the two purposes together: the commitment to lift offshore secrecy; and the passing of the Bill with the aim of the eradication of money laundering in the UK. It will build on exactly what the Minister suggested with reference to the former Prime Minister’s anti-corruption speech in Singapore, and the anti-corruption summit. I hope the Minister will agree to the new clause.
Mr Wallace
At the London corruption summit earlier this year, the Government announced that we plan to create a beneficial ownership register of overseas companies that own or wish to purchase property in the United Kingdom. The Government remain committed to delivering that policy and are developing the detail of how the register will work before we issue a call for evidence in the coming months. Our intention is to bring forward legislation to provide a statutory basis for the register in due course and as soon as possible.
The UK leads the world in corporate transparency. That is a position that the UK Government are rightly proud of: we are the first in the G20 to have started a public register of beneficial ownership. We should build on that position, and I am determined that we complete what we started at the summit.
The proposal is that the register will apply throughout the whole of the United Kingdom. That is important to ensure that control of companies owning land is transparent wherever in the UK the land is. However, Scotland and Northern Ireland have different land registration requirements from England and Wales, which makes the drafting of the legislation more complex. The Government therefore believe that it is important to spend time to get the policy and its implementation correct, and to consult on the policy before legislating.
Mr Wallace
It is getting higher—we will be getting into double figures for The Observer’s readership if we are not careful.
The best time to examine the register is when we have had a full consultation. We have worked closely with the Scottish Government and the Northern Ireland Executive to ensure that we get it right. As the Scottish National party has pointed out, things such as Scottish limited partnerships were set up often for landowners to avoid ownership obligations way back in 1907, if I am not mistaken. Therefore, legislating is easier said than done, and we want to ensure that we get it right so that there are no loopholes or areas in which people can hide in the shadows, which might happen if we rushed it. We want to ensure that public means public. I therefore urge the hon. Gentleman to withdraw his new clause.
Tristram Hunt
I thank the Minister for his response. I understand that such a register throws up legal complexities and matters to do with the interrelationship between the English property market and legal system and the Scottish and Welsh ones. That is why it should be a UK-wide process. I am willing to admit that six months might seem a little aggressive in terms of the full publication of the register. The Minister said “in due course” and “as soon as possible”. On Report, perhaps he will give us slightly greater clarity about the commitment with which the Government are approaching the register. I very much welcome his enthusiasm. On that basis, I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.
New Clause 15
Failure to prevent facilitation of tax evasion offences: exclusion from public procurement
‘(1) In section 57 of the Public Contract Regulations 2015 after paragraph 3(b) insert—
“(c) the contracting authority is aware that the economic operator is a body that has been convicted of an offence under section 37 or 38 of the Criminal Finances Act 2017.”’—(Tristram Hunt.)
This new clause would ensure that companies convicted of failure to prevent a tax evasion facilitation offence are excluded from public procurement.
Brought up, and read the First time.
Tristram Hunt
I beg to move, That the clause be read a Second time.
The new clause builds on new clause 6, which we looked at earlier. Exclusion is the key means of incentivising good corporate governance. The threat of exclusion from public procurement is known to be one that companies fear more than fines. Making the new offences subject to exclusion would ensure that companies take preventing such offences seriously. The UK’s anti-corruption summit committed to excluding corrupt bidders from public procurement contracts, so it is important that companies that facilitate tax evasion are similarly excluded.
Under the Public Contract Regulations 2015, public authorities must exclude companies found to be in breach of their obligations related to the payment of taxes. Unless the Bill specifies whether the new offences under clauses 37 and 38 will constitute such a breach, the Crown Commercial Service, which is often narrow in its approach, is unlikely to consider that they do. The purpose of the new clause therefore is to urge Ministers to ensure that the Crown Commercial Service understands there to be a breach in that context.
Mr Wallace
I am grateful to the hon. Gentleman for tabling his new clause because it allows us to cover another important element of the tax evasion offence we debated earlier. I also thank him for meeting me to discuss those proposals.
New clause 15 would create mandatory exclusion from public contracts of a relevant body convicted of an offence under part 3 of the Bill. I fully agree that, where an organisation has been convicted under the new offences and grave professional misconduct has taken place, it should be possible to exclude that organisation from public contracts.
I am pleased to say that existing law already allows for that by virtue of the Public Contracts Regulations 2015, which allow for the exclusion of a body from a public contract
“where the contracting authority can demonstrate by appropriate means that the economic operator is guilty of grave professional misconduct, which renders its integrity questionable”.
That is quite a low threshold if you ask me; nevertheless, it allows us to do it. I know the hon. Gentleman will be interested in this part, because it is a European angle to his proposal. I am advised that it is not possible lawfully to include a new mandatory exclusion under regulation 57, as proposed by the amendment. Regulation 57 contains a list of offences based on the six categories set out in the EU public contracts directive. The categories outlined in the directive are exhaustive. Case law indicates that member states are not free to add new additional grounds for exclusion to those set out in the directive.
Mr Wallace
I hope the Committee is satisfied that, where there has been grave professional misconduct by an organisation convicted under the new offences, contracting authorities will have the discretion to exclude them from public contracts.
Tristram Hunt
I thank the Minister for his answer. As my hon. Friend the Member for Bootle quietly alluded, this might be something we will have to look at again amid the welter of opportunities—count them!—thrown up by Brexit. [Hon. Members: “Hear, hear!”]
As a result of European regulations, I am willing to accept the Minister’s point. On Report, will he say whether we could have included in the statistical bulletins on unexplained wealth orders and other elements of the Bill an account of any corporations excluded from public procurement as a result? Is there a statistical account of whether any companies have fallen foul of the measure? Could we gain some account of that?
Mr Wallace
I am grateful for the hon. Gentleman’s idea, which I think is a good one. I will certainly try to ensure it is released in any statistical bulletins. When the Bill is up and running, I would like to know as much as he would how many people are precluded from public procurement practices.
Tristram Hunt
I thank the Minister. On that basis, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 16
Failure to prevent facilitation of tax evasion offences: reporting
‘The Secretary of State must make an annual report to Parliament containing the number of prosecutions brought and convictions made under section 37 and 38 of this Act.’ —(Tristram Hunt.)
This new clause would require that the Secretary of State reports annually on the number of prosecutions brought and convictions made for failure to prevent the facilitation of UK and foreign tax evasion offences.
Brought up, and read the First time.
Tristram Hunt
I beg to move, That the clause be read a Second time.
The new clause would
“require the Secretary of State reports annually on the number of prosecutions brought and convictions made for failure to prevent the facilitation of UK and foreign tax evasion offences.”
That is connected to an earlier new clause about culture change within Government to ensure the right degree of ministerial push and importance given to the implementation of the Bill, and to ensure that attention is given at the top of the Home Office and in ministerial offices, which is something a report to Parliament encourages. The fear that I and some of my colleagues have is that, if that detail is hidden away in obscure departmental documents, it does not necessarily have the drive and political push it deserves. The new clause is therefore another attempt to support the Minister in his job, and to encourage proper transparency about this interesting and in many ways useful Bill.
Mr Wallace
I do not want to look ungrateful to the hon. Member who is, as he says, trying to help me enhance the Bill and do my job. I am incredibly grateful for all the suggestions from hon. Members over the last few weeks.
Mr Wallace
I am not that grateful.
New clause 16 would require the Secretary of State to report annually to Parliament on the number of prosecutions brought and the number of convictions made under the new corporate offences. Under the domestic tax evasion offence, HMRC will be the investigating authority and the decision on whether to prosecute will rest with the Crown Prosecution Service. In relation to the overseas offence, the Serious Fraud Office and the National Crime Agency will be the investigating authorities and the decision to prosecute will rest with the SFO or the CPS.
It is important to emphasise that, as with the corresponding offence under the Bribery Act 2010, the number of prosecutions alone will not be a true metric of the level of success of the measure. The new corporate offences are not only about responding to wrongdoing but about changing corporate culture and behaviour. True success will lie in changing corporate culture and preventing wrongdoing from occurring in the first place.
In any case, all of the prosecuting authorities already undertake extensive public reporting on investigations and prosecutions. For example, HMRC publishes quarterly performance updates and the CPS publishes an annual report. Neither of those documents are obscure—they are weighty but not obscure. I can confirm that information relating to the new offences will be included in those existing formats. Accordingly, I invite the hon. Member for Stoke-on-Trent Central to withdraw his new clause.
Tristram Hunt
I will not detain the Committee with an inquiry into the difference between “weighty” and “obscure”; these things can often be lost in the mists of time. As we did not quite generate the success that we needed to on new clause 11, I will not put the measure to a Division. However, I urge the Minister to ensure that, having created this interesting Bill and having delivered these interesting reforms, if the reforms are going to be put to proper effect and have the political momentum—a terrifying word—behind them, then a degree of political transparency and support connected to Parliament is important. On that basis, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 19
Whistleblowing in relation to failure to prevent the facilitation of tax evasion
‘The Chancellor of the Exchequer shall conduct a review of arrangements to facilitate whistleblowing in the banking and financial services sector, including the protection of anonymity, in relation to the disclosure of suspected corporate failure to prevent facilitation of tax evasion, and report to Parliament within six months of the passing of this Act.’—(Roger Mullin.)
This new clause would conduct a review into the facilitation and protection of whistleblowers with a focus on the protection of anonymity for those who suspect corporate failure to prevent the facilitation of tax evasion.
Brought up, and read the First time.
Mr Wallace
I am grateful to the hon. Member for Kirkcaldy and Cowdenbeath for his contribution. New clause 19 would require a review of arrangements to facilitate whistleblowing in the banking and financial sectors. Whistleblowing can play an important part in bringing wrongdoing to light. The Government value the contribution of whistleblowers and believe they should be able to highlight wrongdoing without fear of retribution. To that end, the UK has put in place a strong framework of employment rights for workers who disclose malpractice in the public interest.
If a worker loses their job or suffers some other detriment —being overlooked for promotion, for example—as a result of blowing the whistle, they may bring a claim to the employment tribunal for unfair dismissal or detriment. To qualify as a protected disclosure under the Public Interest Disclosure Act 1998, the legislation that protects whistleblowers, the issue in question must fall into one of the categories listed in that Act. Those categories include both criminal offences and failure to comply with the law in other ways, so the issues in the Bill are certainly catered for, as is any new offence as soon as it comes into force.
To retain their employment protections, whistleblowers must generally make their disclosures either internally to the employer or to the relevant prescribed person named in statute. Two such prescribed persons are most likely to deal with issues covered by the Bill. HMRC is prescribed for matters about the administration of UK taxes, and the Financial Conduct Authority is prescribed for matters relating to the conduct of banks and all other funds and firms subject to the Financial Services and Markets Act 2000. MPs are now also prescribed persons, so Public Interest Disclosure Act remedies will also apply if a person suffers a detriment in employment as a result of disclosure to us.
Both HMRC and the FCA have published information for whistleblowers on how to disclose wrongdoing in their workplace. They both accept, and act on, anonymous disclosures. The Public Interest Disclosure Act 1998, under which disclosures are made and protected, was comprehensively reviewed as recently as 2014. There is a code of practice and guidance for its use. The Government are taking significant steps to ensure that effective arrangements are in place to facilitate whistleblowing in relation to tax evasion or other matters. I am not sure that, as yet, I see a case for further review at this stage.
On new clause 22, I agree with hon. Members that the culture of the financial services sector, as well as other sectors such as advisory, accounting and legal, plays a key role in preventing financial crime. That is the very reason that the Government are legislating for the new corporate offences in part 3 of the Bill—to drive culture change among businesses in relation to preventing complicity in and facilitation of tax evasion. A key measure of the success of the new offences will be how businesses respond and drive culture change.
We have engaged extensively with business over the last 18 months on the offences, both in the UK and overseas. We have seen examples of good practice in a number of sectors and organisations, which have responded swiftly to the new measures and are proactively seeking to drive culture change and operate to the highest standards. Some organisations have been slow to react, but HMRC officials have been working with them and their representative bodies to support business in putting in place compliance procedures.
Given that ongoing engagement, I do not believe it would be prudent to conduct a statutory review immediately following Royal Assent, although I share the same objectives as hon. Members. It is the Government’s view that we should focus our efforts on effectively implementing the new offences, and on using them to help trigger further cultural change, prior to diverting resources to a further review of the arrangements. I would be happy to discuss that further with hon. Members in case they have specific concerns that I should raise with other ministerial colleagues, which I am also happy to do. I hope I have provided adequate assurances for now or that we can agree to disagree. I hope the hon. Gentleman feels able to withdraw the new clauses.
Roger Mullin
I thank the Minister for his remarks, particularly his conclusion, when he indicated an open mind, as is only to be expected from him. However, we remain concerned about culture. He mentioned the role of the FCA. After the comments made last week by the FCA representative, I would have thought that the FCA itself needs a bit of a culture review to see whether it is fit for purpose.
Mr Wallace
When the Bill was being rolled out, I specifically asked for a meeting with the FCA to demand that when it comes into force—hopefully it will do so—they will up their game. The overall intention of the Bill is not just the criminal prosecution of individuals, but to bring about cultural change. As a regulator, I would like steps to be taken. One of the things that I welcome in the English part of the Bill is that the perpetrators are faced with unlimited fines for some of the offences—there is no cap on fines. With large fines, we change not only employees’ habits, but shareholders’ behaviour, which is important.
Roger Mullin
I think the Minister for those remarks and I particularly welcome his remarks about his meeting with the FCA. He is to be commended for that, and we would fully support him. Given his remarks, we will not at this stage push either of the new clauses to a Division, but we will reserve our position and perhaps return to it on Report. I beg to ask leave to withdraw the new clause.
Clause, by leave, withdrawn.
New Clause 20
Recovery orders: repatriation
‘(1) The Proceeds of Crime Act 2002 is amended, after section 266, by inserting—
“266A Recovery orders: repatriation
(1) Where a court—
(a) issues a recovery order under section 266; and
(b) has reasonable grounds for suspecting that property subject to the recovery order was obtained through unlawful conduct in a foreign country,
the court must issue a repatriation order in relation to that property.
(2) A repatriation order shall provide that within a year of the property’s having been recovered the property must be repatriated back to its country of origin.
(3) When a repatriation order has been issued, the Secretary of State shall send a request for cooperation and assistance to a representative of the government of the country of origin, in consultation with relevant third parties, and must, upon a court having issued a recovery order, endeavour to agree with that representative—
(a) as to how such property or the value of such property will be used upon its being repatriated to ensure that wherever possible the property repatriated will be used in a manner that will contribute to the implementation of Sustainable Development Goal 16, that benefits victims of the unlawful conduct, or that ensures the repatriated property is used for the original purpose from which it was diverted;
(b) a mechanism for accounting for the disbursement of the property and for making public a report on the use to which the property has been put.
(4) For the purposes of this section—
“relevant third parties” will include civil society actors and non-governmental organisations; independent audit bodies; the Department for International Development and multilateral development banks; and
“victims” will include communities affected by the unlawful conduct as well as the State.
(5) A repatriation order shall not be issued where—
(a) the court is satisfied that on the balance of probabilities that successful repatriation would lead to the property or the value of the property being subject to conduct that, were it within its jurisdiction, would violate the Human Rights Act 1998;
(b) the court is satisfied that on, the balance of probabilities, that successful repatriation would most likely result in such property being subject to illicit financial activity by a Politically Exposed Person in its country of origin; or
(c) the court is satisfied that, on the balance of probabilities, the property would not reach and/or be used for the purposes as agreed to by the Secretary of State and the representative of the country of origin.
(6) The UK may retain the total value of the recovered property where the Secretary of State and the relevant enforcement agency take all appropriate steps as set out in section (3) subsections (a) and (b) to assist the State in question in repatriating such property and yet receive no cooperation from the other State within a year of having taken such appropriate steps.
(7) For the purposes of subsection (6) “cooperation” is defined as the foreign State’s conclusively demonstrating to the Secretary of State and enforcement agency of its having done or being in the process of implementing the necessary steps required to ensure that the property or value of such property will be used for the ends laid down in section (3) (a) and the court is satisfied on the balance of probabilities that the property or value of such property will be used in accordance with those activities and probabilities as laid down in subsection (5)(a), (b) and (c).
(8) The court may order that a repatriation order may grant that the property could be given, subject to an agreement between the Secretary of State and a representative of the government of the country of origin, to a non-state actor who may distribute the property in accordance with subsection (3)(a) and (b) above.
(9) Upon application by the relevant enforcement agency the court may increase the time period within which repatriation must happen up to a maximum of five years if the court is satisfied that operational circumstances preclude the possibility of repatriation within the period previously required.
(10) The relevant enforcement agency may apply to the court for further extensions to the time period, where there is less than a year before the date of repatriation.
(11) Where the court grants an extension the enforcement agency in conjunction with the Secretary of State must publish a public report detailing the reasons why it sought an extension to the deadline for repatriation.
(12) Where the Secretary of State in conjunction with the enforcement agency publishes such a report as set out the Secretary of State may omit sensitive operational information which would preclude the possibility of repatriation being successful should such details be published.
(13) Such a report without redacted information will be passed to the Secretary of State upon each application made to the court for an extension.
(14) No later than one year after such property is repatriated all such reports will be made public in an uncensored form.””—(Dr Huq.)
This new clause would require property that was subject to a recovery order to be repatriated to its country of origin where the money was options through unlawful conduct in that country.
Brought up, and read the First time.
Mr Wallace
First, I think that we all support what we are trying to do: returning money that we take off the bad guys to whomever it belongs to. If that is not possible—I used the example earlier of a criminal enterprise whose wealth was created by drug dealers, rather than by ripping off a state or somebody else’s assets—we return it to the prosecution authorities to ensure that they can continue.
Significantly, in the past, we have seen money paid back in cases of grand corruption. The UK is party to the UN convention against corruption, article 57 of which clearly requires embezzled funds to be paid back to the victim state, so we are already obliged under international law to do that. We must do that, and it is what we want to do. The £28 million returned to Macau that the hon. Lady and I both mentioned fell under the auspices of that convention. As we are subject to international law, there is no requirement to put such provisions in our domestic legislation. Nothing in our law prevents us from returning recovered assets.
Sharing and repatriating assets in asset recovery cases is a fast-developing issue in international law, and it is something that the UK fully supports. For example, there is a requirement, under the EU framework decision on the mutual recognition of confiscation orders, that at least 50% of assets recovered on behalf of another member be sent back to that state. The UK can return assets to any country, and where underpinning international agreements are required, we enthusiastically pursue them. For example, we recently concluded an asset-sharing agreement with Nigeria, under the formal title I referred to earlier.
This helpful debate on the Opposition’s new clause has allowed us to put these points on the record, but I trust that the Opposition will agree that there is no need for further primary legislation. Asset return happens anyway, with my full support and encouragement. Indeed, strict requirements in an Act could restrict our flexibility and make it harder to obtain effective asset-return agreements tailored to the peculiarities of individual cases. I am aware of a number of cases in which another country’s Government members have requested that we effectively co-return assets for certain projects, for fear of them disappearing into other parts of that Government that are corrupt. That type of flexibility is important to make sure that moneys returned do indeed get to the right place, rather than going back to the same place, and the same individual turning the assets of crime back into another townhouse in London.
That flexibility is really important, and while I cannot bind any successor Government, it would be odd if any Government chose to say, “No, thank you, we are going to keep everything, break our international law obligations, and upset a number of countries around the world by just pocketing this for ourselves.” It is not what we have done in the past, and it is not what we will do in the future. I urge the hon. Member for Ealing Central and Acton to look to our obligations under international law; I hope that that will satisfy her that we do not need more restrictive primary legislation on this issue.
Dr Huq
I listened carefully to the Minister. The 14 subsections in new clause 20 have a set of in-built checks and balances, and I know that the development charities would be disappointed if the new clause was not in the Bill. I accept, as I said, that things are being done on this front—the Macau example is a very good one—but as I understand it, the Minister says that there is no need for the new clause because there are international agreements. He mentioned the EU framework; the first money laundering directive also came from the EU, and we are leaving the EU, so I think it is no bad thing to put our own defence in the Bill, if only for ourselves. We would like to put the new clause to a vote.
Question put, That the clause be read a Second time.
Dr Huq
Yes. The Minister was quoted in the Jersey States Assembly in a question about the fact that
“the U.K. Government hopes the Crown Dependencies might have made their Registers of Beneficial Ownership of Companies public by the end of this year, or into next year.”
The Deputy asked whether the Chief Minister would
“advise what discussions he has had”
and what steps were being taken to put in place the good work that the Minister has mentioned. The following answer came back:
“The U.K. Government accepts, and has accepted in conversations with us, that our approach meets the policy aims that they are trying to meet and international bodies, standard setters and reviewers, have acknowledged that our approach is a leading approach and is superior to some other approaches taken.”
The answer is quite long, and I will bore people if I read it all out, but in essence it was, “We’re doing enough, and we’ve been told that it’s fine.” That is quite scandalous. A supplementary question was also asked. The Chief Minister of Jersey has said, “We’re doing what we’re doing, and it’s enough.” That does not go far enough. As long as such countries can get away with that, they will do that. There is a race to the bottom. They are all saying, “We don’t have to do it; no one else is doing it.”
As I am sure the Minister knows, Orders in Council have been made over the years in relation to different things. One was made in 1991 to abolish capital punishment for the crime of murder in the Caribbean territories of Anguilla, the British Virgin Islands, the Cayman Islands, Montserrat and the Turks and Caicos Islands. In 2009, the UK Government suspended the ministerial Government and the House of Assembly of the Turks and Caicos Islands. The Government basically went in to run the thing: direct rule from London was imposed, despite opposition and criticism. There is a longer list of examples. That has been done before. It seems from the Chief Minister’s answer that Jersey thinks it can get away with it. Could we perhaps set a date of, say, 2020 and say that if it has not published entirely public registers of beneficial ownership by then, we will presume that all money coming through is dirty, or something like that? That may concentrate minds.
I could go on and on about the new clause, but I was told to be brief this afternoon, so I will end there for now. I am curious to hear the Minister’s response.
Roger Mullin
The SNP has been very supportive of everything today, but I have to say that for the past year and a half I have been having discussions with the Isle of Man authorities, including with the First Minister there, and I have found them genuinely willing to engage in discussions. I think that the language used about the Isle of Man was unfortunate.
Mr Wallace
As the hon. Lady rightly says, this subject has been raised significantly, both on Second Reading and elsewhere. New clause 21 would set a legislative timetable for the UK Government to ensure that overseas territories have a public register of beneficial ownership, and to work with Crown dependencies to achieve the same outcome. There is considerable interest in this specific issue and I am pleased that this amendment allows us to debate it. I understand where the Opposition are coming from and appreciate the desire for these jurisdictions to have publicly accessible registers of beneficial ownership information—David Cameron made this an ambition in 2015. I would be grateful if the hon. Lady clarified why she chooses to treat Crown dependencies differently from overseas territories when it comes to some of the measures; that would be helpful to all Members.
While the overseas territories and Crown dependencies are separate jurisdictions with their own democratically elected Governments, and are responsible for their own economic diversification and fiscal matters, we have been working with them on their role on company transparency. If public registers emerge as a new global standard, the UK Government would expect all relevant jurisdictions to meet that standard. However, it would be wrong to say that, in the absence of public registers, no efforts have been made to increase corporate transparency and tackle tax evasion and corruption. The Crown dependencies and those overseas territories with financial centres are already taking a number of important steps on beneficial ownership and tax transparency, which will put them well ahead of most jurisdictions. This includes some of our G20 partners and other major corporate and financial centres, including some states in the United States. These measures will prevent criminals from hiding behind anonymous shell companies and mark a significant increase in the ability of UK law enforcement authorities to investigate bribery and corruption, money laundering and tax evasion.
I asked officials whether there has ever been an example of our imposing legislation on the Crown dependencies. As far as we can find out, in recent history there has never been an example of our imposing legislation on Crown dependencies without their consent. That is important—we have not gone around imposing our will on Crown dependencies as we see fit. Where we have done so on overseas territories, it has been on very strong moral issues such as capital punishment. Both in Crown dependencies and overseas territories, people have moved quite significantly and, I have to say to the hon. Lady, far more significantly than in 13 years of a Labour Government. We cannot sit here and ignore the elephant in the room.
Under our Government, we now have a position where the debate in this room is about the word “public” and whether registers are going to be public. It is not about whether these islands and other places will have a central register of beneficial ownership. By next year, they will either have a direct central register or linked registers and that is 90% of the way. By the way, our law enforcement agencies will have automatic access to that information.
The best thing, in my view, would be to say, “Yes, we know what David Cameron’s intention was in 2015 when he made that statement; yes, the United Kingdom pretty much leads the world in making our register public for the whole of the United Kingdom”, but also to say, “Let us revisit this once we get the Bill through, once we see whether our law enforcement agencies can use that access to prosecute, deter, change culture and show the way forward.” If that is not happening, of course we can have these debates again, but we should recognise that a lot of those countries have moved without our imposing our will on them, and we are hopefully giving access to our National Crime Agency and HMRC—all the things that we struggled to get for very many years. Let us see where that journey takes us. Our intention is clear. We pretty much lead the world in this. I urge hon. Members to recognise that we are going a long way.
Richard Arkless
The Minister will forgive me if I am wrong, but he has only outlined the position and the progress made by the Crown dependencies in having registers and information sharing. Will he elaborate on the overseas territories or did I miss something?
Mr Wallace
I am grateful to the hon. Gentleman for pointing that out. I meant and/or the overseas territories. The full house will, hopefully by next year, have those registers in place with automatic sharing enabled for our law enforcement agencies, and vice versa—should someone choose to use our country to hide tax from those other countries, their law enforcement agencies will be able to have it.
What I notice about all this is that the world is changing. Transparency is in the ascendancy, secrecy is not. Whether these places are overseas territories or other countries that are nothing to do with the United Kingdom, it is not secrecy that makes them competitive or attractive, but the tax rates and surrounding regulations. That is generational change. Yes, there will be people who wish to hide their wealth for all the wrong reasons, but we are now in a position where our agencies and bodies of law and order will be able to access those areas. They will not have to rely on leaks or third-hand information.
I would not be surprised if, in five or 10 years, we are talking about entirely different countries around the world, maybe even countries that we might think would not be harder to access, but actually are. Those countries might have a more developed legal system and a more protective privacy system that makes it harder for our forces of law and order to get hold of data. I certainly think that these places have come 90% of the way, and we should see whether that works for us. We all have the intention and the United Kingdom is leading by example.
The new clause is a very strong measure. We should not impose our will on the overseas territories and Crown dependencies when they have come so far. Irrespective of the point raised by the hon. Member for Ealing Central and Acton about their attitude and about whether they were pushed or forced, they were not pushed there by a gunboat. It is important to recognise that we have got where we have through cajoling, working together and peer group pressure, which, after all, makes a real difference. Therefore, I urge the hon. Lady to withdraw the new clause.
Dr Huq
It is not good enough to say that we just have to pat ourselves on the back and that everything is fine. I am a bit disappointed with the Minister for trotting out that thing about 13 years of Labour. What did Labour do? We passed the Proceeds of Crime Act 2002, which the Bill amends; the Serious Organised Crime and Police Act 2005; the Bribery Act 2010, section 7 of which we discussed so much this morning; and the Money Laundering Regulations 2007. We created the Serious Organised Crime Agency to ensure a single, intelligence-led response to organised crime.
Dr Huq
Let me finish this list. We also passed the Terrorism Act 2000, part 3 of which we have been amending here, as well as part 2 of the Anti-terrorism, Crime and Security Act 2001—legislation to deal with all these things that we have been talking about, such as terrorist funding. It is a bit low of the Minister to trot out that one about 13 years of Labour. We have been consensual and friendly all the way through this Committee, saying what good legislation this is, so that is a bit tawdry. [Interruption.]
The Chair
Order. It is a bit difficult to hear what the hon. Lady has to say. Is the Minister intervening?
Mr Wallace
We could say that that is a whole list of missed opportunities for Labour to impose its will on the Crown dependencies. The point is that this takes time. I do not expect Labour to rustle up a perfect, tax-transparent solution to the problem; I did not expect Labour to do it in 13 years, and it is unreasonable to say suddenly, “We are going to impose it in the Bill.” There has been a direction of travel all the way through the last decade and a half. This has been about building a slow but thorough process to make sure that we got to where we are. We will be back again on economic crime and reviews of regulators, and to build on some of these issues.
The Chair
With this, it will be convenient to discuss the following:
That schedule 5 be the Fifth schedule to the Bill.
Clauses 46 to 51 stand part.
Mr Wallace
The remaining clauses in part 4 are relatively technical and straightforward. I am tempted to sit down after saying that. They are also similar to other pieces of legislation, so I will not delay us much longer, beyond highlighting a few points.
Clause 46 allows the Secretary of State to make by regulation such provision as they consider necessary in consequence of this Bill. Clause 47 sets out the procedural requirement for making regulations in respect of the devolved Administrations, while clause 49 covers the Bill’s territorial extent. Most of the Bill extends to England, Wales, Scotland and Northern Ireland. As I stated on Second Reading, we expect the Scottish Government and the Northern Ireland Executive to seek legislative consent motions from their legislatures; I welcome that, and support them in doing so. I am grateful for our constructive and ongoing engagement with the devolved Administrations.
As this brings us to the end of the Committee, I pay tribute to the Chair and co-Chair for their expeditious and authoritative chairing of our proceedings, and to the many members of the House authorities that have facilitated our consideration of the Bill. They include the Clerks of the Public Bill Office, the Doorkeepers, Hansard and many others.
I am grateful for the constructive approach taken by the Opposition Front Benchers and the Scottish National party in trying to make the best of the Bill. It is not over yet; I understand that there is a long way still to go. I am grateful for the amendments that were tabled, including those from the hon. Member for Stoke-on-Trent Central. I thank the hon. Members for Dumfries and Galloway, and for Kirkcaldy and Cowdenbeath, for pointing out the issues to do with Scottish limited partnerships and other concerns; I shall meet them for discussions.
The fact that the Committee stage is to finish early is a testament to the significantly cross-party approach, it says here. We shall, I hope, return to the Floor of the House with the Committee’s strong endorsement of the Bill as well drafted legislation that will make a difference in the fight against organised crime.
Since I took on my present job, I have had to deal with a range of matters, including terrorists and serious organised crime. The bit that scares me the most is the serious and organised crime—the wealth of those individuals, and the impunity with which they operate. I cannot say how helpful the Bill will be, at least in taking away their profit and returning it to the countries or people they have stolen from or, failing that, to the forces of law and order. When I go to sleep at night, it is serious and organised crime that scares me more than anything else in my brief. I hope that we have gone a long way towards at least deterring those engaged in it, and sending a strong message to people who think that such behaviour is permissible.
Question put and agreed to.
Clause 45 accordingly ordered to stand part of the Bill.
Schedule 5
Minor and Consequential Amendments
Amendments made: 54, in schedule 5, page 140, line 11, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 73, in schedule 5, page 140, line 32, at end insert—
‘( ) In paragraph 5, in sub-paragraph (1), for “this Schedule” substitute “any provision of this Schedule other than Part 2A”.
( ) In that paragraph, omit sub-paragraph (4).”
This amendment is consequential on NC18.
Amendment 74, in schedule 5, page 140, line 33, at end insert—
‘( ) In paragraph 8(1), for “this Schedule” substitute “paragraph 6”.”
This amendment is consequential on NC18.
Amendment 75, in schedule 5, page 140, line 34, at end insert—
‘( ) After paragraph 9 insert—
Restrictions on release
9A Cash is not to be released under any power or duty conferred or imposed by this Schedule (and so is to continue to be detained)—
(a) if an application for its forfeiture under paragraph 6, or for its release under paragraph 9, is made, until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded;
(b) if (in the United Kingdom or elsewhere) proceedings are started against any person for an offence with which the cash is connected, until the proceedings are concluded.”
( ) In paragraph 10, in sub-paragraph (1) after “Schedule,” insert “and the cash is not otherwise forfeited in pursuance of a cash forfeiture notice,”.
( ) In that paragraph, after sub-paragraph (8) insert—
“(8A) If any cash is detained under this Schedule and part only of the cash is forfeited in pursuance of a cash forfeiture notice, this paragraph has effect in relation to the other part.””
This amendment is consequential on NC18.
Amendment 55, in schedule 5, page 141, line 27, leave out “303O(4) and insert “303O(5)”
This amendment corrects an incorrect cross-reference.
Amendment 56, in schedule 5, page 142, line 2, at end insert—
( ) in paragraph (b) (as amended by section 28 of this Act), for “or 298(4)” substitute “, 298(4) or 303O(5)”;” —(Mr Wallace.)
This amendment is consequential on amendment 15 and corresponds to the amendment of section 82 of the Proceeds of Crime Act 2002 made by paragraph 18(3)(b) of Schedule 5 to the Bill, as amended by amendment 55.
Schedule 5, as amended, agreed to.
Clauses 46 to 48 ordered to stand part of the Bill.
Clause 49
Extent
Amendment made: 52, in clause 49, page 102, line 34, at end insert—
“() section 28(2A);” —(Mr Wallace.)
This amendment is consequential on amendment 15.
Clause 49, as amended, ordered to stand part of the Bill.
Clause 50
Commencement
Amendment made: 53, in clause 50, page 103, line 5, after “25” insert “and 28(2A)”—(Mr Wallace.)
This amendment is consequential on amendment 15.
Clause 50, as amended, ordered to stand part of the Bill.
Clause 51 ordered to stand part of the Bill.
Question proposed, That the Chair do report the Bill, as amended, to the House.
Dr Huq
It has been a pleasure to serve under your chairmanship, Mrs Main, and that of Sir Alan Meale in the earlier sittings. I commend the Minister on the Bill. We can all sleep safely in our beds because of it. I am fortunate that my first Front-Bench service has been with such a nice Minister. I look forward to working constructively with the Government on Report—even if there were some tiny things. However, let us not raise those.
Criminal Finances Bill (Third sitting)
Ben Wallace ExcerptsThursday 17th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 November 2016 - (17 Nov 2016)
Dr Rupa Huq (Ealing Central and Acton) (Lab)
I beg to move amendment 1, in clause 1, page 1, line 17, after “sought” insert—
“(and the property specified may include property located outside the United Kingdom)”
This amendment would ensure that unexplained wealth ordered may be issued for property located outside the UK.
It is a pleasure to serve under your chairmanship, Sir Alan.
In summary, we welcome the Bill. The unexplained wealth orders are a good thing, but amendment 1 is an example of where we think the measures could go a little bit further and be further improved. The amendment would provide that property located outside the UK could be utilised in an unexplained wealth order brought before an individual. It is meant to be a technical rather than political amendment. We are happy to work with the Government, but I think we can all drink to this amendment regardless of political affiliation.
The amendment would facilitate information sharing across different jurisdictions and would provide the United Kingdom with vital information regarding illicit financial activity that has taken place elsewhere across the globe. Reports by both the Select Committee on Home Affairs and the Public Accounts Committee hinted at this, and there is even a line in the Government’s action plan for anti-money laundering and counter-terrorism finance from April that says we should increase
“the international reach of law enforcement agencies and international information sharing to tackle money laundering and terrorist financing threats.”
Therefore, if an individual provides false and/or misleading information in relation to an unexplained wealth order, they can be prosecuted, but we would widen the scope of the property that comes under such an order so that we can question those who might be resident in the UK regarding their suspected illicit activities regardless of where their wealth is. As we know, people travel and cross borders, so we might not be able to recover wealth from that person. That throws up issues around cross-jurisdictional co-operation, and it is one area where confiscation orders kept hitting a brick wall and coming to grief.
We can glean intelligence on behaviour abroad and share it with other states, which would act as a disincentive to come to the UK to corrupt politically exposed persons who may contaminate our economy with their illicit wealth. If criminals know that on entering the UK, there is a process and our enforcement agencies can compel them to talk about their suspect wealth or property regardless of where they have placed it, they will think twice about coming here. We want to restrict their ability to move. That would send out a powerful message that the UK is not a soft touch when it comes to dodgy financial dealings, which I think we can all agree would be a good thing.
The current threshold at which a UWO can be served under the Bill is £100,000, but what if a criminal or suspected criminal has property of £50,000 here in the UK and has moved £50,000 of property elsewhere? Our enforcement agencies have concluded that, on the balance of probability, both combined are beyond the means of the person in question. I would like to think that the Bill already covers that, but we have tabled this probing amendment to confirm it. We are talking about portable wealth, which extends to jewellery and paintings, which have ultimate portability, because someone could leg it to a foreign country with them. My conclusion is that we would be unable to issue an unexplained wealth order if property is split between two places. I suspect I am right but am happy to be proved wrong.
The scenario I mentioned raises another question. If an individual acquires property of a value that reaches the unexplained wealth order threshold of £100,000 and manages to transfer it out of the UK, it is only after they have done so that our enforcement agencies become aware of it. Does that mean that an unexplained wealth order cannot be issued to that person because the property is now outside the UK? I want some clarification from the Minister on those things. I imagine that the answer is “Yes, we cannot do that”, but if the answer is, “No, we can do it”, it would be even better, because Opposition Members want unexplained wealth orders to be a success.
Finally, the amendment would introduce an element of operational efficacy. If all our enforcement agencies were aware that they were able to factor in stuff that is located outside the UK properly from the beginning of their investigations, it could contribute to our agencies being quicker off the mark. They could sound a warning alarm bell. They would be oriented from the get-go to cast their net as widely as they can to hold criminals to account. That is largely what we seek to do through the amendment.
The Minister for Security (Mr Ben Wallace)
It is a pleasure to serve under your chairmanship, Sir Alan. As we begin the line-by-line scrutiny, it might be useful if I give the Committee a brief outline of how unexplained wealth orders will work.
In short, an unexplained wealth order is a civil investigatory tool. It is a court order that requires a person to provide information that shows they obtained identified property legitimately. If the person provides information and responds to an unexplained wealth order, the enforcement authority can then decide whether to investigate further, take recovery action under the Proceeds of Crime Act 2002 or take no further action. If the person does not comply with an unexplained wealth order, 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. It is important to note that the unexplained wealth order does not in itself lead directly to recovery action. It is designed to be an investigatory power and a precursor to civil recovery action.
An unexplained wealth order is an order made against a person, requiring them to provide information to explain how they obtained the property. It is important for all of us to understand this crucial factor: the unexplained wealth order is made against a person, not against property, and does not itself result in the recovery of that property. That is the vital point in relation to amendment 1.
In the Proceeds of Crime Act, it is clear that, if an order is to be made against a person or a property overseas, it must be explicitly stated on the face of the legislation. For example, section 282A of POCA provides that a civil recovery order can be made against property overseas if there is a connection with the UK. Section 375A of POCA also provides that an evidential request can be made overseas in constructing a case for civil recovery.
The same is already the case with unexplained wealth orders. New section 262A(2)(b) in clause 1 of the Bill provides that the person on whom the order will be served must be named, and it expressly provides that
“the person specified may include a person outside the United Kingdom”.
The unexplained wealth order therefore has global effect. The definition of “property” in the POCA already encompasses all property, whether it is situated at home or abroad. An unexplained wealth order can therefore list any property, wherever it is in the world. The court has an associated power to make an interim freezing order in respect of that property.
Clause 3 inserts a provision into POCA that an enforcement authority can request assistance from an overseas state concerning the freezing of property overseas that is subject to an unexplained wealth order. I therefore assure the hon. Lady that unexplained wealth orders will be effective against property anywhere in the world. Accordingly, I invite her to withdraw her amendment.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
New clause 12 seeks to add to amendment 2 and put a duty to prevent corruption in the Bill, to strengthen the hand of the Minister and the agencies involved. As we have heard, the UK is still considered a global haven for money laundering.
According to a Home Affairs Committee report on the proceeds of crime, it is estimated that more than £100 billion is laundered through London’s financial systems every year. Despite more than 380,000 suspicious activity reports being filed each year, the National Crime Agency currently has only 27 investigations open, with approximately £170 million frozen. By contrast, in Switzerland, some £5 billion-worth of Swiss francs are currently frozen.
The new clause seeks to ramp up the responsibilities on the National Crime Agency, public prosecutions and HMRC to make it a duty to prevent corruption, to ensure that we protect London’s reputation and that our financial, legal and accountancy services remain among the best in the world.
Mr Wallace
We are all in agreement that law enforcement agencies should do more to co-operate and talk to each other before embarking on action against a person or property, and that they should ensure that they are acting to combat corruption in all its forms. In that sense, the implication of the amendments is entirely sensible.
As the hon. Lady set out, amendment 2 would impose a duty on operational agencies to co-operate prior to applying an unexplained wealth order. Such co-operation would have several benefits. Most obviously, it would avoid duplication of the same effort against an individual and their property. It would avoid one agency trampling over another that had embarked on a similar line of inquiry. Indeed, another agency may well have an explanation of the wealth. An obvious example is that HMRC can be aware of complex legal tax arrangements that an individual may have.
I am entirely supportive of the spirit of the hon. Lady’s amendment. I would go further and say that liaison should not be limited to those bodies that can apply for unexplained wealth orders and take civil recovery action; it should happen between all law enforcement agencies and prosecution authorities. I am pleased to reassure her that that already happens. Law enforcement agencies, as a matter of course, check various law enforcement databases to see whether there is a flag against a particular person or property that is of interest to them. They can then liaise accordingly. In addition, unexplained wealth orders will be subject to the Proceeds of Crime Act investigation code of practice, which will be amended and subject to debate in both Houses before coming into force. I can assure the Committee that this issue will be addressed in that code.
The Proceeds of Crime Act is not the only legislation where a conflict between law enforcement agencies could occur relating to the same person or property. Several police forces may have an interest in the same criminal. Those conflicts can be resolved without the need for primary legislation. This is a matter for internal discussion on tasking and co-ordinating, which the code of practice will achieve.
New clause 12 would impose a duty on agencies to prevent corruption when considering the use of unexplained wealth orders. It is my hope that the mere existence of these orders in UK law will in itself create a deterrent to those who seek to place their corrupt wealth in the UK.
We continue our efforts to tackle corruption in all its forms. This year, we hosted the London anti-corruption summit, bringing together world leaders, business and civil society to agree a historic package of actions to expose, punish and drive out corruption in all walks of life. We will continue to implement UK commitments from the summit and encourage others to do likewise.
Indeed, the limb of unexplained wealth orders that allows their application to non-EEA foreign officials and politicians reflects the real concerns about those involved in corruption overseas who then launder the proceeds of their criminality in the UK. I hope the hon. Member for Stoke-on-Trent Central can see that the power will be used to tackle corruption, but unexplained wealth orders go further: they will also apply to cases in which there is a suspicion of involvement in serious crime, not necessarily corruption. The proposed duty could risk the deprioritisation of other crime types, which we agree that the NCA, the Crown Prosecution Service, HMRC and the Financial Conduct Authority could be tackling. They will of course pursue those guilty of corruption, but I hope we agree that our law enforcement agencies are best placed to prioritise their resources to pursue a whole range of criminals.
The Secretary of State and Attorney General already issue statutory guidance on the use of powers under POCA, including the use of civil recovery powers. That guidance will be extended to the new bodies granted civil recovery powers in the Bill. HMRC and the FCA intend to reissue the guidance next year, when we will be able to address both issues. I hope that the hon. Members for Ealing Central and Acton and for Stoke-on-Trent Central are reassured that the issues are already accounted for. I invite her to withdraw the amendment.
Tristram Hunt
I am happy for the amendment to be withdrawn, but it would be nice to hear something more on Report. I take the point about the precision of focusing on corruption when other serious criminal activities are involved, but some language on a duty to prevent corruption would be good. The important element is the duty; I hope that the wording on corruption and other serious criminal activity might be added to that.
Dr Huq
If I understood correctly, the Minister said that no primary legislation is required to do what the amendment would do, and that there are already flags and a joined-up process. Are we confident that something like the Magnitsky case, with all the stuff that happened—everyone closing the door to Bill Browder, year upon year—would not happen again with unexplained wealth orders?
Mr Wallace
On the Magnitsky case, it would be inappropriate to comment on a case that could be under continuing investigation. The main point is that our law enforcement agencies have operational independence. It is for them to decide the priorities for how they spend their resource and work together. We do an awful lot, without primary legislation, to ensure that they work together. They liaise through regional bodies such as the regional organised crime units, and through the national co-ordinators and everything else.
Our view is that primary legislation is unnecessary because, whether it is through the code of practice, which will be published alongside the Bill, or in the operational day-to-day running of the organisations, joint working is part of their remit and, effectively, their duty. We do not think it is necessary to put anything in the Bill because we fear that that could pervert their priorities and interfere with their operational independence.
Tristram Hunt
The amendment is explained by the explanatory statement. You will know, Sir Alan, that in 2014 Slovenia’s former Prime Minister, Janez Janša, was found guilty of taking bribes during the course of a €278 million arms deal with a Finnish state-owned contractor. Politically exposed persons were also among the 12 people referred to a criminal court in Cyprus earlier this year to stand trial for corruption and bribery charges in connection with a waste overcharging scam that is thought to have involved more than €30 million.
Although it may be reasonable to expect that European economic area countries would be able to undertake criminal investigations against politically exposed persons in their countries if there were sufficient evidence to suggest that they had been involved in corruption, that might not necessarily be the case. For example, there is still blanket immunity from criminal prosecution for parliamentarians in Hungary, despite it being an EEA country. The amendment would extend the Government’s welcome reform of unexplained wealth orders for those outside EEA states to include those within EEA states. We know that what we are dealing with does not simply stop at the continent of Europe or the EEA states. The amendment seeks to apply some degree of equality of this legislation to the EEA states.
Amendment 60 would have the same effect as amendment 59, but would apply to unexplained wealth orders issued in Scotland as well.
Mr Wallace
I thank the hon. Gentleman for his comments. We had a useful meeting yesterday about some of these issues. He will know that we welcome these amendments as they give us the opportunity to discuss why we have effectively a different regime between politically exposed persons outside the EEA and ourselves. The amendment would cover us sitting in this room—all PEPs in the EEA. That is important because, if any of us were to face an unexplained wealth order, we would want to know that it had been issued on the basis of evidence linking us to serious crime; we would not want to give our authorities the ability just to slap one on without any evidential threshold.
We have confidence that, within the EEA—the hon. Gentleman used the example of a country prosecuting its own former Prime Minister—there are the tools to find the evidence and the ability to work with fellow law enforcement agencies around Europe to meet the evidential threshold. We cannot discriminate within the EEA; we cannot say, “This applies to Slovenia but it doesn’t apply to France”. Once we go into that area, we cannot discriminate between the different states. He picked out Hungary, where there is immunity for parliamentarians. I think there are other countries—even Italy; I do not know. If I remember my Berlusconi history, I think there were lots of issues about immunity in that country. That is the real issue. We have confidence in our neighbours and friends in Europe that they have the capacity to build the evidence and therefore to build a case for an unexplained wealth order.
Charlie Elphicke (Dover) (Con)
My hon. Friend is making a powerful argument. Is he aware how many Members of Parliament have problems just opening a bank account because of over-eager regulators using the PEPs regulations? With this amendment, would there not be a risk that over-eager agencies would be interested in issuing these things to MPs, which is not an ideal situation? We ought to have the evidential threshold set out in clause 1(4)(b).
Mr Wallace
I am grateful to my hon. Friend for his intervention. He makes the clear point that we want to be confident that, when we are held to account, it is based on evidence gathered by our resourced law enforcement agencies. The decision on PEPs outside the EEA reflects real operational challenges that we and organisations such as the National Crime Agency have had in gathering evidence against people in some countries where there may be no properly functioning Government or, indeed, where the Government are entirely corrupt and it is very difficult to gather that evidence.
That is the reason we have had to plug that gap in that way. I hope that the hon. Member for Stoke-on-Trent Central understands that that is why we have a different approach. I urge him not to push his amendment to a vote.
Tristram Hunt
I thank the Minister for his comprehensive response, including on the evidential threshold, and the hon. Member for Dover for his point concerning the energy with which some financial institutions in the UK have approached PEPs, even—dare I say it?—on car insurance.
On the basis of the Minister’s argument, I am willing to withdraw the amendment, but I fear that this may be returned to in the aftermath of our exiting the European Union.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Wallace
The previous debates have given us the opportunity to begin considering clause 1, which provides for the creation of unexplained wealth orders. Those are powerful new tools, and I welcome the cross-party support for them as well as the strong endorsement of those in civil society from whom we heard earlier this week.
The London anti-corruption summit in May galvanised the international response to corruption. Domestically, we must tackle grand corruption and protect the integrity of the UK’s financial sector. Unexplained wealth orders will help us to do that. As we have discussed, unexplained wealth orders are essentially an investigatory tool that will help to enable civil recovery of the proceeds of crime under existing powers in the Proceeds of Crime Act 2002. Civil recovery is a powerful tool, because it can be used where criminal prosecution followed by a confiscation order is impossible, perhaps because a person is abroad and cannot be extradited or there is not specific evidence linking an individual to a crime, but there is enough evidence to show that property is linked to the wealth generated from a crime.
Between April 2015 and March 2016, £6.5 million was recovered under those powers, but there is still a gap where law enforcement agencies cannot satisfy the necessary evidential burden. Unexplained wealth orders will flush out evidence to enable enforcement agencies to take forward recovery action under POCA. Such an order will require a person to provide information that shows that they obtained identified property legitimately. If they do so, agencies can then decide whether to investigate further, take civil recovery action or take no further action. If the person does not comply with the order, the property identified in the order is presumed to be recoverable under any subsequent civil recovery proceedings.
I stress that the unexplained wealth order is designed to be an investigative power and a precursor to civil action, not an end in itself. I accept that there is significant interest in the way that such orders will operate, because they involve the reversal of the burden of proof. That is why they are subject to stringent safeguards. The value of the property subject to an unexplained wealth order must be greater than £100,000, a much higher threshold than for normal civil recovery, where action cannot be taken against property worth less than £10,000.
Nic Dakin (Scunthorpe) (Lab)
I thank the Minister for being so complete in his arguments. Can he explain why £100,000 was chosen? I note from the evidence that we have received that no one had any objection to that figure, but I am interested in why it was chosen.
Mr Wallace
The hon. Gentleman poses an interesting question. Unexplained wealth orders are linked to serious and organised crime. Although, inevitably, some serious criminals make below £100,000, that was thought to be a useful threshold, and that is where we should look as a starting point. There will be concerns among Members that Aunt Bessie’s £25,000 appearing in someone’s bank account may trigger something like an unexplained wealth order, and we wanted the wealth threshold to be significant enough to ensure that there was a link between serious crime and the recovery of assets being triggered. I know that some people wanted that threshold to be higher than £100,000 and some people wanted it to be lower. As the Minister, my job is to try to get it in the right place, but I would welcome his suggestions on whether it should be, say, £59,000 or £105,000. It could be like “Bullseye”.
Carolyn Harris (Swansea East) (Lab)
It is a pleasure to serve under your chairmanship, Sir Alan. Is there a mechanism for recognising regular, ongoing transactions that are close to but always under £100,000? Will that trigger any red flashing warning lights that there may be illegal activity?
Mr Wallace
The cumulative wealth would of course build up. I am happy to be persuaded by the Committee about the threshold. The reality is that, given the vast number of people involved with organised crime groups across the threat picture and the staggering wealth of some of them, we will be lucky to get to £100,000. We will be going for people worth £20 million, £30 million or £40 million and all the way down. It would chill people’s bones to realise how some of the people who live among us make their money out of crime and launder that money. The bottom line is the number of those individuals. That is why we chose £100,000, but hon. Members may want to make a persuasive argument otherwise. Cumulative wealth is certainly an issue. I was in the north-east of England the other day and met an individual who is unemployed but has well over £400,000 in their bank account. I am looking forward to knocking on that person’s door.
Tristram Hunt
I had a terrible fear about the rule of law for a minute there.
We tabled new clause 11 to help the Minister. It would require the Secretary of State to make an annual report to Parliament about the number of unexplained wealth orders made each year. It is really about helping to drive culture change through the Government, the Departments and the agencies involved in this excellent set of reforms, and ensuring that Parliament is kept up to date with how the agencies and Ministers are approaching it. There is nothing quite like a presentation to Parliament —a ministerial statement, written or oral—to concentrate attention in Departments on the importance and significance of a particular piece of legislation. The new clause would ensure that the Bill had the bureaucracy and political support behind it.
Similarly, new clause 13 would help to get the wheels in motion for unexplained wealth orders and investigatory powers under the Proceeds of Crime Act 2002. It seeks to prevent the courts from awarding costs against enforcement agencies if their applications for unexplained wealth orders or interim freezing orders are unsuccessful. It is about ensuring that a culture of risk-aversion does not develop in our agencies. They are often fearful, in these straitened budgetary circumstances and under the full glare of the press, about pursuing the kind of individuals the Minister spoke about, for fear of the financial implications if they are unsuccessful and taken to court. Colleagues will remember that the Serious Fraud Office’s botched case against the entrepreneur Vincent Tchenguiz will settle for £3 million plus costs, which is a fraction of what his lawyer originally demanded, so these can be quite costly enterprises.
We would not want to hand down these new powers in statute to those who direct our investigatory agencies, only for a culture of not pursuing those individuals to develop in those organisations. New clause 11 would ensure that Parliament had a voice and oversight over the process, and new clause 13 would ensure that a culture of risk-aversion does not develop in the agencies that are to be granted these new powers.
Mr Wallace
I will start with the good news: I support the spirit of new clause 11, which I discussed with the hon. Gentleman yesterday. It is important that we have a measure to ensure the transparency of the operation of unexplained wealth orders. In my recent responses to the reports of the Public Accounts Committee and the Home Affairs Committee on asset recovery—both reports were excellent, I have to say—I committed to publishing annual statistics on annual recovery performance. After our meeting, I instructed my officials to ensure that those statistics include unexplained wealth orders. I therefore hope there is no need for the hon. Gentleman’s new clause—which would create a statutory duty in primary legislation to report—as those figures will be contained in an annual bulletin.
New clause 13 relates to the risk that potential financial liability may make law enforcement agencies reluctant to apply for unexplained wealth orders. It seeks to ensure that the authorities are not liable following an unsuccessful unexplained wealth order application. I was pleased to be able to discuss that issue with the hon. Gentleman yesterday, and I am advised that the existing civil procedure rules, which would extend to cover unexplained wealth orders, mean that by default an application for such an order would take place in private. I am happy to share those civil procedure rules with the hon. Gentleman to see whether he thinks that is enough. That is also the case for any subsequent legal stages. On that basis, if an application is unsuccessful, or if the individual was latterly able to provide the court with an acceptable explanation of their wealth, it would not generally be public knowledge. There would therefore be no undue reputational damage to the individual concerned.
More generally, whatever the peculiarities relating to unexplained wealth orders, it remains our view that any awards of costs should follow the same rules that apply in other, similar matters. The general principle that the loser pays is a well established position. Changing it could lead to unfortunate unintended consequences in relation to other powers and procedures. In any case, the judge has a general discretion to award costs that are proportionate. It is not a matter of one side producing a figure and the judge awarding that without any consideration of the case; we should maintain a consistent approach.
On that basis, although I share the concern about impinging on our agencies’ ability to pursue crimes, it is not appropriate to indemnify them in this context. If they have made a mistake and applied for an unexplained wealth order against the wrong person, risking someone’s reputation, it is in my view appropriate for them to take responsibility. If we indemnify them, a mistake will be confused with normal investigative procedure. I do not think it is the best thing to indemnify them, given that hearings can be held in private, in court procedure. I hope that hon. Members will be satisfied with that.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Interim freezing orders
Question proposed, That the clause stand part of the Bill.
Mr Wallace
Clause 2 acts in tandem with clause 1 in appropriate cases. It provides that the court can also issue an interim freezing order in relation to property that is subject to an unexplained wealth order. The interim freezing order provides that the property cannot be dealt with in any way while subject to that order. There is no point in putting an unexplained wealth order on something if it can immediately be sold, as we might lose the asset. The freezing order can be used to keep it in place.
It is important to split the obtaining of an unexplained wealth order and the freezing of property into two different matters. Although they will be done at the same hearing, they are different decisions with separate considerations. Some colleagues have asked why we are not providing that property must be frozen in every case. Freezing someone’s property is a very invasive measure and may not be necessary in every case. For example, there may be no suspicion that the property will be dissipated—perhaps it is a house that has been owned and occupied by the same person for many years—or that a civil recovery order will be frustrated in some other way.
We would not want unexplained wealth order applications to be rejected solely on the grounds of a technicality related to the freezing decision. It is also important to note that if property is frozen, the court may quite reasonably expect the case to progress at a far quicker pace than if no freezing order was in place. On that last point, I should flag up the fact that, under clause 1, if property is subject to an interim freezing order, the enforcement authority is given a deadline of 60 days to decide the next steps. The freezing order would then be discharged after a further 48 hours.
The expectation is that if an enforcement authority is to go forward with civil recovery action, it will obtain a property freezing order, with many of same provisions and safeguards, to apply immediately to the same property once the interim freezing order is lifted. The property would remain frozen.
An application can be made for the variation or discharge of the freezing order. The court can also provide that property can be released to meet affected persons’ reasonable living expenses, their need to carry on their business and their legal expenses. I hope that what I have said reassures hon. Members that the freezing order provisions are properly circumscribed.
Dr Huq
The Minister has given a full and cogent account of why interim freezing orders are being introduced. As a London MP, I know how dirty money in the property market has skewed the entire London property market, meaning that genuine people cannot get a foot on the ladder. It sounds as if sufficient safeguards are being put in place, so we will not stand in the way of the clause.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Clause 3
External assistance
Mr Wallace
Clause 3 supplements clause 1, on unexplained wealth orders, and clause 2. It provides for a request to be sent to another country to freeze property there that is subject to an unexplained wealth order, which addresses the point that the hon. Member for Ealing Central and Acton made in the debate on her amendment 1 about going after property abroad.
I will make two points for the benefit of the Committee. First, an unexplained wealth order can apply to property outside of the UK. That reflects the operation of existing civil recovery powers, which can include property overseas if a sufficient connection can be shown with the United Kingdom—for example, where the suspected criminal is British, the criminality is thought to have taken place in this country or there are victims in the UK.
Secondly, there is no international law that expressly provides for the freezing of property in relation to unexplained wealth order-type powers. We will need to liaise closely with other countries in relation what existing international law may underpin such a request, as well as working on obtaining wider recognition of unexplained wealth orders. The clause primarily creates legal certainty that such a request can be made. We also encourage recognition of such requests as part of the wider fight against international crime and corruption.
Dr Huq
Once again, we have no problems with any of that, particularly as it allays some of those concerns about overseas property that were anticipated by amendment 1.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Unexplained wealth orders: Scotland
Richard Arkless (Dumfries and Galloway) (SNP)
I beg to move amendment 57, in clause 4, page 14, line 35, leave out “£100,000” and insert “£50,000”.
This amendment reduces the threshold for the value of property that UWO may be issued for in Scotland to £50,000.
It is a pleasure to serve under your chairmanship again, Sir Alan. Essentially, we are asking for the threshold or limit for which an unexplained wealth order can be granted to be reduced, in Scotland only, from £100,000 to £50,000. I cite three main arguments for making that suggestion. We state in the explanatory notes that that would bring the threshold in line with international standards. The level in Ireland is €5,000, while the level in Australia is 100,000 Australian dollars, which equates to around £60,000.
I also refer the Minister to the drastic difference in asset valuations north and south of the border, particularly in property prices. Property prices in London average at £487,000. The unexplained wealth order threshold in England and Wales is set at £100,000, which is just less than a quarter of the average property price. Property prices in Scotland are significantly lower. In my constituency the average is £120,000, while in North Ayrshire they are less than £100,000. Applying the same rationale of a percentage of the overall property price, our threshold should be substantially lower. We suggest that a reasonable level would be £50,000.
I also draw the Minister’s attention to the point that reducing the threshold in Scotland, where there are lower asset valuations, is a no-lose situation for the Government. The threshold in itself is not the main benchmark to trigger these unexplained wealth orders; it is the test. The test for Scotland, which we agree with, is set out in proposed new subsection 396B(3) of the Proceeds of Crime Act 2002. That test must be met in every single circumstance, whether the threshold is £5, £10 or £100,000. Even if the limit was set at £500,000, that test must be met. Given the lower asset valuations in Scotland, it is a no-lose situation to bring the threshold down.
I envisage criminals perhaps acquiring properties in a lower-asset valuation jurisdiction and creeping below the £100,000 threshold. We do not want to end up with some criminals getting off the hook and us having to come back to Parliament to try to lower the threshold. We are not suggesting that the threshold is lowered in England and Wales—that is a matter for the Minister and Members for England and Wales. Clearly there are arguments, given the higher property prices, but I suggest, for the reasons I have set out, that it would be sensible to lower the threshold for Scotland. It would be a no-lose situation for the Government to agree to the amendment.
Mr Wallace
I thank the hon. Gentleman for his point. The point to note is that an unexplained wealth order is made against the person and therefore their collective assets, rather than an individual asset. Therefore, whether a successful gangster with a huge amount of money chooses to buy 10 houses where property prices are low—in any part of the United Kingdom—or one house, the order is against that person and catches all their wealth however it is stored.
I want to put the hon. Gentleman at his ease on his view that there is such a difference between Scotland and England. The threat of organised crime is exactly the same. Unfortunately for all of us, there are successful gangsters on both sides of the border who make considerable amounts of money. Therefore, the argument about the £100,000 threshold is that it will catch serious criminals on both sides of the border. We are going to go after their wealth. We must also remember that it is about the person rather than the property. I therefore urge him to withdraw his amendment. If he does so, I am happy to meet him to discuss this issue further—there are other opportunities for that, should he like to do so—and to explore the different options at the threshold.
Richard Arkless
Given that we are almost wholly persuaded by my arguments to reduce the threshold, I am tempted to press the amendment to a vote. However, taking the Minister at his word—I have no reason to disbelieve him—we will be happy to withdraw the amendment if we are assured that those further conversations could happen. We do not see any harm in that, and perhaps we can develop those conversations as we go through the stages of the Bill. Given his gracious assurance, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Wallace
The clause brings us for the first time to devolution and separate court systems in the United Kingdom. Clauses 4 to 6 provide for unexplained wealth orders in Scotland on effectively the same terms as clauses 1 to 3 do for England, Wales and Northern Ireland. As such, much of what we have discussed relating to the substance of unexplained wealth orders applies equally here.
The reason for separate provisions for Scotland is the different court structure and the separate existing practice and procedure that relates to civil recovery. I assure the Committee that there will be a consistent approach to unexplained wealth orders across the United Kingdom. All the safeguards and other measures will apply in Scotland as they do elsewhere in the United Kingdom.
As we are adding to the criminal law, I will specifically mention the creation of a parallel offence of knowingly or recklessly making a statement that is false or misleading, but I do not think there is anything more to concern the Committee relating to unexplained wealth orders that we have not already discussed.
Richard Arkless
I rise to reiterate our support that the clause stands part of the Bill.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Interim freezing orders
Question proposed, That the clause stand part of the Bill.
Mr Wallace
The clause supplements clause 4 in appropriate cases. It provides that the court can also issue an interim freezing order in relation to property subject to an unexplained wealth order in Scotland. It is important to note that it provides in Scotland what clause 2 provides in England, Wales and Northern Ireland. The safeguards and processes are similar. It is also closely modelled on freezing powers that already exist in civil recovery.
Richard Arkless
Although we accept the principal contents of the clause, I reiterate the concerns I made on the Floor of the House on Second Reading. The test to implement a freezing order in proposed new section 396I(2) is that the court
“considers it necessary…for the purposes of avoiding the risk of any recovery order that might subsequently be obtained being frustrated.”
Therefore, essentially the judge will have to decide whether there is reasonable suspicion that the alleged criminal will abscond with that property. We are clearly keen to avoid that situation.
How does the Minister see that paragraph being interpreted by the judiciary? Is there a danger that it is over-prohibitive or too onerous? How will it be evidenced? How on earth can a judge determine whether that person is likely to abscond with the property? The fact that they have been subject to an unexplained wealth order might reasonably suggest in itself that that would be enough to compel the profit to be frozen? We are trying to avoid an unexplained wealth order being granted, but then some pest from another jurisdiction wriggles with the freezing order and gets the property out of the country, and the unexplained wealth order will have no effect. We are keen to make sure that does not happen in Scotland or, indeed, in the rest of the UK.
Mr Wallace
The hon. Gentleman makes an interesting point and my response is “judicial discretion.” It is up to the sheriff or the judge to weigh up the evidence, and the individual or party, before him. The likelihood and ability that they may flee and so on may well come into that.
Richard Arkless
I completely understand and respect those points. The point of an unexplained wealth order is that the wealth is unexplained. We do not know the nature of the criminal. We know nothing about them. We have no idea whether they are likely to abscond. I suggest that it would be difficult for the judge to make that determination, and if he cannot do so under the Act, he will probably, as the judiciary is entitled to do, err on the side of caution and not implement the freezing order, but implement the unexplained wealth order.
Mr Wallace
The provision reflects the existing civil recovery arrangements in both Scotland and England. In other civil recovery procedures, that is how it is dealt with at the moment. That is why it is framed that way in the Bill.
I take the hon. Gentleman’s point concerning the worry about flight and so on, but if criminals are obviously residents of the UK or European economic area and there is a link to serious organised crime, those making the application cannot just turn up, but will have to present evidence, so there will be scrutiny and the judge or sheriff will be able to weigh up whether there should be a freezing order.
Richard Arkless
I accept that and am happy to support the clause. The Minister’s constructive response provides an opportunity to discuss this and to examine the legal points to ensure that criminals do not to fly with the cash before we can get our hands on it. No one wants that.
Mr Wallace
We can discuss that at length when we discuss the £50,000 threshold, which I am happy to do. As the hon. Gentleman knows, we are grateful to the Scottish Government with whom we have worked hand in hand on much of the Bill. Because we have accepted recommendations, advice and help from the Justice Minister in Scotland on some of the framing of the Bill, it is one we can agree on. We have accepted some of the guidance from the hon. Gentleman’s Government north of the border.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
External assistance Disclosure orders
Question proposed, That the clause stand part of the Bill.
Mr Wallace
The clause supplements clauses 4 and 5 and provides that a request can be sent to another country to freeze property there that is subject to an unexplained wealth order. It is a Scotland-specific provision but closely mirrors what clause 3 provides in England, Wales and Northern Ireland.
Mr Wallace
The Proceeds of Crime Act 2002, which was introduced by the last Labour Government, provides a suite of powers to be used in connection with a range of investigations, including confiscation and civil recovery. A disclosure order is one of those powerful tools and requires any person having relevant information to answer questions, provide information or produce any document that is relevant to the investigation. Disclosure orders are flexible, practical and efficient. Their use avoids the need to seek multiple orders over the course of an investigation. The changes we are making extend the power to seek disclosure orders in money laundering investigations that were previously explicitly excluded. This exclusion was primarily because of concerns over self-incrimination. However, that protection is maintained in the new provisions, ensuring that individuals who are subject to a money laundering investigation cannot be compelled to provide information that might incriminate them.
Clause 7 also changes the definition of who can apply for a disclosure order, removing the need for a prosecuting body to be responsible for its application. Significantly, this change does not lead to a reduction in the level of seniority of the person who can apply. An appropriate officer can apply for a disclosure order only on the approval of the senior appropriate officer, ensuring that the application process is safeguarded. These changes will be reflected in the statutory code of practice on the investigation tools in the Proceeds of Crime Act 2002.
Clause 8 replicates in Scotland the provisions contained in clause 7 for England and Wales that enable an application for disclosure orders in money laundering investigations, providing an essential UK-wide response.
Dr Huq
I am convinced by the Minister’s persuasive words that red tape will be removed. We can apply for disclosure orders and yet maintain vital safeguards, so we will support clause 7 and clause 8, which extends the power to Scotland.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8 ordered to stand part of the Bill.
Clause 9
Power to extend moratorium period
Mr Wallace
I beg to move amendment 8, in clause 9, page 28, line 34, at end insert “(subject to the restriction mentioned in section 336A(6))”
This amendment clarifies that the 186 day maximum period for extending the moratorium period also applies to a decision of the appeal court in Scotland.
The Chair
With this it will be convenient to discuss Government amendments 15, 50, 51, 55, 56, 52, and 53.
Mr Wallace
Clause 9 inserts in part 7 of POCA a scheme for the extension of the suspicious activity report moratorium period beyond 31 days. As the action plan for anti-money laundering and counter-terrorist finance sets out, the Government see a more robust law enforcement response as central to tackling money laundering. It might help if I briefly explain how the suspicious activity report regime works.
Where a company in the regulated sector—a bank, an accountancy firm or a legal firm—suspects that they may commit a money laundering offence, they are obliged to submit a suspicious activity report to the National Crime Agency seeking consent to proceed. The National Crime Agency then has a seven-day period to determine whether it is necessary to refuse consent to the company to proceed with the transaction. If consent is refused, the 31-day moratorium period begins. During the moratorium period, law enforcement agencies need to gather the necessary evidence to instigate civil recovery proceedings or a criminal investigation in relation to the money laundering activity. However, money laundering investigations can be multi-layered and complex. Money launderers obfuscate the financial trail to distance proceeds from their criminal source; funds are often moved overseas.
New section 336A of the Proceeds of Crime Act 2002 states that the court may not grant a further extension of the moratorium period if the effect would be to extend the period of more than 186 days in total, beginning with the day after the end of the initial 31-day moratorium period. The amendment makes that clear. Amendment 15 replicates in Scotland what clause 28(2) already does for England and Wales. Amendments 52, 53, and 56 are consequential to that.
The criminal’s property, referred to in POCA as “free property”, which may be in the form of cash, is available for consideration in confiscation unless it is already subject to a forfeiture or deprivation order. When a court considers making a confiscation order under POCA, it must not take into account certain types of property when calculating the amount of the order. This is to ensure fairness to the defendant and prevent the double counting of assets.
Clause 28 amends POCA to clarify the situation in relation to cash that has been seized and is being detained pending the decision of a forfeiture application. Cash that is detained in anticipation of the forfeiture application being made is already excluded, so this is an extension of the existing principle in section 82 of POCA. The amendment extends that to Scotland. We hope to be making an equivalent amendment in respect of Northern Ireland in due course—we are awaiting their formal agreement.
Amendments 50 and 51 will correct an error in clauses 37 and 38, which incorrectly refer to England when they should refer to England and Wales. That is merely to ensure that the text of the Bill reflects the intent of the policy, which is for the measure to extend to England and Wales. Amendment 55 will correct another typographical error.
Dr Huq
It sounds as if the amendments are tidying up some sloppy mistakes. On the whole, however, I know that the SARs extension to the moratorium period was very much welcomed by the witnesses we heard from. I have seen that some law firms do not like the policy, but I think it is a good idea. The previous period of 31 days was not long enough. Does the Minister have an inkling of how many times the maximum would be used—I think it is 200 days?
Mr Wallace
The timescale is really just a reflection of what the investigatory agencies have said to us: that some of these cases are very complex. Some of the ways in which people hide their wealth—they sometimes freeze it themselves—and who they are mean that the process will take time. We want to ensure that our agencies have time to investigate, rather than being under the sort of pressure where effectively they run out of time. Those people exploit that. That is the reason for the longer period. Hopefully it will not be used, but the very fact that it is there will give power to the elbow of the agencies trying to do the job.
Dr Huq
I thank the Minister for his response. We support the proposal, but we have a concern, which will come up in a new clause at the end, about the architecture of crime fighting. There could be better resource for all the different agencies that will be looking at these issues and particularly for the ELMER IT system. It was envisaged that that system would deal with 20,000 SARs a year, but the figure is 380,000 at the moment and will probably rise even higher after the Bill is passed. That does not relate to the clause, but I wanted to sound a word of caution.
Mr Wallace
I beg to move amendment 9, in clause 9, page 29, leave out line 47.
This amendment removes a reference to the Scottish Ministers from the list of persons who may make an application to the sheriff for extending the moratorium period under new section 336A of the Proceeds of Crime Act 2002.
Mr Wallace
The amendments will remove references to Scottish Ministers from the list of persons who may make applications to the sheriff for extending the moratorium period and for making a further information order under the Proceeds of Crime Act 2002 or the Terrorism Act 2000. In our ongoing dialogue with the Scottish Government and with law enforcement partners, we have clarified that Scottish Ministers do not require those powers. In Scotland, they would be used by the Crown Office and Procurator Fiscal Service, the National Crime Agency, the police and HMRC in respect of the moratorium period and by the procurator fiscal, the police and the NCA in respect of further information orders. We are acting on the advice of the Scottish Government, with whom we have consulted extensively in the development of the Bill and will continue to do so. We are making these amendments to ensure that the new measure will work effectively in Scotland.
Richard Arkless
The Minister’s explanation was comprehensive and persuasive and accords with my understanding of the Government’s position. We will not stand in the way of the clause.
Mr Wallace
Clause 9 inserts in part 7 of POCA a scheme for extending the suspicious activity report moratorium period beyond 31 days. As the action plan for anti-money laundering set out, the Government see a more robust law enforcement response as central to tackling money laundering. I have already explained the SARs regime, so we do not need to hear about that again.
As the national risk assessment set out, the UK is vulnerable to abuse by professional enablers from the legal, accountancy and finance sectors. The level of expertise involved can make it difficult to progress a money laundering investigation substantially in only 31 days. That is particularly the case when the law enforcement agency needs to obtain evidence from overseas authorities, which is another reason for an extension for a further length of time—the hon. Member for Ealing Central and Acton asked why it needed to be so long—or to undertake complex asset-tracing inquiries. Accordingly, the moratorium period may be lifted and funds dissipated before the investigation has progressed sufficiently to determine whether civil or criminal proceedings should be undertaken.
We need to provide law enforcement agencies with an appropriate amount of time to undertake investigations. This clause provides for the extension of the moratorium period by a court for periods of up to 31 days. That can be repeated up to a total of 186 days from the end of the initial 31-day moratorium period. The hon. Lady is better at adding up than me, so she produced the right figure. Providing an extension of the moratorium period enables law enforcement officers to continue investigating particularly complex transactions, such as those involving overseas grand corruption or other serious crime. The clause ensures that proceeds of crime are not dissipated when there is a suspicion that money laundering activity has taken place and when the law enforcement agency has not had the opportunity to complete its inquiries.
The Government recognise that there may be concerns about the length of time for which an individual’s property could be withheld from them. The clause does not allow unlimited extension of the moratorium period. The court must approve the application to extend the moratorium period each time an extension is sought. Law enforcement agencies must demonstrate to the court that it is reasonable in all circumstances for the moratorium period to be extended. They must satisfy the court that the investigation is being carried out diligently and expeditiously and that further time is required to progress the investigation.
An application to extend the moratorium period will be made to the Crown court, which provides a senior level of judicial authorisation. The owner of the property will be able to make representations in person before the court and is provided with the opportunity to appeal the decision to extend the moratorium period. An application may be made only by a senior officer who has a remit to undertake financial investigation. A senior officer is at the police rank of inspector or equivalent.
Money laundering is an enabler of serious and organised crime. The clause will help to stop criminals profiting from their criminal behaviour. It gives our law enforcement agencies the time to progress critical investigations into money laundering where they have genuine reasons for being unable to progress their investigation substantially in 31 days.
Dr Huq
The Minister has put it very well. All the witnesses stated that 31 days was not enough. Here we have appropriate checks and balances. A legal procedure is gone through to extend the period; it cannot be open-ended; and appeals procedures are built in. The Minister also praised my maths, which never happens normally—I am a qualitative person usually—so for that reason as well as all the other reasons, we will not stand in the way of the clause.
Question put and agreed to.
Clause 9, as amended, accordingly ordered to stand part of the Bill.
Clause 10
Sharing of information within the regulated sector
Question proposed, That the clause stand part of the Bill.
Mr Wallace
The clause introduces a new provision into the Proceeds of Crime Act 2002. As the action plan for anti-money laundering also set out—it seems to make a regular appearance—the Government see public-private partnership as central to tackling money laundering and terrorist financing. A major part of that approach is to provide support for the effective exchange of information, both within the private sector and between the public and the 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.
Both the private sector and law enforcement agencies hold significant amounts of information that can be of great use to each other. The private sector holds data on financial transactions and related personal data; law enforcement agencies hold intelligence on money laundering and terrorist financing. When those data have been shared, there have been benefits to both sectors.
Dr Huq
I described joined-up thinking in my remarks on amendment 2. The Minister has reassured us. I have seen that some people have civil liberties concerns, but he has told us that the sharing of information will be a last resort in extreme cases, and that it will happen largely on a voluntary basis anyway.
The Government action plan on money laundering said that what is needed is a
“collaborative approach to preventing individuals becoming involved in money laundering.”
It discussed different agencies, supervisors and the public and private sectors working together. The clause does all those things, and we support it.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Further information notices and orders
Amendment made: 10, in clause 11, page 38, leave out line 2.—(Mr Wallace.)
This amendment removes a reference to the Scottish Ministers from the list of persons who may make an application to the sheriff for a further information order under new section 339ZJ of the Proceeds of Crime Act 2002.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Wallace
Clause 11 creates a new power to issue further information orders. In the anti-money laundering action plan the Government set out our commitment to improving the financial intelligence that would be available to both the law enforcement agencies and the private sector. Improving our financial intelligence is essential to allow the identification of the major risks from money laundering, and to identify where resources from both the public and private sectors should be focused.
The action plan also contained a commitment to do more to tackle money laundering internationally, through sharing information and intelligence, and working through international bodies such as the Financial Action Task Force. The suspicious activity reports regime, run by the UK Financial Intelligence Unit at the National Crime Agency, is central to the UK anti-money laundering regime, and to the development of financial intelligence. The regime took more than 380,000 reports in 2014-15 from the regulated sector, including banks, lawyers and accountants.
Clause 11 will allow the UK Financial Intelligence Unit, following the receipt of a suspicious activity report, to request further information from any member of the regulated sector, irrespective of whether that entity raised the SAR.
There are a number of reasons why the UKFIU needs such a power. First, there are occasions where the SAR does not contain all the information necessary to allow the UKFIU to determine whether action, including an investigation, should be undertaken. That is particularly important when determining how scarce resources should be allocated. The intention is to drive up the quality of SARs and to enable improved intelligence analysis for the better identification of risk and threat.
Secondly, the UKFIU can use the power when it needs information in order to develop effective intelligence to identify the major threats from money launderers. That intelligence will be used to inform the work of law enforcement agencies and can be shared with the private sector to help them put in place effective counter-measures to the threats they face from money laundering.
Thirdly, it will allow the UKFIU to seek further information on behalf of a foreign financial intelligence unit to support investigations or intelligence development in that country. That will be subject to the appropriate safeguards, and the UK will benefit from the ability to request equivalent information from foreign financial intelligence units. The provision will also ensure that the UK is compliant with the relevant Financial Action Task Force recommendations ahead of the its evaluation of the UK anti-money laundering regime in 2018.
The clause will allow the National Crime Agency to direct that further information is provided and, if it is not provided, to apply to a court for a further information order to require the person to provide the information requested. We are keen to support appropriate information sharing between financial intelligence units, and we know that FATF and its members want to do more in that area. Incidents such as the attacks in Paris, where financial intelligence was needed to support the investigation, illustrate the need to be able to share such information. However, I would like to be clear that there should be safeguards in place for international information sharing. As with a request driven by the NCA itself, a court order will be required where a regulated entity does not provide information if requested to do so by the NCA. That in itself is an important safeguard. I am, as ever, open to discussing this issue with hon. Members if it is felt that additional safeguards may be appropriate.
On a separate point, I know that the issue of privileged information is of concern to Members, and I want to be clear that the UK Financial Intelligence Unit will not be able to request the provision of privileged information as part of this measure. This is an important safeguard for those who hold such information, and we do not believe that it should be requested under this power.
Dr Huq
It appears that the clause enacts some of the recommendations of the action plan for anti-money laundering and counter-terrorist finance that the Government issued in April 2016. We will support the clause.
Question put and agreed to.
Clause 11, as amended, accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Andrew Griffiths.)
Criminal Finances Bill (Fourth sitting)
Ben Wallace ExcerptsThursday 17th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 November 2016 - (17 Nov 2016)
Richard Arkless
Amendment 58 would extend the definition of “listed asset” in proposed new section 303B of the Proceeds of Crime Act 2002 to include betting slips and casino chips. The Minister helpfully acknowledged on Second Reading that he would consider tabling an amendment to deal with those two means of retaining value, and I understand that new clause 10 has been tabled in that regard.
Although I fully commend the spirit of new clause 10, it will achieve that change not by adding to the definition of listed asset but by expanding the definition of cash to include gaming vouchers and fixed-value casino tokens. On the latter, we are in agreement: in effect, the new clause does what it says on the tin. It will extend the meaning of cash and therefore make fixed-value casino tokens catchable. Our concern is that “gaming voucher” is specifically defined in new clause 10 as
“a voucher in physical form issued by a gaming machine”.
We do not believe that that covers betting slips. Therefore, although we welcome the tone and construct of new clause 10, we feel that there is one means of retaining value that it does not cover, and that is covered in amendment 58.
The Minister for Security (Mr Ben Wallace)
I am grateful to the hon. Member for Dumfries and Galloway for his amendment, which was set out in his party’s manifesto for this year’s Scottish Parliament elections. The Government take this issue seriously, as do the Scottish Nationalist party and the Scottish Government.
As we have heard, to avoid detection, criminals use a range of means to transfer value among themselves. Law enforcement agencies and prosecutors—particularly those operating in Scotland—have made us aware of criminals’ use of gaming vouchers and casino chips to do that. There has been media coverage of drug dealers using fixed odds betting terminals to convert cash obtained from street drug dealing into vouchers issued by those machines. Those vouchers can either be converted into cash at the bookmaker, thus laundering the funds, or transferred to another person to pay the drug dealer’s debts.
The Proceeds of Crime Act contains provisions that enable law enforcement agencies to seize cash, but those provisions do not extend to the type of criminal tactic that I have just described, so clauses 12 and 13 seek to allow those agencies to freeze, seize and seek forfeiture of illicit funds held in bank accounts and other forms of criminal property used to transfer value. It has always been the Government’s intention to include gambling vouchers and casino chips in those provisions, as I made clear on Second Reading. When the Bill was introduced, we were still looking at the best way of achieving that in legislation, but I tabled new clause 10 on Monday—I apologise for doing so at the beginning of the Committee stage and not giving hon. Members more time to look at it—which will add gambling vouchers and casino chips to the definition of cash in the Proceeds of Crime Act and allow law enforcement agencies to seize those items on the same basis as they can seize cash, where their individual or aggregate value is more than £1,000.
Officers will have to demonstrate to a court that they have reasonable grounds for suspecting that vouchers or casino chips are either proceeds of crime or intended for use in unlawful conduct. That is an important safeguard that we apply to all forms of seizure. Law enforcement agencies will need to show why they seek the detention of the property, and will be able to seek administrative forfeiture of vouchers or tokens, or the agreement of a court. In all cases, an individual who believes that such vouchers or tokens are theirs legitimately will be able to challenge their detention or forfeiture.
I turn to the hon. Gentleman’s point and why we have used the term “gaming vouchers” rather than “betting slips”. In discussions with law enforcement agencies, we have identified that there is a major concern about the laundering of proceeds of crime through machines that provide a guaranteed return if they are played in a certain way. Those machines produce pay-out vouchers with a value that can then be cashed in. Betting slips, such as those used for horse racing, are used for betting with no guaranteed return and, therefore, are much more risky for use in money laundering.
However, once the points had been raised by the hon. Gentleman, I asked officials to examine whether there is potential to extend the Bill to ensure that we cover betting slips as well. As someone who likes the horses and knows his way round a losing—rather than a winning —bet, I understand that the ability to exploit that type of bet could potentially lead to such money laundering.
Carolyn Harris (Swansea East) (Lab)
The Minister may be aware that I am the Chair of the all-party group on FOBTs. I have grave concerns about bookmakers not reporting unusual and excessive activity on B2 machines by people who would not normally have that kind of disposable income. Is the Minister satisfied that leaving it up to the betting industry to self-report is adequate?
Mr Wallace
If memory serves me right, the Gambling Commission has the power to carry out a range of investigations and to impose conditions on bookmakers. I hear the hon. Lady’s point loud and clear. I have the same concern in my part of the world in the north-west about whether bookmakers are properly regulated and carrying out their obligation to report suspicious bets, as they currently do under the law. That is more a question of whether we are doing enough to enforce the law. Existing laws are quite strong, though some bookies’ shops—I suspect, as she does—have a way to go. If criminals know that we can seize their FOBT print-outs, they might be less likely to stick their money in the FOBT in the first place. We have put provisions in the Bill because they are pretty canny. When POCA came in in 2002, they realised that we could seize cash, so off they went. They are pretty good at moving the cash. No doubt, one day we will be back again, maybe saying that they have used telephone cards or whatever, and we will have to adapt the legislation in time.
The Government’s amendment chooses to put the provision into POCA, as opposed to the route chosen by the Scottish Nationalist party, because we believe that these items are better placed in cash provisions, because they have no real use other than to be turned into cash. The listed items of moveable property have an intrinsic use as well as being a store of value, and they need to be dealt with under the provisions that we have introduced into the Bill.
The listed items of moveable property clause also contains detailed provision about dealing with non-severable property and competing joint-owner claims that are not relevant to gambling vouchers. As I said, we are considering this as part of the Treasury’s review of regulation under the change to the fourth anti-money laundering directive when it comes to self-reporting of suspicious activity and fixed odds betting. That is under review by the Treasury as well, so I hope everyone will get their collar felt if they do not comply with one directive or another.
I hope hon. Members will agree that that would achieve the results they were after and, accordingly, I invite them to withdraw their amendment.
Richard Arkless
I thank the Minister for his comments and it is clear that extending the definition of cash, as the Government intend in the Bill, achieves the same outcome as we desired in extending the list of assets. I accept the Minister’s point that those assets have an intrinsic value, and perhaps the other ones are best suited to the extension of the definition of cash.
On the basis of the Minister’s commitment to examine the specific issue of betting slips and if we can agree that the evidence suggests that they are a moveable item that can store value that could be easily used by criminals, I am sure—given his tone—that we could discuss that further down the line. Given that assurance and the long list of things that we will consider as the Bill passes through its stages, I will take the Minister at his word. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Wallace
As a former Member of the Scottish Parliament, I might be accused of favouring one part of the United Kingdom over another with all the concessions.
Richard Arkless
Given the Minister’s time in Scotland, he might want to refer to my party as the Scottish National party, not the Scottish Nationalist party.
Mr Wallace
Well, I will not say what we used to call it when I was in the Scottish Parliament. We will call it the SNP. I never say “separatists”, obviously.
Clause 12 will create new powers to seize and forfeit moveable items of property where they are suspected to be the proceeds of crime. Criminals launder the proceeds of their crimes to benefit from their criminal activity and carry it on. They are resourceful in using any mechanism to hold and move illicit funds, and we need to ensure that we are able to respond to that threat. Criminals hold the proceeds of crime in a variety of forms, which act as a store of value and a means through which such value can be transferred. Some, such as cash, gold and diamonds, can be easily moved or concealed. In some cases, these items can be readily sold for cash or dissipated through other means.
We want to take action to prevent criminals from transferring their illicit funds however they choose to do it, and the clause should be seen as part of a framework for seizing such assets, alongside the existing cash seizure provisions in the Proceeds of Crime Act and the new provisions in clause 13 for the freezing and forfeiture of funds held in bank accounts.
The cash seizure and administrative forfeiture procedures in POCA were designed to prevent cash from being moved or dissipated in the time that it would take to seek a restraint order. Cash seizure is widely used, both inland and at the UK border. The existing legislation does not allow law enforcement agencies to take the same action in the case of other highly mobile stores of value. Evidence suggests that those items are being used to move value both domestically and across international borders.
The clause will give law enforcement agencies new powers to seize and forfeit certain listed items, such as precious metals and stones, where they have reasonable grounds to suspect that those items are the proceeds of crime or are intended for use in unlawful conduct. The clause will strengthen law enforcement agencies’ ability to disrupt criminal funding by preventing value from being transferred and enable the recovery of criminal property.
The Bill sets out the list of items that can be seized by agencies. The list has been drawn from discussions with law enforcement agencies and from reviewing the approach taken by other states. We have set the minimum value level for the seizure of listed items at £1,000, which is the same as for cash. There will be no upper limit, again mirroring the existing cash provisions. We have set no higher limit, as we believe there are potential circumstances where the value of the item is likely to be significant, and law enforcement agencies need the power to seize the item if there is reasonable suspicion that it is the proceeds of crime. There is evidence of that, particularly in relation to works of art being used to store illicit value and then transferred internationally. Some Members might have heard last week that a French impressionist painting was discovered in a mafia house. Should we discover one of those in the United Kingdom, I do not think we would like to cap what we could seize. I want to be clear that we do not intend that this power should be used indiscriminately. That is why the power can be used only in respect of certain listed items and is subject to oversight by a court.
We have also introduced two additional safeguards. First, within six hours of the seizure, a senior officer must review the seizure and authorise the continued detention. Secondly, we are not, in these cases, permitting administrative forfeiture. That procedure is available in the existing cash forfeiture system and allows a law enforcement agency to forfeit cash without obtaining a court order, in circumstances where the owner does not object. Owing to the possibility of greater complexity of the cases, such as property being jointly owned and difficult to sever, administrative forfeiture is not appropriate. We want to ensure that law enforcement agencies have the powers they need to seize such items. At present, there is a short list, but we intend that it will be amended over time to reflect changes in criminal behaviour.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Amendment 58 looks quite attractive. The hon. Member for Dumfries and Galloway and I served together on the Select Committee on Justice and went to America. I was quite tempted by his amendment, but I am now reassured by the Minister that Government new clause 10 addresses those concerns. It is added to the list for the ever longer meeting they will have.
Mr Wallace
I am not an art historian or expert. We would probably get Philip Mould from the television to come along. In reality, like with everything else, there is probably a proper valuation process held and items are disposed of that way. If they wanted my services, I would be useless.
The Chair
Order. To help the hon. Lady, I think she will find that, in the evidence produced on Tuesday, one of the witnesses from Her Majesty’s Revenue and Customs said that they recovered assets and then called in experts who valued them.
Mr Wallace
The clause introduces a new provision into the Proceeds of Crime Act 2002. Criminals need to launder the proceeds of their crimes to carry on their criminal activity. As I outlined on clause 12, we need to ensure that we are able to respond to that threat.
POCA already contains provisions for the seizure of cash, but we do not have an equivalent power to take quick and effective action against funds held in bank accounts, and criminals know that. Given the use made by criminals of the banking system, we need to plug that gap. At present, it is difficult for law enforcement agencies to take action against many such accounts because their values are below the limits for civil recovery. The clause will allow the police or the National Crime Agency to seek the freezing and forfeiture of those funds.
The clause will give law enforcement agencies new powers to freeze and forfeit funds held in bank and building society accounts. The measure will have two significant effects. First, it will be easier and quicker for law enforcement agencies to seize the illicit funds held by criminals who abuse the banking system to store and transfer the proceeds of their crime. Secondly, it will also make it clear to criminals that we can take immediate and effective action against their abuse of the financial system.
The provisions we are putting in place will support the forfeiture of funds in bank accounts that have been suspended by the banks when they have serious concerns regarding the use of the accounts. The banks welcome the certainty that will bring. The provision will of course be accompanied by appropriate safeguards. An account cannot be frozen unless there are reasonable grounds to suspect that the funds in it are the proceeds of crime or will be used to fund criminal activity. The freezing of an account will be overseen by a court, which will be able to make an exclusion to allow the account to be used to support a person’s reasonable living expenses or to continue to run a legitimate business.
Forfeiture can be undertaken administratively by the law enforcement agency exercising the provision in uncontested cases. When the forfeiture application is contested, the matter will be decided by the court. The funds in the account will not be transferred to the law enforcement agency account until the forfeiture order is made. I hope that sufficiently reassures the Committee about the need for the power and how it will be used.
Dr Huq
It sounds like there will be sufficient judicial oversight in this space. We know that a lack of bank regulation previously led to some nasty incidents in our history, so we support the clause.
Question put and agreed to.
Clause 13 accordingly ordered to stand part of the Bill.
Clause 14
Serious Fraud Office
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 1 be the First schedule to the Bill.
Clauses 15 and 16 stand part.
Government amendment 11.
Government new clause 9—Immigration officers.
Mr Wallace
We come to chapter 4 of the Bill. This group concerns clauses 14 to 16, schedule 1, amendment 11 and new clause 9, which relate to provisions that grant officers of a number of agencies access to new powers under the Proceeds of Crime Act.
Clause 14 and schedule 1 amend POCA to grant officers of the Serious Fraud Office direct access to the wide range of powers under POCA without the unnecessary existing step of their having first to be accredited and monitored as accredited financial investigators by the National Crime Agency. We are also granting officers access to the new powers proposed elsewhere in the Bill, including the power to extend the moratorium period under clause 9 and the new seizure and forfeiture powers in clauses 12 and 13.
It is, of course, only right that those using the intrusive powers provided by POCA are trained and monitored to ensure that the powers are not misused. However, officers of the SFO are experienced and well trained in the use of POCA powers and have appropriate oversight arrangements.
Clauses 15 and 16 amend part 5 of POCA to grant the powers for the civil recovery of assets to both HMRC and the Financial Conduct Authority. Expanding the civil recovery powers to HMRC and the FCA will improve both the capability and capacity for civil recovery. It will ensure they have access to the full suite of investigatory powers to support them in their civil recovery investigations. The use of those powers is governed by an existing code of practice, which will be amended. The Bill will also enable the SFO, HMRC and the FCA to apply for unexplained wealth orders. As we have discussed, the civil recovery provisions in POCA are robust and powerful, and giving additional bodies access to those powers will strengthen the UK’s overall response to serious and organised crime.
Clauses 12 and 13 provide for new freezing, seizure and forfeiture powers. At present, the Bill allows the police, the National Crime Agency, the SFO and accredited financial investigators to use those powers. Amendment 11 and new clause 9 will extend the use of those important new powers to immigration officers to support their investigations into immigration offences and to take action against criminal property that is the proceeds of immigration crime, or that is being used to fund further immigration offences. Those officers will also be able to seize suspected criminal property obtained through offences unrelated to immigration if they encounter them during immigration investigations. The amendment will strengthen the UK’s ability to tackle money laundering and will allow for the seizure of more criminal assets.
Dr Huq
We will support the clause. However, the amendment will lead to an increased workload for agencies such as the SFO and others. Our new clause will be debated later, but we would like an assurance that the blockbuster funding model that they currently operate, which seems to momentarily splash cash, will be replaced with some sort of consistent funding model, because their workload is going to increase and the investigation time in the courts is increasing. That is my only caveat.
Mr Wallace
In response to the hon. Lady, some of the measures in the Bill actually make their jobs easier. Although it might give them more people to catch, the fact that they are going to have disclosure orders and that they will be able to use things such as unexplained wealth orders as an investigatory measure, and the fact that we are going to improve the subject access request data sharing regime, so that the private sector produces more quality referrals rather than just a blurb of quality, will hopefully make their jobs easier when it comes to an investigation. In one sense, all of those barriers that they have to get through at the moment will be removed, which, hopefully, will make them more productive.
I recognise the hon. Lady’s point about the funding of the SFO and other agencies. Under the comprehensive spending review and the SDSR, we found quite a lot. SFO officers are already doing this work. It is here to be—[Interruption.] My writing is appalling. One of the reasons we want to remove their need be accredited financial investigators is that that is another hurdle that will get in their way and make them less productive, so we have removed some of those issues.
Dr Huq
It is the NCA as well. Both of those big reports from the Home Affairs Committee and the Public Accounts Committee said that there should be more consistent funding, but I am not going to let that niggle get in the way right now because we have a whole clause on that coming at the end.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Schedule 1 agreed to.
Clauses 15 and 16 ordered to stand part of the Bill.
Clause 17
Search and seizure warrants: assault and obstruction offences
Question proposed, That the clause stand part of the Bill.
Mr Wallace
This clause, and those that follow, fill a gap in the general law relating to those who conduct investigations of being placed in danger of being assaulted or obstructed. It is a general offence to assault another person, but in addition to that, police officers and HMRC officers are protected by specific offences that relate to the obstruction or assault of those officers in the course of their duties.
There are two very good reasons for specific offences. Those officers, by the very nature of their actions and work, face a much higher danger and likelihood of being assaulted. For example, they often enter the residences of serious criminals. I am sure the Committee sees that that is a wholly different scenario from what is envisaged in the general offence of assault. We, as law-abiding citizens, are not actively placing ourselves in situations that put us in danger.
Although we are unaware of any prosecutions relating to the assault or obstruction of police officers or others while exercising powers under the Proceeds of Crime Act, there is wide recognition that it is an important safeguard. It is a gap in the law that under POCA, investigators of certain agencies are put in situations where they could be assaulted or obstructed, and yet there are no connected offences. Section 453A of POCA has already created assault and obstruction offences for civilian accredited financial investigators operating under the Act. The clause provides that those who can execute search and seizure warrants in civil recovery investigations have a similar protection.
Dr Huq
We have had two good debates on the Floor of the House recently about the assault of police officers. These are very good provisions, and we are happy to support them.
Question put and agreed to.
Clause 17 accordingly ordered to stand part of the Bill.
Clause 18
Assault and obstruction offence in relation to SFO officers
Question proposed, That the clause stand part of the Bill.
Mr Wallace
The clause addresses a gap in the law relating to those who conduct investigations being placed in danger of being assaulted or obstructed. Much of what I said in relation to clause 17 also applies here. We are extending powers to SFO officers elsewhere in the Bill—in clause 14 and schedule 1, as well as clauses 12 and 13. In doing so, we place them in the position of being vulnerable to being assaulted or at least obstructed.
Unlike the police, HMRC officers and others, there is no specific offence that relates to SFO officers who are assaulted or obstructed in the course of their duties in general. The Bill therefore creates one to support the more general provisions of extending powers to the SFO. SFO officers currently access the powers in POCA as accredited financial investigators, and there are offences of assault and obstruction that relate to them. As accredited financial investigators, they are therefore protected by the offences in section 453A. The clause will simply copy the same approach, to reflect the fact that they will be able to operate the powers in their own right.
Dr Huq
This appears to us an entirely logical extension of the anti-assault powers. I know that taxmen are not always the most popular people, but I think MPs and used car salesmen are the most unpopular in the rankings of professions. We thoroughly support the clause.
Question put and agreed to.
Clause 18 accordingly ordered to stand part of the Bill.
Clause 19
Obstruction offence in relation to immigration officers
Amendment made: 11, in clause 19, page 72, line 36, at end insert—
“( ) section 303C as so applied (powers to search for a listed asset);
( ) section 303J as so applied (powers to seize property);
() section 303K as so applied (powers to detain seized property);”—(Mr Wallace.)
This amendment is consequential on NC9.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Wallace
This clause is similar to clauses 17 and 18. It addresses the need for an offence of obstruction, in this case to apply to immigration officers. Much of what I have already said in relation to such an offence also applies here. Under section 21(1)(g) of the Immigration Act 1971, a person commits an offence if they obstruct an immigration officer who is lawfully acting in accordance with their powers under that Act. That obstruction offence does not apply to the exercise of powers under the Proceeds of Crime Act.
As immigration officers now regularly use their powers under POCA—in particular since the extension of those powers in the Crime and Courts Act 2013—it is consistent for them to have a related obstruction offence. The clause amends POCA to create such an offence. Immigration officers are already covered by a general assault offence under section 22 of the UK Borders Act 2007, so no further provision is required in relation to assault. We are also amending immigration officers’ power of arrest without warrant to include this new offence.
Dr Huq
Again, Her Majesty’s Opposition entirely support this clause in relation to obstruction of immigration officers in the line of duty.
Question put and agreed to.
Clause 19, as amended, accordingly ordered to stand part of the Bill.
Clause 20
External requests, orders and investigations
Question proposed, That the clause stand part of the Bill.
Mr Wallace
Clause 20 makes a technical change, consequential to clause 18. Under section 444 of POCA, an Order in Council can be made to set out the procedure for providing assistance to other countries in freezing and confiscating property in the UK that is related to their cases. The Order in Council can create provisions that correspond to those available in our own domestic cases. The clause ensures that any offence created relating to the assault or obstruction of an SFO officer mirrors the one that we are creating domestically under clause 18. I hope the clause stands part of the Bill.
Dr Huq
Again, we have heard that these criminals often do not respect borders and maps, so we support the move to extend the provisions to external requests.
Question put and agreed to.
Clause 20 accordingly ordered to stand part of the Bill.
Clause 21
Seized money: England and Wales
Mr Wallace
I beg to move amendment 12, in clause 21, page 73, line 17, at end insert—
“( ) In subsection (2), for paragraphs (a) and (b) substitute—
“(a) has been seized under a relevant seizure power by a constable or another person lawfully exercising the power, and
(b) is being detained in connection with a criminal investigation or prosecution or with an investigation of a kind mentioned in section 341,”.
( ) After subsection (2) insert—
“(2A) But this section applies to money only so far as the money is free property.”
( ) Omit subsection (3).
( ) In subsection (5), for “bank or building society” substitute “appropriate person”.
( ) In subsection (5A), at the beginning insert “Where this section applies to money which is held in an account maintained with a bank or building society,”.
( ) In subsection (7A), after “applies” insert “by virtue of subsection (1)”.”
This amendment broadens the circumstances under section 67 of the Proceeds of Crime Act 2002 in which a court may order detained money to be paid in satisfaction of a confiscation order, by providing that the section applies to money that has lawfully been seized by any person (rather than only by constables) under a relevant seizure power, and by removing the requirement that the money is held in an account maintained with a bank or building society.
Mr Wallace
Amendments 12, 13 and 14 are a logical extension of powers that are already within POCA. Section 67 of POCA provides the magistrates court with a power in relation to money seized by the police or HMRC under the Police and Criminal Evidence Act 1984 that has to be paid into a bank or building society account. The court can order that money be paid to the court in satisfaction of a confiscation order. The money still belongs to the criminal. Therefore, section 67 avoids the ridiculous scenario of money being paid back into the criminal bank account when there is an outstanding confiscation order to pay. The amendments do not break new ground, but extend the established logic of section 67. When the police have possession of a criminal’s money, they should be able to transfer that across in the payment of a confiscation order, rather than return it to the criminal.
The amendments do three things. First, section 67 currently applies only to police and HMRC officers. The amendments effectively extend the powers to law enforcement officers who have the power to seize money, including immigration officers and SFO investigators. Secondly, the provision will now apply to money that has been seized under any power relating to a criminal investigation or proceeding, or under the investigatory powers in POCA. Instead of being limited to money seized under the Police and Criminal Evidence Act, this removes an unnecessary restriction. Many other powers of seizure should come from this provision’s scope, such as those in the Immigration Act 2016.
Thirdly, section 67 currently applies only to money that has been paid into a bank or building society account. That is another false limitation. For example, if money has evidential value it will not be paid into an account. It may be required at a trial as evidence that it is contaminated with a trace of drugs or explosives. It would be odd that a convicted drug trafficker with an outstanding confiscation order has his money returned by the police purely because that money was used as evidence in his trial, and not paid into his bank account.
There was no provision equivalent to section 67 in Scotland. Section 67 applied in England and Wales, and was similar to section 215 for Northern Ireland. I draw the Committee’s attention to clause 23, which introduces a similar power in Scotland. In constructing clause 23, we have been made to rethink the scope of section 67. We have come to the conclusion that it should be extended in the ways I have just described. We are also looking into whether to make similar amendments to the powers being introduced in Scotland and to the existing powers in Northern Ireland, and I will update colleagues in due course. I am sure the Committee will agree that this is an entirely sensible extension of the existing power to support the enforcement of confiscation orders.
Dr Huq
We do not oppose the amendment.
Amendment 12 agreed to.
Amendments made: 13, in clause 21, page 73, line 18, leave out subsection (2) and insert—
“( ) For subsection (8) substitute—
(8) In this section—
“appropriate person” means—
(a) in a case where the money is held in an account maintained with a bank or building society, the bank or building society;
(b) in any other case, the person on whose authority the money is detained;
“bank” means an authorised deposit taker, other than a building society, that has its head office or a branch in the United Kingdom;
“building society” has the same meaning as in the Building Societies Act 1986;
“relevant seizure power” means, subject to subsection (9), a power to seize money conferred by or by virtue of—
(a) a warrant granted under any enactment or rule of law, or
(b) any enactment, or rule of law, under which the authority of a warrant is not required.
(9) A power to seize money conferred by Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 is not a “relevant seizure power” for the purposes of this section.”
This amendment defines terms used in amendment 12 and makes a consequential change to the Bill.
Amendment 14, in clause 21, page 73, line 23, leave out “subsection (8)(a)” and insert—
“the definition of “bank” in subsection (8)”.—(Mr Wallace.)
This amendment is consequential on amendment 13.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Wallace
The clause is a technical amendment to POCA, specifically to update references to the definition of “bank” in three sections. The current reference in POCA is to the Banking Act 1987, which was repealed in December 2001, before POCA was commenced. The reason for its repeal was to remove bank regulation from the Bank of England, and to make it independent. Although no universal definition of a bank was given in the Banking Act, and nor is there any such definition in the subsequent legislative changes, a bank is defined by its activity as a deposit taking institution.
The only references in POCA affected by the change are those in three sections: section 67, section 215, and paragraph 6 of schedule 3. In addition, the definition will apply for the purpose of the new powers in the Bill to freeze and forfeit funds in a bank account.
Section 67 provides that where a confiscation order is made against a person, and moneys belonging to that person are held in a bank or building society account maintained by the police or HMRC, those institutions can be ordered to pay those moneys to the court. Section 215 makes equivalent provisions for Northern Ireland, and paragraph 6 of schedule 3 to POCA refers specifically to a Scottish provision relating to the deposit of certain moneys by an administrator into an “appropriate bank or institution”.
These changes replicate, as much as possible, the previous provisions, while recognising that the legislation in the area has now changed. I hope the clause will stand part of the Bill.
Dr Huq
Once again, I am proud that the Proceeds of Crime Act was a Labour Act that we pushed through when we were in government. It is now being updated to reflect contemporary circumstances.
Question put and agreed to.
Clause 21, as amended, accordingly ordered to stand part of the Bill.
Clause 22
Seized money: Northern Ireland
Question proposed, That the clause stand part of the Bill.
Mr Wallace
Clauses 22 to 28 contain a number of minor and technical amendments that will strengthen the operational impact of POCA powers. The clauses clarify and simplify the use of powers intended to recover criminal assets, and I will very briefly expand on those particular provisions.
Clause 26 makes technical amendments to the process that accredited financial investigators follow when seeking approval to use certain POCA search and seizure powers. Accredited financial investigators are not warranted officers, but may be employed by a police force or another public body. They have access to a wide range of powers under POCA, including certain search and seizure powers. They have access to search and seizure powers to seize property that may be subject to a future confiscation order. In order to use those powers, an accredited financial investigator has to seek the prior approval of either a justice of the peace or a senior officer. Currently, POCA only allows a civilian AFI to seek the approval from a senior AFI, as opposed to a senior police officer. This is not always practical from an operational point of view and creates an additional layer of bureaucracy. This measure allows civilian accredited financial investigators to seek authorisation from a police colleague who is at least the rank of inspector and therefore of equivalent seniority, thereby creating additional flexibility.
Clause 27 provides that an investigator has full access to investigation powers in section 22 revisits. Section 22 of the Proceeds of Crime Act allows an investigation to revisit any confiscation order so that any money acquired by a defendant in the future may be confiscated and satisfy a previous order. Currently, it is open to question whether an investigator’s ability to identify money made by the defendant using the investigatory powers in POCA—for example, by monitoring bank accounts, searching property or requiring the production of evidence —is available for investigations linked to revisits. Clause 27 strengthens investigative powers, making confiscation revisits more effective and helping to make best use of the resources being put into revisiting confiscation orders.
The remaining clauses clarify process and definitions to allow for the more effective recovery of criminal assets. Although minor and technical, these amendments are important measures that allow for the proper functioning of POCA. I hope that the clauses will stand part of the Bill.
Charlie Elphicke (Dover) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan, and to make my first speech before this illustrious and most distinguished Committee. I have a few queries for the Minister on these important clauses. Part of the concern about POCA in the past has been that it has not always worked quite as well as it should have; it has a slightly chequered history when it comes to making sure that the proceeds of crime are, in fact, captured for the state.
First, looking at the miscellaneous provisions relating to Scotland, we are told that clause 23 is intended to replicate in Scotland the effects of section 67 for England and Wales, and section 215 for Northern Ireland, with certain modifications. It provides for the High Court of Justiciary or the sheriff, as the case may be, to order that any realisable property in the form of money held in a bank or building society account is paid to the appropriate clerk of court in satisfaction of all or part of the confiscation order. It would be helpful if the Minister could say why exactly those provisions are needed and how they will ensure that POCA works more efficiently. I am sure that will be a matter of concern to the spokesman for the Scottish nationalist party [Hon. Members: “Scottish National party.”] Oh, Scottish National party—or is it the Scottish neverendum party? I get confused, but I have a one in three chance of being right on one of them. That deals with the concern that I had on Scotland.
We are discussing clauses 23 to 28, are we not? Clause 24 deals with recovery orders related to heritable property. The proposed measure is to remove existing jurisdictional and procedural barriers that can delay the recovery of the possession of heritable property. For those who are not fully up to speed on what heritable property is, and for the benefit of colleagues and Members of the Committee, it is a house, flat, commercial premises and like real estate. I would ask why there were jurisdictional and procedural barriers in the first place and how they would be dealt with by this provision. The clause also says that, where a recovery order is granted, the property automatically vests in the trustee for civil recovery and the previous owner-occupier loses his or her title, since the owner-occupier of the property is subject to the recovery order and has no right or title to occupy the property. The appropriate way to recover possession in those circumstances is by warrant for ejection.
I want to check that there will not be any delay in getting such a warrant and that the procedural aspects are considered likely to work efficiently and swiftly. I also want to ask what the situation would be if there are any sitting tenants in the heritable property to which a recovery order applies. Would such sitting tenants be ejected or would they be able to see out the length of their tenancy?
A house might be owned by a crook who might have let that house to some innocent people, members of the hard-working classes of modern Britain, who suddenly find that their home is seized because that crook is brought to book. They do not want to be ejected and thrown out on to the street, where it is cold and dark as the seasons change against us. I hope we can understand what will happen to sitting tenants in such a case because that is extremely important. I see that the hon. Member for Scunthorpe is following with interest and is concerned about the matter. It would no doubt be heritable property 95% made with English steel from the great steelworks in his illustrious constituency.
Clause 25 deals with money received by administrators. We are told that this is a technical amendment to paragraph 6 of schedule 3 to POCA, which deals with money received by an administrator in Scotland. That is obviously a matter of great concern to my hon. Friend from the Scottish nationalist party. It is to provide a definition of “bank” following the repeal of the provisions of the Banking Act 1987, which previously provided the definition. I want to understand why it is so important to provide a definition of bank in such circumstances and why that is not already covered by legislation. That is a minor technical point. Is it truly necessary or does it make a substantive difference?
The Chair
Minister, having caught such a rare fish, I presume you want to deal with it now rather than later.
Mr Wallace
I am touched by the love of Scotland expressed by my hon. Friend the Member for Dover—although his constituency is closer to France than Scotland. I might be able to help him on some of his technical questions.
My hon. Friend’s first question was about why the miscellaneous provisions relate to Scotland, how they are processed and why they are different. Sections 67 and 215 of the 2002 Act provide that a magistrates court can require a bank or building society to pay a sum of up to £5,000 if it fails to comply with an order. However, there is no precedent for such a provision in Scottish law. Also, the equivalent orders in Scotland will apply to law enforcement authorities, as well as to banks and building societies. It was therefore considered more appropriate for any, hopefully rare, wilful non-compliance with an order in Scotland to be dealt with as contempt of court.
Clause 24 addresses recovery orders relating to heritable property. Although it is Scottish Ministers, as the enforcement authority, who apply for a recovery order, once granted it is for the trustee for civil recovery to recover possession of any heritable property to which the recovery order applies. That is because the effect of a recovery order is to vest the property in the trustee for civil recovery. Under existing law, however, a trustee for civil recovery is unable to seek recovery of possessions directly in the Court of Session so must raise a separate action in a lower court, namely the appropriate sheriff court. That can lead to defenders rehashing arguments that were unsuccessful before the Court of Session and incurring costs for those days, which ultimately compromises the amount recovered. Such delays also permit those involved in criminality to continue occupying a property despite the Court of Session having determined that the property was obtained through unlawful conduct and should therefore be recovered.
My hon. Friend is rightly concerned about sitting tenants whose house is owned by a crook and who suddenly find that it is forfeited or frozen. The primary policy obligation is the effective recovery of the proceeds of crime, which is generally best served by recovering the heritable property concerned and selling it so that proceeds from the sale can be added to the public purse. A primary function of the trustee for civil recovery is to realise the value of the property for the benefit of the enforcement authority, which, in Scotland, is the Scottish Ministers. It was never intended that the trustee should take on the functions of a landlord in relation to any sitting tenants.
However, we are considering introducing amendments to other legislation in consequence of the clause, as was well pointed out by my hon. Friend the Member for Dover, with a view to ensuring that any legitimate tenant receives fair notice that a recovery order is being sought in respect of the property concerned and that, if granted, they will have to vacate the property within a certain period of time, and that adequate support is put in place to safeguard against homelessness.
Let me move on to the fourth point, relating to the definition of “bank”—I remember this being a particularly gripping part of the Bill when I was reviewing the legislation. The Banking Act 1987 provided a definition of a bank; these amendments simply update the definition to ensure that it is current, as the Banking Act has been repealed.
Dr Huq
I am reassured to hear that tenants’ rights, which are often under-regulated in this country, will be dealt with in the legislation.
I have a question about clause 26, which is on accredited financial investigators. We have had those in this country since 2009. Even though I do not have the exact figures—my iPad is not getting wi-fi—there is evidence that we have not hung on to all of them. People have been trained as specialist investigators out of the public purse. We live in an age where we should justify every pound of public money, and we seem to have lost those people to the private sector. A lot of them have been poached.
Dr Huq
It was a powerful point. As I was going to say if the hon. Gentleman had allowed me to finish the sentence I had embarked on, this issue will be addressed at the end in one of our new clauses. Perhaps we could build in some way of, if not exactly giving them golden handcuffs, then retaining them or even getting the cost of the training repaid, whatever that is. We see the same happening across other sectors. We hear of junior doctors being lost to Australia. It would be a tragedy if we trained these people up and then off they went, poached by the private sector. We have heard of examples where they have gone to the gambling industry, which my hon. Friend the Member for Swansea East has experience of in her role on the all-party group on fixed odds betting terminals. I flag that issue up now, but we will come back to it later in a new clause.
Mr Wallace
I have heard the hon. Lady’s sentiment. We will discuss the new clause later. I understand the point that we invest in people and we as the taxpayer should extract that investment back. We will no doubt discuss that further.
On the final concern raised by my hon. Friend the Member for Dover about the governance of accredited financial investigators, the use of the power in the clause is covered by a code of practice that will be amended. That mirrors the application processes elsewhere in POCA whereby civilians authorise applications. I am happy to provide those codes of practice for my hon. Friend to look at.
Question put and agreed to.
Clause 22 accordingly ordered to stand part of the Bill.
Clauses 23 to 27 ordered to stand part of the Bill.
Clause 28
Confiscation orders and civil recovery: minor amendments
Amendment made: 15, in clause 28, page 78, line 33, at end insert—
‘(2A) In section 148 (free property: Scotland), in subsection (3)(b) for “or 297D” substitute “, 297D or 298(4)”.” —(Mr Wallace.)
Clause 28(2) amends section 82 of the Proceeds of Crime Act 2002, which determines what constitutes “free property” in relation to confiscation proceedings in England and Wales, by providing that property detained under section 298(4) of the 2002 Act is not free property. This amendment provides for a corresponding change to be made to section 148, which applies in the case of confiscation proceedings in Scotland.
Clause 28, as amended, ordered to stand part of the Bill.
Clause 29
Disclosure orders
Question proposed, That the clause stand part of the Bill.
Mr Wallace
We now move on to part 2 of the Bill, relating to terrorist property. In our discussions so far we have focused on clauses that are about ensuring we take the profit out of serious and organised criminality. Terrorism finance is different. Individuals who raise and move funds for the purpose of terrorism are not concerned with profit, but with causing the loss of life. It is essential that the tools available for terrorist finance investigations and the powers available to seize terrorist cash and property are as comprehensive as those available for dealing with other financial crime or, in some cases, more robust. Part 2 of the Bill is included for that purpose.
The relevant clauses therefore largely reflect the existing provisions relating to financial crime, but have been adapted as needed to respond to what is a different type of threat. As I explained earlier, disclosure orders are available for confiscations, civil recovery and exploitation proceeds investigations. Clause 29 and schedule 2, which it introduces, are very similar to clauses 7 and 8, and extend disclosure orders to money laundering investigations, but do so for terrorist finance investigations. The clause will make disclosure orders available for terrorist finance investigations, which will give law enforcement agencies the means to obtain information that is significant for investigating suspected terrorist finance offences or for identifying terrorist property.
The clause makes it possible for the police to apply to the court for an order to compel an individual to answer questions, to provide information or to produce documentation that is assessed to be relevant to progressing a terrorist finance investigation. It will be an offence to fail to comply with such an order without reasonable excuse, and to make a false or misleading statement in response to such an order. Either offence is punishable by a possible term of imprisonment of up to two years.
This is a robust measure, which is appropriate when we consider the type of threat with which we are concerned. However, it will operate with a number of safeguards: the application for an order must be made by a senior police officer, at least a superintendent, or authorised by such an officer; and the court must be satisfied that the information sought will be of substantial value, and that it is in the public interest for it to be provided, before making an order.
The action plan for money laundering and counter-terrorism finance, to which I have referred on numerous occasions, identified the need for a more robust law enforcement response to tackle money laundering and terrorist finance in all its forms. The measure is part of that response.
Dr Huq
The Minister is absolutely correct that the Government’s action plan of April 2016 identified this as a crucial area in need of examination. Terrorism is the threat of our modern age, along with climate change, so we go along with the clause.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Schedule 2
Disclosure orders
Mr Wallace
I beg to move amendment 16 in schedule 2, page 109, line 9, leave out “designated” and insert “counter-terrorism”.
This amendment, and amendments 18, 20, 21 to 25, 27 to 49 and 54, are consequential on amendment 26.
The Chair
With this it will be convenient to discuss Government amendments 18, 20 to 49 and 54.
Mr Wallace
We come to a large number of Government amendments, but I am pleased to inform the Committee that they are all connected to the same issue. Legislation must keep pace with changes to the police workforce. Civilian financial investigators accredited to the National Crime Agency under the Proceeds of Crime Act 2002 can already exercise many of the equivalent investigatory powers available under the legislation for a variety of investigations into money laundering and other serious crime.
Clause 34, which we will reach consideration of in due course, will allow civilian members of police staff, who will be referred to as counter-terrorism financial investigators, likewise to exercise certain investigatory powers in connection with terrorist investigations. The powers include applying to a court for a production order in relation to terrorist property, a financial information order or an account monitoring order. Clause 34 will also amend schedule 1 to the Anti-terrorism, Crime and Security Act 2001 to allow financial investigators to seize terrorist cash. Clause 32 will enable them to seize certain personal movable items.
At a time when counter-terrorism policing has been given additional investment in recognition of the threat levels facing the UK and the vital function it provides, I hope the Committee will agree that it is entirely sensible to provide greater flexibility in legislation for how the police may use their workforce. That does not mean that the exercise of those powers by a wider pool of people should be without safeguards. After further discussion with the police and the National Crime Agency, we have identified that a discrete accreditation process is appropriate for counter-terrorism financial investigators, rather than the training system for financial investigators set out in the Proceeds of Crime Act 2002.
Nic Dakin (Scunthorpe) (Lab)
The Minister is explaining the need for the amendments. Will he explain exactly what difference the proposed changes will make to the accreditation? How will it compare with what it would otherwise have been?
Mr Wallace
As I said earlier, terrorist financing often happens much more in real time. It is not about someone banking their asset to enrich themselves; it is about funding an operation. There will therefore be different requirements for these financial investigators. They will almost be chasing the money as they go, often to stop an operation that is about to happen—someone may be about to book a plane ticket and we may need that stopped—so they will need a different skill set from a normal accredited financial investigator. That is one fundamental difference; another relates to the different approaches that the Bill takes to terrorist financing and to criminal financing. There is a difference between enriching oneself and funding an act of terror.
Amendment 16 agreed to.
Mr Wallace
I beg to move amendment 17, page 114, line 30, leave out “6” and insert “12”.
This amendment increases the maximum period of imprisonment from 6 to 12 months (in line with other provisions in the Bill) in the case of an offence in Scotland of making false etc. statements in response to a disclosure order under the new provisions inserted into Schedule 5A to the Terrorism Act 2000.
The amendment will increase the maximum sentence for making false or misleading statements in response to a disclosure order to 12 months’ imprisonment, following a summary conviction in Scotland. The maximum penalty for the offence following a conviction on indictment will remain two years’ imprisonment. In our ongoing discussions with the Scottish Government, I have been advised that the summary courts in Scotland have general powers to impose sentences of up to 12 months and that this is therefore the correct approach for offences that can be tried summarily or on indictment. It will help to ensure the best use of the sheriff courts in Scotland.
Richard Arkless
That is a fair assessment of the position in Scots law. A sentence of 12 months is more consistent with the rest of the Bill and with the summary powers of sheriff courts in Scotland. Also, we have a presumption against lower sentences in Scotland and I would not like a lower sentence of less than six months to be caught by that presumption unintentionally. We support the amendment.
Mr Wallace
Collaboration between law enforcement and the private sector is incredibly important for countering terrorism, as it is for combating serious and organised crime. The importance of such close collaboration will be a key theme that features prominently in the forthcoming revised Contest counter-terrorism strategy.
Clauses 30 and 31 mirror the provisions in clauses 10 and 11, but for terrorist finance investigations.
As I have outlined to the Committee in relation to part 1 of the Bill, the Government are committed to improving public-private partnerships. We must support the regulated sector to come together to share expertise and information to help it protect legitimate businesses from being exploited for criminal or terrorist intent. In some cases, the detailed picture held by the regulated sector might be key to understanding particular threats. Closer working with the regulated sector can only enhance our understanding of terrorism and provide opportunities to protect against it or disrupt it. Clearly, the financial sector in particular can play a vital part in terrorist finance investigations and tracking terrorist property.
Clause 30, like clause 10 on money laundering, will enable firm-to-firm information sharing through a legal gateway, which will provide immunity from civil liability, encouraging the reporting sector to share information to detect and prevent money laundering and terrorist financing. The joint money laundering intelligence taskforce has demonstrated that there is potential for information sharing in relation to terrorist financing to support effective law enforcement action and disrupt threats to our national security. The clause is an important measure that enables us to take forward that agenda. Although obligations to protect customers’ personal data remain important and must be respected, where it is possible to overcome barriers to the effective sharing of information to progress an investigation, the Government will do what we can to allow it.
Clause 31 will allow the National Crime Agency or the police, following receipt of a report under section 21(2)(a) of the Terrorism Act 2000, to request further information from any member of the regulated sector, irrespective of whether that entity raised the original suspicious activity report. It will also allow the National Crime Agency to seek further information on behalf of a foreign authority. Just as in clause 11, in the event that a member of the regulated sector does not comply with a request for more information, the provision will also allow the NCA or the police to obtain a court order to ensure that it is provided.
The two clauses will allow better information flows within the regulated sector and between the regulated sector and law enforcement agencies, generating better intelligence for law enforcement agencies and helping firms better protect themselves. I commend the clauses to the Committee.
Dr Huq
Clauses 30 and 31 revisit the information sharing themes that we have been discussing all day. We thoroughly commend them. They build on another good piece of Labour legislation, the Terrorism Act 2000. Unfortunately, terrorists have become ever more ingenious in the evil schemes that they dream up in the 16 years since, which is why the clauses are necessary.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31
Further information notices and orders
Amendments made: 18, in clause 31, page 86, line 1, leave out “designated” and insert “counter-terrorism”.
See the explanatory statement to amendment 16.
Amendment 19, in clause 31, page 86, leave out line 3. —(Mr Wallace.)
This amendment removes a reference to the Scottish Ministers from the list of persons who may give a further information notice under new section 22B of the Terrorism Act 2000.
Question put and agreed to.
Clause 31, as amended, ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Andrew Griffiths.)
Criminal Finances Bill (First sitting)
Ben Wallace ExcerptsTuesday 15th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 November 2016 - (15 Nov 2016)
Dr Huq
Q What do you think of the £100,000 figure?
Detective Superintendent Harman: It sounds a reasonable figure to me when we are dealing with a higher end, it certainly does, but we operate less in that realm. We are more about the slightly smaller amounts causing a great deal of harm.
The Minister for Security (Mr Ben Wallace)
I want to clarify the point: the seizure threshold is £1,000 and the unexplained wealth order threshold is £100,000. I did not want members of the Committee to get confused about the two. If we are talking about taking money out of a bank account, it is at the £1,000 level; if we are talking about confiscating assets on an unexplained wealth order, it is £100,000.
The Chair
Order. Can I just say to the witnesses that we have only a very short period of time and there are at least five other members who want to ask questions? The Minister may also do so at the end. Your replies are very informative and welcome, but could you make them more succinct? Similarly, could Members confine themselves to instant questions that people want immediate replies to and that can be given?
Dr Huq
That is only from 2010, so it is not an old Act, and again, nobody here is Mystic Meg, but do you have the tools in this legislation to bring about successful prosecutions or are there too many obstacles, such as that the SFO is involved and that behavioural change would be needed, as you said? Do you foresee there being a low or high level of prosecutions when the Bill is enacted?
Simon York: A good result would be that corporates change their behaviour and that there is less facilitation of tax evasion, and consequently, less tax evasion. We certainly have the tools, through a combination of this proposed legislation and our existing capability—HMRC is a very competent and successful law enforcement agency and criminally investigates many people and convicts them successfully every year, so I think we have that capability. Do I think we will have a lot of prosecutions in this area? I hope not, but I think we will be looking for a number to act as part of this deterrent to show that the legislation has teeth and to show that we mean business.
Nick Price: I would just make a quick general observation: all prosecutions are difficult and we operate an adversarial system, which of course we are well used to. This is a really useful piece of potential legislation, with some really useful elements to it. Are we going to see a phalanx of extra prosecutions coming over the horizon? Perhaps not, but there are some really useful aspects of the Bill that we will no doubt deal with shortly.
Mark Thompson: In my experience, it is not inherently a numbers game, in terms of numbers of prosecutions. We have found that the section 7 offence of the Bribery Act is a useful tool for us as prosecutors. It focuses the corporate mind and there has been a large response from the private sector in complying with that. I would be surprised if the tax evasion offence did not have the same implications.
The Chair
You have only two or three minutes to answer, so please be very brief. If you want to give fuller answers to Members, you can write to the Committee Clerk and we will make sure that all Members get a copy.
Professor Murphy: One brief answer—yes, it is effective. I think there are more effective mechanisms available but I am not disputing it has a behavioural consequence. I am afraid I am not expert enough to comment on the other areas. I simply am not an expert on mortgage fraud or LIBOR in that area. I am a tax specialist not a criminal finance specialist.
Does HMRC have enough resource? No, clearly, it does not. It needs to have a lot more resource and to be seen in local communities so that people realise that the threat is personal in that sense, but it is going in the wrong direction of travel at present. It is the risk of being caught that changes behaviour at the criminal end of activity, and transparency would expose that. That is why I think creating the smoking gun of information is the critical measure that needs to be taken to give HMRC a chance to identify those who are creating most risk.
Alex Cobham: We have a report out with the Public and Commercial Services Union, being launched across the road this afternoon, that says exactly that HMRC neither has enough resources and nor are they appropriately allocated to deal with the relative prioritisation that we think it should have.
Mr Wallace
Q The ARIS scheme allows HMRC, the investigators and the prosecutors to keep 50% of the proceeds of any confiscation. If the Bill leads to further confiscation, would you say that therein lies some of the solution that you are going to highlight across the road? If they will be able to keep what they recover, will unexplained wealth orders, for example, or seizures improve their budgets?
Alex Cobham: That seems potentially helpful, but I think you would be wise to look at the bigger question of whether HMRC is appropriately resourced given the bang per buck that it actually gets in different areas, rather than having just that one measure in mind.
Professor Murphy: I would rather have no crime and no proceeds than fund collection through increased recovery.
Mr Wallace
Q Unlike Corbyn economics, we live in the real world.
Professor Murphy: But it is the wrong direction of travel.
The Chair
I thank the witnesses for coming to answer Members’ questions. If you wish to give fuller answers, please submit them to us in correspondence.
Criminal Finances Bill (Second sitting)
Ben Wallace ExcerptsTuesday 15th November 2016
(8 years ago)
Public Bill CommitteesRead Full debate Criminal Finances Act 2017 View all Criminal Finances Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 November 2016 - (15 Nov 2016)
Peter Dowd
Q Do you think that the amount of training within the system fits the Bill, so to speak? Is there enough there?
Anthony Browne: There are certainly a lot of training providers. I should declare an interest here in that the BBA provides training, although we are a tiny part of the whole. Larger banks tend to do in-house training. There are a lot of third companies, external to banks, that provide training. There could be an almost unlimited supply of training, so I do not think that that is a constraint.
Nausicaa Delfas: We have talked about training in firms but there also is training for investigators exercising the powers in the Bill and other legislation. There is accreditation and monitoring of them, so the system is robust.
The Minister for Security (Mr Ben Wallace)
Q Thank you very much for your input into the formation of the Bill. It helps the Government, and hopefully the Bill reflects some of that. I am keen to find out from the regulated sectors and the professions what you envisage could or would happen to any one of your members should they be convicted of the offence of corporate tax evasion or money laundering. What penalties are available to you to deal with either law firms or the individuals who could be convicted?
Amy Bell: In relation to law firms, while the Law Society is the named supervisor, we delegate enforcement responsibilities to the Solicitors Regulation Authority. Its powers are incredibly wide and include restricting or stopping a firm from practising, intervening in a firm, closing the firm down, stopping the individual solicitors involved from being able to practise and ultimately referring them to the solicitors disciplinary tribunal, where they can lose their right to practise and be removed from the role. Quite serious options are open to the SRA.
Mr Wallace
Q And for the banking and financial sector?
Nausicaa Delfas: From our perspective, obviously, individuals could be prohibited from the industry. In terms of firms, there are significant fines and reputational damage.
Mr Wallace
Q And they could potentially lose their banker’s licence, if they are a bank.
Nausicaa Delfas: Removal of permissions, yes.
Mr Wallace
Q Ultimately, if an international bank loses its British banker’s licence, what does it mean for that bank in the global world? Is it usually the case that if they lose their banker’s licence in a developed market, it is pretty much curtains for them in the rest of the world?
Nausicaa Delfas: It would have a significant impact, yes.
Anthony Browne: If you lost your licence to operate in London, it would clearly have a dramatic effect on an international bank.
Mr Wallace
Q Do you think some of the overseas offences here will have a change of behaviour effect on foreign-owned banks that operate here as well? Ones that may previously have been able to exploit their jurisdiction elsewhere will find that the stakes are higher for them.
Nausicaa Delfas: Undoubtedly so. Obviously, where controls are exercised from the UK, those powers already exist, but this certainly goes further.
Anthony Browne: One aspect of the criminal offence of failing to prevent tax evasion about which we do have concerns is its extraterritorial impact and the degree of extraterritoriality. For example, if a US citizen who is a customer of a US bank operating in the US evades tax in the US and that US bank has a branch in the UK, the entire US bank could become criminally liable for an action that has no nexus in the UK whatsoever—it is a US citizen, US tax and a bank operating in the US under US law. The same goes for Japan, and so on. Effectively, that would place us as regulators for jurisdictions overseas. The US Department of Justice, for example, does not have such authority over UK banks operating in the US. It could have a dramatic impact on the UK’s competitiveness as an international financial centre.
Mr Wallace
Q But the US regulator does have a say in things like foreign and corrupt practices over examples such as the one you used. You do not have to have an entity with their extraterritorial reach in their other legislation.
Anthony Browne: It has to be a nexus in the US, I think. That is my understanding of that, but we can get back to you on the detail of it. Our understanding is that there no legislation which has this impact, in the sense that it is entirely extraterritorial without any nexus. It does not involve UK taxes, UK citizens, UK banks or UK laws.
Mr Wallace
Q But we do not really want tax evaders anywhere, do we? We do not want to allow tax evaders to rob other countries of their wealth either. We do not want to be a permissive society.
Anthony Browne: No, but obviously, the US, Japan and other countries have very sophisticated tax evasion laws already. Getting them to comply with two different laws simultaneously on a global basis, for both the UK and other jurisdictions, would have quite big implications. I do not know whether you have spoken to other Governments about the impact of this.
Mr Wallace
We have not had any representations from the United States objecting to this.
Roger Mullin
Q I would like the panel’s views on whether there is a case for strengthening protection for whistleblowers in the financial sector.
Anthony Browne: The protection for whistleblowers has just been strengthened in the financial sector. Ms Delfas might know more about it. We have been working with the regulators to ensure that each bank has a proper independent whistleblowing regime that does exactly that: protect whistleblowers. There is a senior manager or a board director who is a champion of the whole whistleblowing regime within the bank. That is a process that we have been going through over the past 18 months or so, to strengthen it.
Dr Huq
Q Can you think of anything that is not in the Bill that you would have liked to have seen in it? I was kind of thinking sideways—maybe enhanced supervision of the property market or something. I know that is not one for you three directly, but if there is anything you would like to see in the Bill, we are told that the Minister is in listening mode.
Mr Wallace
Always.
Anthony Browne: We broadly support this Bill and almost all the provisions in it. The one thing we would like to see changed in the Bill is the threshold for intelligence sharing, which is a point that Ms Delfas made earlier. It would be beneficial and make the regime more effective if you lowered the threshold for intelligence sharing. If there was activity that was just below the formal level of suspicion, so that banks do not deal with it as a suspicious activity report, if they could at that stage share intelligence with other banks like two pieces of a jigsaw, they could find out that something happening in bank A is also happening in bank B.
That could raise it to a suspicious activity and so enhance the intelligence sharing and make it far more useful and effective. We are worried that the way it is prescribed at the moment would actually be a lot less effective than either the Government or the banks want.
Dr Huq
Q Do you think that the £100,000 for an unexplained wealth order is about right as the threshold where that kicks in? Would you like to see it higher or lower?
Anthony Browne: I do not have a view on that, but I can get back to you.
Nausicaa Delfas: I do not particularly have a view but, certainly from our experience, the cases of money laundering tend to be of higher value. I do not have a view on the figure as such.
Mrs Drummond
Yes, but I think Mr Leask was talking about other countries and corrupt Governments. We cannot cover that in the Bill. We can cover the overseas territories. Were you not talking about other countries outside the overseas territories when responding to Mr Mullin?
David Leask: We were talking about the use of both English limited liability partnerships and Scottish limited partnerships as shell companies. Those shell companies often provide cover and a way for people in Russia, for example, to buy a company in the British Virgin Islands. Often the shell on the outside will be British, but, when you crack it open, on the inside you get the British Virgin Islands or another Commonwealth or British overseas territory. Sometimes it is a country such as Belize or Panama.
One of the things said to me by a colleague—a lot of work is being done on these stories by colleagues in countries like Ukraine and Latvia—was, “We keep coming up with that British Commonwealth problem.” That really struck me, once you start unwrapping these shells. One final point I will make is that, in many countries, there are blacklists of offshore fiscal paradises and tax havens, and the British and Scottish companies enable you to bypass those blacklists.
Toby Quantrill: In the recent Panama papers data that were revealed, just under half of companies in the documents in Mossack Fonseca in Panama were registered in the British Virgin Islands. It was by far and away the most utilised location. It is at the heart of the system. With the ability to deal with that comes a responsibility to do so.
Mr Wallace
Q I thank The Herald for what you have done. I have read some of your stuff and it has been quite an eye-opener. The SNP obviously raised it in the debate and that prompted me to have a meeting with one of my business Minister counterparts to see where we can go forward with it. Some of the stuff that you have identified—well done for it—is the truest form of good investigative journalism that can be produced. It was the Glasgow Herald when my grandmother wrote for it way back 40 or 50 years ago. It is clearly a structure that has been abused, and I think we want to ensure that that does not happen.
I want to ask Mr Quantrill about a bigger issue: the Crown dependencies and overseas territories. If we stack it up, going back to the anti-corruption summit chaired by David Cameron back in May, we have got to a position now where all of them will have a central register of beneficial ownership, except the Caymans, which will have a linked register of ownership. Our law enforcement agencies will have access to them. We are the only country in the G20 to have a public one. Never mind the dependencies or anywhere else; our neighbours in Europe do not have them yet, so the trajectory is in the right direction. It seems to boil down to a call to make the Crown dependencies make them public—that we, the UK Government, impose our will on the Crown dependencies and territories, in primary legislation.
Do you recognise what that actually means? I have many constituents who, for example, have very strong feelings on abortion. Does that give this sovereign Parliament the right—technically, we are sovereign over Scotland and the Crown dependencies—to impose that very strong will on those Crown dependencies? That is the next step. The step you are suggesting is for us to ignore their own Parliaments and impose our will on them, because it is a subject that you and many other people feel passionately about. I respect that, but it is what you are proposing. Is that something that you are happy to do?
Toby Quantrill: Not happy—
Mr Wallace
By working with them, we have got to a position rather quickly of having central registers and getting our law enforcement automatic access to those data without long, drawn-out court cases. We have done that in the space of a year. Is Christian Aid proposing that we override the democratic expression of those countries, whether they like it or not, because it is a subject that you have decided is more important than other issues?
Toby Quantrill: I certainly recognise the difficulties. I would also very much prefer that we did not have to go down the path of legislation. I do not necessarily think that we would need to, but it ought to be available, and it ought to be made clear that it is available. There have been precedents in the past.
That is one thing, but what we are looking for is a timeline and to be really clear by when this will happen, so that we know what is happening and can see the UK using all its powers to persuade and support these places to go in that direction, primarily. However, we do not think it is acceptable for this not to happen within a timeline. The reason for that is that the impact globally is so great. The Panama papers are a game-changer in this respect. It puts these places right at the heart of the system. The damage being done globally, to our mind, overrides the very real discomfort of taking this action, but it is not an action without any precedent. The UK has gone down that route in the past, as I am sure you are aware, on a number of different issues.
Also, interestingly, I had sight of a paper recently, the Foreign Office annual report on the Cayman Islands Government from 2003; it goes back some time. In it, there was a single paragraph relating to the EU savings directive. At that time, the Caymans Government clearly did not want to implement it; it was a similar issue of making certain information available. The paragraph stated that voluntary action by the Caymans Government meant, effectively, that we did not have to legislate. It was clear that the threat of legislation had been used, and had been effective in that case. It has been done in the past, in a similar incident.
Yes, I recognise the difficulty—I honestly do—but there are potential implications of maintaining secrecy in these places. It is not just one particular place; it was, as I said, one of the most important centres of financial secrecy in the world. I think the potential impact of that staying in place is too great to ignore, but what we are looking for is a timeline, persuasion and all means possible first.
Mr Wallace
Q You quote the Panama papers, which was a significant leak, and there have been previous ones—Liechtenstein and others. The access that our law enforcement agencies will now get will be greater than the Panama papers. The Panama papers are not complete, and they are effectively within the control of the journalists in the sense that they were selectively leaked to them and then published. No one is able to get the full picture because we do not have open access to Panama, which is not a Crown dependency or an overseas territory; it is a place that Scotland had a bad relationship with a few hundred years ago.
What we are proposing, and what the Crown dependencies are giving our law enforcement access to, is the complete picture. In one sense, we will have a greater advantage than the Panama papers because our law enforcement agencies will be able to have full access to the full range automatically. Therefore, in one sense we are 90% there. As you said, we do not have the transparency bit, but the Government’s intention is to do that. We are doing it, first, by leadership. We are the first in the G20 to say it is our aspiration. The step that seems to be mooted is to impose the sovereign will of Parliament on them, but in 12 months we have gone 90% of the way.
Toby Quantrill: We are looking for a timeline. We must give time and support to moving in that direction and be clear about when we are going to reach it. The Panama papers demonstrated the power of making this information public, because the impact has been global. In countries all around the world, citizens have gained information about people often within their Government and judiciary, and they have been able to investigate, follow those leads and hold their Governments to account. That is the power of transparency. It should be full transparency, not just the bits and bobs. We should not have to rely on leaks to hold our Governments to account. That is the point we are making.
Carolyn Harris (Swansea East) (Lab)
Q Have you ever heard of the Magnitsky clause?
Toby Quantrill: No.
Investigatory Powers Bill
Ben Wallace Excerpts(8 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Security (Mr Ben Wallace)
I beg to move, That this House disagrees with Lords amendment 11.
Mr Speaker
With this it will be convenient to discuss the following:
Lords amendment 12, and Government motion to disagree.
Lords amendment 13, and Government motion to disagree.
Lords amendment 14, and Government motion to disagree.
Lords amendment 15, and Government motion to disagree.
Lords amendment 338, and Government motion to disagree.
Lords amendment 339, and Government motion to disagree.
Mr Wallace
The Investigatory Powers Bill will provide a world-leading framework for the use of investigatory powers by law enforcement and the security and intelligence agencies. It will strengthen the safeguards for the use of those powers, including through the introduction of a double lock for the most intrusive powers, and it will create a powerful new body responsible for oversight of them. This is the most important piece of legislation this Government will bring before the House.
I will turn first to the amendments tabled in the other place by Baroness Hollins. As we have just heard from my right hon. Friend the Secretary of State for Culture, Media and Sport, the Government will hold a landmark public consultation relating to the governance of the press and its relationship with the public, police and politicians. This consultation will give everyone with an interest in these matters an opportunity to have their say on this vital issue, which affects each and every one of us in the country. I hope the whole House will welcome the announcement, which shows the Government’s commitment to addressing the issues and recommendations set out in the Leveson report in the most appropriate way.
This is an emotive subject for Members, in both this House and the other place, where Earl Howe set out the Government’s position in relation to this issue during the debate on Report. I hope the House will indulge me while I set out the key points. As I said at the start of my remarks, the Investigatory Powers Bill is one of the most important pieces of legislation the Government will bring forward. It will provide a world-leading framework for the use of investigatory powers by law enforcement and security agencies and, in doing so, protect this nation from some of the most serious crimes and threats. We should not forget that the Bill will also strengthen the safeguards for the use of those powers, and it will create a powerful new body responsible for that oversight.
We heard yesterday in the Lords from peers on all sides about the importance of the Bill and the careful cross-party scrutiny that has got it into the very good shape that it comes back to the House in today. The Bill will provide vital tools for our law enforcement, security and intelligence agencies. It is not, and never was, intended to provide for the regulation of the press.
Whatever the merits of the provisions introduced by Baroness Hollins, this is not the place for them. Their inclusion is a distraction from the very important aims of the Bill. Moreover, they threaten to undermine an important provision in the Bill.
Mark Field (Cities of London and Westminster) (Con)
While I entirely accept that this is not the place to deal with those matters, I hope the Minister will recognise that there is very strong feeling on these Benches that the issues in relation to Leveson do need to be dealt with as a matter of some urgency. While I agree that we should not, therefore, accept the amendment, I very much hope that he and other Ministers will ensure that these matters are brought to the House at the earliest possible opportunity, so that they can be fully and properly dealt with.
Mr Wallace
I am grateful to my right hon. Friend, and I do, of course, recognise the strength of feeling about press regulation, but I also recognise the strength of feeling about making sure we give our security services and our police forces the tools to tackle the paedophiles, the serious and organised criminals and the terrorists who threaten the state and my constituents.
Chris Bryant (Rhondda) (Lab)
I am wholly in favour of most of the other provisions of the Bill, but that is not the point we are debating now; we are debating why the Government are reneging on their promise, made on 18 March 2013 as part of a package, that we would commence section 40 of the Crime and Courts Act 2013. Does the Minister not realise that if we keep getting statements such as the one we just had from the Secretary of State for Culture, Media and Sport, suggesting that the Government intend to kick this issue down the road yet further, their lordships are simply going to send the proposals back again, and again, and again, with probably even larger majorities?
Mr Wallace
I know that the hon. Gentleman is an impatient individual, but 10 weeks is not a long time to wait in engaging in a consultation. [Interruption.] He says, “Three and a half years”, but what is 10 weeks on top of that?
Mr Rees-Mogg
My hon. Friend makes a crucially important point. If SNP Members do not require the Sewel consents to be given, then implicitly, as we have an unwritten constitution and operate by convention, they would be giving media policy back to the United Kingdom Parliament.
Joanna Cherry (Edinburgh South West) (SNP)
The Minister asked me a question. I can only remind him of what Mr Speaker said when he was in the Chair: that legislative consent is not required until the Bill has been amended, as the Minister will know very well. Legislative consent to those aspects of the Bill that require it is not sought from the Scottish Government until the Bill has passed through this House. He is therefore setting a false trap. He will remember a phrase from the Scottish Parliament, “My head does not zip up the back.” My head does not zip up the back, and I will not fall into his false trap, but SNP Members will give their support to the Lords amendment on this occasion.
Mr Wallace
I think we can debate Zippy another time.
This is about an important issue of principle. Throughout all the Bills I have ever been involved in, we in this House have gone out of our way to make sure that we seek the up-front approval of the Scottish Parliament in an LCM before we start down the path of picking and choosing what we do or do not support.
Mr Rees-Mogg
What the hon. and learned Member for Edinburgh South West (Joanna Cherry) said may well be true, but this is our last opportunity to approve or reject the amendment. If it goes back to the House of Lords, and all the other amendments that we make are agreed to, there will be no further opportunity to amend the Bill, so legislating now, without consent, would make the law.
Mr Wallace
Not for the first time, my hon. Friend is absolutely right. This is the last opportunity to amend this Bill—there will be no going back. Should the hon. and learned Lady wish to go back, then we shall hear her options.
Joanna Cherry
The Minister is in a slightly unfair position because he did not pilot the Bill through the Bill Committee, but I did serve on the Committee, and he can check what happened with his ministerial colleagues. The Government accepted clause 8, on the back of which this amendment rides, as a result of an SNP amendment to reintroduce the tort—or, to use the Scots word, delict—in the Regulation of Investigatory Powers Act 2000. This further Lords amendment rides on the back of an amendment that arose from the historic event of the Government actually accepting an SNP suggestion. I was absolutely delighted about that and will mention it at every opportunity.
Mr Wallace
In the words of the hon. and learned Lady, my head does not zip up the back either. This is an amendment to an accepted amendment. That does not mean that the amendment is accepted in relation to an LCM—we cannot make that assumption. We should reflect on Mr Speaker’s point that this House does not usually legislate on policy that is not agreed to by the Scottish Parliament in advance.
Mr Rees-Mogg
We have developed a fascinating constitutional suggestion that amendments made by SNP Members of this House are senior to legislative consent motions given by the Scottish Parliament. SNP Members seem to be raising their status.
Mr Wallace
I am keen to move on, but merely say that how SNP Members vote today will certainly be a clear sign of whether they are embracing a new principle on how we should choose to legislate on issues in Scotland.
As I said, this clause was never intended to provide a basis for claims against newspapers for voicemail interception—so-called phone hacking. Civil claims can already be brought in respect of such activity. In any case, the Bill makes such activity a criminal offence, as is surely right for such egregious interferences with privacy.
If there is a problem to be addressed, this is not the way to do it, and this is not the Bill in which to do it. This is the wrong amendment in the wrong Bill at the wrong time. Governance of the press is an important issue, and it is right that such an issue is subject to full consultation and dedicated scrutiny and consideration. It should not just be tacked on to one of the most important cross-party Bills that this House has debated. This Bill is about the security of the nation. It is a Bill to keep all our constituents safe. Members should ask themselves whether it is appropriate to jeopardise this Bill for the sake of opportunism in the other place.
Dr Andrew Murrison (South West Wiltshire) (Con)
The solution, of course, would be for the Government to accept Baroness Hollins’s amendments, and then the Bill would be secured, since all of us in this place are broadly supportive of its stated intentions. Many of us have sat through these debates at great length for a very long time.
Dr Murrison
My hon. Friend is right to say so.
Does the Minister accept that the only objection to this measure that the Government are putting forward is that it is in the wrong place? That appears to be a fairly slim argument. Can he assure people like me who are perhaps wavering on this matter that the terms of reference of the consultation that the Secretary of State for Culture, Media and Sport announced earlier will be sufficiently robust and give a steer on the Government’s good intentions on section 40, because then we might be tempted to be a little more patient in the hope that that consultation will result in an outcome that makes Baroness Hollins’s amendments redundant?
Mr Wallace
I hear my hon. Friend’s comments, but this is like saying, “Because we’re being blackmailed, we should give in to the blackmail.” The Bill will give powers to our security services and our police to deal with some horrendous crimes and threats to the security of the nation. That does not mean that because someone has tacked an amendment on to the Bill that is not really anything to do with it, we should just give in. We should say, “Let us have the debate about press regulation in the proper forum.” My right hon. Friend the Secretary of State has brought forward a 10-week consultation period. As the House will know, the Government have been put on notice that, at the end of that period, they will need to listen to and engage with everyone’s concerns and to come up with a position. That is not necessarily the end of this matter in Parliament—there will be plenty of other times when pieces of legislation that may be more appropriate come through.
Mr Dominic Raab (Esher and Walton) (Con)
I thank the Minister for that reassurance. I welcome the Government’s approach, particularly in addressing the critical question of the Bill—the balance between security and privacy—and in accepting many of the recommendations on safeguards proposed by the Intelligence and Security Committee, whose Chairman, my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), is in his place. May I urge the Government not to allow the Bill, which is fundamentally about national security, to be conflated with, or held up by, the very different and much wider question of media regulation, as urged on us by the other place?
Mr Wallace
The whole House will hear my hon. Friend’s comments. He is a dedicated campaigner on privacy—in fact, on both parts of the Bill—in terms of what he believes in, and he has been consistent throughout. The House should listen when he says that he wants to make sure that a Bill with good oversight is passed correctly, giving us the freedom then to move on to debate and shape press regulation in, rightly, a different forum.
Mr Wallace
No, I am sorry.
On that basis, I urge this House to reject the Lords amendments in relation to clauses 8, 9 and 273.
Mr Wallace
In that spirit, perhaps the hon. Lady could answer the question asked by my hon. Friend the Member for North Dorset (Simon Hoare): should the Bill not contain Baroness Hollins’s amendment, would the hon. Lady support it?
Joanna Cherry
I assure the hon. Gentleman that it would not come to that, because if the amendment is passed by the House, the Scottish Government will grant a legislative consent motion. The SNP, which is in opposition in Westminster and the Government in Scotland, has discussed this issue in detail over the weekend—I discussed it with the Scottish Government Minister—and we have a position on Lords amendment 15. I will now set out our position, but I am very conscious of the time, so I will be as brief as possible.
As I said earlier, Lords amendment 15 rides on the back of clause 8, and I am very proud to say that it arose from an SNP suggestion in Committee for such an amendment. We have heard about the effect of the Lords amendment. In my respectful submission, the effect will be good: no newspaper should be involved in telephone hacking, and if one is, it should face the consequences. I want to make the SNP position clear.
Section 40 of the Crime and Courts Act, about which we have heard much today, was passed in March 2013. It was part of implementing the Leveson inquiry recommendation that any new regulator set up by the press should be accredited as independent and effective. The purpose of section 40 is to provide costs protection for claimants and Leveson-regulated newspaper publishers. It was passed in this House with cross-party agreement, including the support of SNP MPs. There were rather fewer SNP MPs then than there are now, but my colleagues supported the then Bill. As has already been said, the UK Government have reneged on implementing section 40 on many occasions. Today’s announcement of a consultation kicks its implementation further into the long grass.
As has correctly been said, section 40 extends to England and Wales only, because the regulation of print media is devolved to the Scottish Parliament. The Scottish Parliament has provided cross-party support for the UK Government’s actions to implement the royal charter. The Scottish Government will continue to monitor the current press regulations and work with other parties in Scotland and at Westminster to ensure effective regulation of the media on a non-political basis.
The majority of the press, and in particular the regional press in Scotland, were not involved in the sort of malpractice that prompted the Leveson recommendations. It is therefore the view of the Scottish Government and the Scottish National party that any policy in this area in Scotland must be proportionate and must balance the freedom of the press with the public desire for high standards, accuracy and transparency.
That said, the protection afforded by section 40 when brought into force would be available to Scottish litigants who chose to sue newspapers based in England and Wales. Regrettably, a number of major newspapers based in England were involved in the sort of malpractice that prompted Leveson, and it is therefore right that such protection should be afforded. The limited amendments that we are discussing will not affect small or regional newspapers adversely at all, because they have not been involved in phone hacking, and, I assume, do not have any plans to become involved in it.
Scottish National party MPs are going to support the Lords amendments to provide costs protection across the UK for claimants and Leveson-regulated news publishers in claims for unlawful interception of communications, including phone hacking. I hope that as a result of the amendments some good, at least, will come of this Bill’s passage through Parliament, in the event that this House is minded to support them. I will be crystal clear that nothing I have said involves any concession whatever about the primacy and importance of the Sewel convention, which is now enshrined in legislation. If anyone is in any doubt on that, they should go away and read carefully the guidance note from which I have quoted at some length this afternoon.
Mr Wallace
On memorandum 10, to which the hon. and learned Lady refers, is she saying that she is happy to accept the principle that in future when amendments come forward that are not Government amendments nor amendments that the Government are minded to accept, whether from a friendly Back Bencher or an unfriendly one, we do not have to consult the Scottish Government for a legislative consent motion?
Joanna Cherry
The hon. Gentleman is no doubt aware of what I did for a career before I came here. I have no intention of making any concession that goes beyond the four walls of what I have already said.
Matt Warman
This short, impassioned debate about the freedom of the press has surely proved that a 90-minute debate on a Lords amendment shoehorned into a Bill about national security cannot be the right place to make a decision as important as this one. This Bill is supposed to regulate hacking, yet the Lords are seeking to hack the Bill by putting in something completely irrelevant to the vital matters of national security that it covers. As the previous Prime Minister and the present one have said, this is one of the most important—if not the most important—pieces of legislation in this Parliament. Were I to dare criticise either of them, I would contend that the freedom of the press is even more important than some aspects of the Bill. It is absurd for anyone seriously to suggest that we can deal with this matter in 90 minutes.
I have a great deal of sympathy with the view of my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) that the chilling effect of the proposals in section 40 would have a hugely negative impact across not only the national media but the regional and local media. Over hundreds of years, we have seen the good that a vibrant, boisterous and scabrous press can do, as other Members have said, and we need to preserve that. We do not need to damn it in a 90-minute debate. I hope that Members of all parties can see that this is not the right place to take such a momentous decision.
Mr Wallace
Every morning I go into my office and I open a number of documents. They are not nice reading. They usually focus on those people that want to kill us, want to rob us, want to corrupt our country or want to spy on us. This is not a subject to take lightly. This is not a subject to which to politically attach something to settle a score elsewhere. The Bill is about giving our brave men and women in the security services and the police forces up and down the country the powers to do their job, to make sure that we put away those people that pose a threat to this country.
Those men and women are watching this debate today. Instead of seeing this House debate the hundreds of amendments that this Parliament has collectively produced to reach a consensus to make the Bill something to go forward with, they see political opportunism being played out on another subject: press regulation. They do not see us discussing how we are going to protect them and society. We should not forget that.
What is important is that this Bill is not like any other Bill. This Bill is here because we have to bring it forward to replace the Data Retention and Investigatory Powers Act 2014. DRIPA has a sunset clause and will expire on 31 December. The irony of that is that if DRIPA expires, we lose the requirement that we can place on internet companies and CSPs to retain data—data that we need to catch phone hackers, to catch child killers, to put away paedophiles. That is the risk that hon. Members are taking, with amendment 15. That is what they are making us decide on. We should reject the choice that they are putting before us and focus on the good things in the Bill and what it has done to strengthen and protect our security forces to ensure that we put away the right people. We should not play politics in this House or the other place.
Lords amendment 11 disagreed to.
Lords amendments 12 to 14 disagreed to.
After Clause 8
Motion made, and Question put, That this House disagrees with Lords amendment 15.—(Mr Ben Wallace.)
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this we may take Lords amendments 2 to 10, 16 to 337 and 340 to 377.
Mr Wallace
The Investigatory Powers Bill will ensure that the police and the security and intelligence agencies have the vital powers they need at a time of changing threats and rapidly evolving technology. It will place those powers on a clear statutory footing and achieve world-leading oversight. It will leave no doubt about how seriously we value privacy and individual rights in this country.
Let us not forget why those powers are so important. Every day, our law enforcement and security and intelligence agencies use those powers to investigate serious crime and collect evidence to convict offenders. They are particularly crucial in combating human trafficking and child exploitation. For example, in January 2009, Operation Retriever, an organised crime investigation in Derby, uncovered one of the most serious cases of child sexual abuse in recent times, involving multiple offenders and multiple victims.
During the investigation, officers uncovered an elaborate and hideous campaign of sexual exploitation directed against teenage girls who were groomed by people they thought they could trust and were driven around the midlands to houses, hotels and bed-and-breakfasts, where they were raped, often violently. One of the officers involved in the investigation described it as
“a campaign of rape against children”.
The investigation team used a combination of covert policing and communications data, such as mobile phone records, to link group members and their victims to each other, to phone handsets and to downloaded images and videos of sexual abuse taking place. In that investigation alone, 27 female victims aged between 12 and 18 were identified. Communications data evidence helped to secure the convictions of nine defendants. One of the offenders is serving at least 11 years for rape, sexual assault, sexual activity with a child, perverting the course of justice, aiding and abetting rape, false imprisonment and making child pornography. Another is serving at least eight years for rape, sexual assault and other sexual activity. Yet another is serving three years for the supply of cocaine.
Those men could still be on our streets, exploiting innocent children, without the police having access to the important intelligence that communications data provide. It is essential that we give the police the tools they need to investigate and prevent awful crimes such as these. That is what this Bill will do.
I am pleased that the Bill has commanded cross-party support, and I am grateful to all those who helped, in the spirit of consensus, to produce the Bill that we have before us. On Report, the former shadow Home Secretary, the right hon. Member for Leigh (Andy Burnham), set out his party’s position:
“We have supported the principle of a modern legal framework governing the use of investigatory powers, recognising that as communications have migrated online, the police and security services have lost capability”. —[Official Report, 6 June 2016; Vol. 611, c. 952.]
On Third Reading, the right hon. Gentleman went on to say:
“The police and security services do incredibly difficult work on our behalf and we thank them for it. Their job has got harder as both the level of the threat has risen and the nature of communication has changed in the modern world. To fail to respond to that would be a dereliction of our duties to them; it would also fail our constituents. The Bill is ultimately about their safety, the safety of their families and their privacy. I think we can look ourselves in the mirror tomorrow and say we have done our level best to maximise both.”—[Official Report, 7 June 2016; Vol. 611, c. 1148.]
The right hon. Gentleman was right. This has been a truly collaborative effort, of which both we and the Opposition can be proud. I note that the Government’s approach has attracted support from some of the Liberal Democrats in the Lords, although Liberal Democrat Members are not present here.
We have before us today a substantial number of changes agreed in the other place—evidence of constructive engagement from all sides to further improve this landmark legislation. Let me list the main changes. Responding to concerns raised by the former shadow Home Secretary, we have replicated changes agreed in this House throughout other parts of the Bill, including protections for trade union activity and amendments to the test applied by judicial commissioners when reviewing warrants, notices and authorisations under the Bill.
We commissioned an independent review by the independent reviewer of terrorism legislation, David Anderson QC, that comprehensively endorsed the necessity of the bulk powers. As a consequence of that review, we have included provision for a technical advisory panel to advise the Investigatory Powers Commissioner and the Secretary of State on the impact of changes in technology. We have added a sentencing threshold for access to internet connection records, so that they could not be used to investigate minor crimes. We have added extra protections and safeguards for journalists, lawyers and parliamentarians.
We have addressed issues raised by the Intelligence and Security Committee by giving the Committee the right to refer matters to the Investigatory Powers Commissioner to investigate on behalf of this House; adding a requirement for the commissioner to report on thematic warrants and operational purposes; introducing a criminal offence for the misuse of bulk powers; bolstering safeguards surrounding the modification and renewal of warrants; and clarifying provisions relating to class BPD warrants, improving safeguards, and prohibiting the retention of medical records in bulk personal datasets held under class warrants.
Mr Dominic Grieve (Beaconsfield) (Con)
May I put on record my appreciation for the way that the Minister listened to the representations made by the Intelligence and Security Committee in this matter? It has proved to be a most constructive dialogue and I am extremely grateful to him for having taken on board and acted on the vast bulk of the recommendations that we put forward. May I raise one matter? On the issue of thematic warrants, I know that the Government, for very understandable reasons, were unable to move on some of the safeguards that the Committee wanted. Will the Minister give an undertaking that he will keep that under review as we see how the measure operates in practice?
Mr Wallace
I am grateful to my right hon. and learned Friend for his comments. Although it would be nice to take the credit, that belongs to my hon. and learned Friend the Solicitor General, who steered the Bill through Committee, and the present Prime Minister, who helped shape and deliver the Bill. I have merely come in at the end, but will take some of the credit nevertheless.
Of course we will keep the matter under review, as my right hon. and learned Friend the Chair of the Intelligence and Security Committee asked. I do understand the concerns about thematic warrants. I know that he will keep the matter under review and the Government will do so as well.
We have made a number of minor and technical changes to improve the clarity and consistency of the legislation. Finally, in the absence of legislative consent from the Northern Ireland Assembly, we have removed measures that would have brought oversight of devolved investigatory powers in Northern Ireland within the remit of the Investigatory Powers Commissioner.
Many amendments have been accepted and we have worked together to produce the Bill that is before us today. I hope it will command the support of the whole House.
In closing, I remind the House that one of the aims of this legislation is to update investigatory powers for the digital age. It is worth contemplating briefly the consequences that would have come from failing to achieve that aim. Police forces across the country are increasingly struggling to pursue investigations because they cannot uncover crucial information as criminals’ activity moves online. Alan Wardle of the National Society for the Prevention of Cruelty to Children told the Public Bill Committee that
“the police’s ability to investigate and prosecute some of the high-profile crimes we have seen in recent years—online grooming of children and the number of people who are viewing illegal images of children online, which has grown exponentially—is increasingly dependent on communications data. I think it is vital that this Bill ensures that the police have the powers and capabilities to continue to do that.”––[Official Report, Investigatory Powers Public Bill Committee, 24 March 2016; c. 34.]
Mr Wallace
Perhaps I could pick up on some of the concerns of Liberty. We will all have had in our inboxes this morning a letter from Liberty. The concerns expressed in it are, I am afraid, simply wrong. In the third paragraph, Liberty’s policy officer says:
“Bulk powers allow for…surveillance…The much vaunted ‘double lock’ system of authorisation in fact allows the Secretary of State rather than judges to authorise warrants.”
That is incorrect; in fact, the Secretary of State and a judge will authorise a warrant. Perhaps Liberty is incorrect in some of its assertions about why it is unhappy and should look at the Bill, as amended, that has been before this House.
Ms Abbott
I have no doubt that stakeholders will look at the amended Bill, and if it returns to us from the Lords, there will no doubt be another opportunity to tease out some of these issues.
This Bill has all-party support and that is significant, because getting the balance right between updating legislation to deal with an internet and high-tech age and defending the civil liberties of subjects is very important, and this House is best placed to do that. We have been grateful to Ministers for being willing to listen to Members in all parts of the House in seeking to improve the Bill.
Huw Merriman (Bexhill and Battle) (Con)
I am pleased to follow my hon. Friend the Member for Fareham (Suella Fernandes) and to speak in support of the Bill.
In March 2016, David Anderson, QC suggested that this Bill
“charts a bold route forward—and gets the most important things right”.
He went on to say that it
“restores the rule of law and sets an international benchmark for candour.”
He suggested at that time that some matters remained to be resolved, but as the Government’s support for these Lords amendments demonstrates, there has been cross-party co-operation and support both in this House and in the other place. The Bill is all the better for it.
This relative consensus is well demonstrated by the remaining amendments, just rejected, relating to press regulation. There were, of course, concerns prior to my election to this place, that a Bill of this type could be construed as a snoopers’ charter. The fact that we have just had a debate on Leveson speaks well of the progress made on this Bill. The fact that we have got to this positive position is, in my view, in no small part due to the Government’s acceptance of suggestions made across the political divide and their taking of the three independent reviews as a starting-point for this legislation.
It is worth considering that the first report, the Anderson report, called for a new law that would be both comprehensive and comprehensible. The second report, from the Intelligence and Security Committee of Parliament, said that the
“legal framework has developed piecemeal, and is unnecessarily complicated.”
That, it said, had resulted in a
“lack of transparency, which is not in the public interest.”
The third report, produced by the Royal United Services Institute, called for a
“radical reshaping of the way that intrusive investigative techniques using the internet and digital data are authorised”,
and said that it should be
“subject to judicial scrutiny”.
The Bill delivers on all those fronts. It gives our law enforcement and intelligence agencies the power that they need to keep us safe. It brings together all the powers that are already available to those agencies before they are due to expire following the judicial review of the Data Retention and Investigatory Powers Act 2014, and gives them additional powers to catch up with new technology and the web. It introduces a double lock for the most intrusive warrants, providing judicial oversight and creating an investigatory powers commissioner. It not only delivers comprehensive legislation with safeguards, but gives the security agencies the power to keep up with technology that is being used by those who seek to do harm to our constituents.
That takes me back to the words of David Anderson, QC. Last month, in Strasbourg, he spoke to the Committee on Legal Affairs and Human Rights, a Committee of the Parliamentary Assembly of the Council of Europe—of which I am a member—about these powers and about the threat posed by terrorists across Europe. During the same session, the threat was brought home most powerfully by another speaker. This lady, a Parisian, had lost her daughter to the terrorists who were responsible for the Bataclan massacre in Paris. Her words, and her pain, were incredibly moving for all who listened. She demonstrated to us how difficult her life had become, and also the terror that her daughter had experienced in her final hours. That brought home to me the need for us in this place to do everything we can to ensure that we never have to hear testimonies like that from our constituents across this nation, and it is on that basis that I shall be very pleased to see the Bill become law.
Mr Wallace
I wish to place on record our gratitude to the Labour party, the Liberal Democrats, the Scottish National party, and the Opposition Front Benchers—the right hon. Member for Leigh (Andy Burnham) and the hon. and learned Member for Holborn and St Pancras (Keir Starmer) and, in the other place, Lord Murphy of Torfaen and Lord Rooker—for their contribution to making the Bill what it is today. We must ensure that it proceeds in a spirit of consensus, and I therefore approve of the provision in clause 232 for a review of the Bill in five years’ time. Obviously I must also express my gratitude to the Prime Minister, who helped to shape the Bill and to introduce the important powers that it gives our security services and police to help them to do their job.
I thank my hon. and learned Friend the Solicitor General, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes)—the former Security Minister—and the Chairman of the Intelligence and Security Committee, my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve). They, too, have made a considerable contribution. I also thank the SNP, including the hon. and learned Member for Edinburgh South West (Joanna Cherry), although she seemed rather cynical about the Bill in her more recent contributions. I recognise that the support of the SNP goes a long way towards the application of the Bill in the United Kingdom; it is important that we all embrace its aims.
A long time ago, in a different life, I did some of this stuff when there was no regulation, before the introduction of the Regulation of Investigatory Powers Act 2000. We are now in a much healthier place: a place with scrutiny, oversight and an understanding by all of matters that, in the old days, we did not even avow had happened. We should not underestimate the distance that we have come since days gone by. We have come a very long way since then, and I am proud of what the Bill gives us, and gives the men and women who need in to keep us safe.
Having had conversations with colleagues overseas, I know that people are envious of this Bill. We should not forget that, at this moment, there are people in Germany and France who face a much greater threat to life and liberty. There are forces of law and order that are struggling to come to terms with the modern threat, sometimes with legislation that is out of date. I think that by introducing this Bill we have brought ourselves up to date, and that we are now in a position to tackle the threat. I am grateful to the whole House, and to members of all its political parties, for supporting the Bill.
Lords amendment 1 agreed to.
Lords amendments 2 to 10, 16 to 337 and 340 to 377 agreed to.
Ordered, That a Committee be appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments 11 to 15, 338 and 339;
That Ms Diane Abbott, Victoria Atkins, Robert Buckland, Joanna Cherry, Nic Dakin, Andrew Griffiths and Mr Ben Wallace be members of the Committee;
That Mr Ben Wallace be Chair of the Committee;
That three be the quorum of the Committee;
That the Committee do withdraw immediately.—(Christopher Pincher.)
Committee to withdraw immediately; reasons to be reported and communicated to the Lords.