Proceeds of Crime

Keith Vaz Excerpts

Tuesday 12th June 2012 Commons Chamber

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

I beg to move,

That this House takes note of European Union Document No. 7641/12 and Addenda 1 and 2, a draft Directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union; and supports the Government’s intention to not opt-in under Protocol (No. 21) to the European Union Treaties at this stage.

I welcome the opportunity to debate this important draft directive in the House this evening, but I should say at the outset that I am sorry that it has had to be scheduled on a day when a number of members of the European Scrutiny Committee cannot be present. It was originally scheduled for 23 May, but it was necessary to move it in order to give more time to consider fully the views of operational partners before deciding whether or not to opt in. Given the weight of parliamentary business and the limited time available before the opt-in deadline, it was not possible to find a time for this debate when members of the European Scrutiny Committee had returned from their pre-presidency visit to Cyprus. That is not as I would have wished, and I have offered to meet the Committee Chairman, my hon. Friend the Member for Stone (Mr Cash), to discuss the directive.

I also recognise that, in order to inform these debates, we must ensure that the House is informed at an earlier stage of the Government’s position on such directives. I have written to the European Scrutiny Committee Chair to underline the high priority that I attach to ensuring that this process and these debates provide more effective scrutiny, and my officials will work with the Clerk of the European Scrutiny Committee and with the European Union Committee in the other place to that end. I am also arranging a discussion with the Minister for Europe to consider how the matter might be addressed effectively.

On the subject of the motion, asset recovery is a hugely important weapon in our efforts to tackle organised crime. The proceeds of crime are not only a central motivation for organised criminals; they fund further criminality. Freezing and confiscating criminal finances hurts organised criminals and protects the public, and I have no doubt that right hon. and hon. Members on both sides of the House will have examples of when the use of asset recovery has been a very effective weapon in providing relief to communities from serious organised criminals. It is an effective means of tackling and putting increased pressure on organised crime groups.

[Keith Vaz (Leicester East) (Lab)]

The Minister is absolutely right, but we must do much better, and the better way is to make sure that there is more co-operation between EU countries on ensuring that those who try to find a safe haven for their money in another EU country are caught and their money confiscated as quickly as possible.

[James Brokenshire]

The right hon. Gentleman, the Chairman of the Home Affairs Committee, makes an important point about international co-operation—one that we certainly recognised in the organised crime strategy that was published last summer. Criminals may wish to hide or to secrete assets not only in the EU, but throughout the world, so the need to look at the matter in an international context is an important one to which I shall return during my contribution.

In our domestic legislation, we have taken some important steps forward. The Proceeds of Crime Act 2002 is the principal piece of domestic legislation for the restraint and confiscation of the proceeds of crime. It is an advanced and powerful piece of legislation that in most areas goes beyond the minimum standards of the directive that we are debating this evening. It provides a single scheme for the confiscation of the value of the proceeds of crime, following any criminal conviction and regardless of the amount.

If a defendant has been convicted of a listed serious offence or has a number of convictions, the court can assume that all their property is the proceeds of crime and can be factored into the amount of a confiscation order, a power known internationally as “extended confiscation”. It allows for the confiscation of assets that have been transferred to family members or other third parties; it enables the freezing of assets by a court from the beginning of an investigation in order to prevent their dissipation; and it provides civil recovery powers, an intrinsic part of our approach to this area of law, whereby the focus is on the property, not on the person who holds it, and no conviction is required. That is a particularly useful tool for tackling high-level organised criminals for whom it is hard to obtain a conviction.

In 2010-11 UK law enforcement agencies froze or recovered more than £1 billion of criminal assets. The amount of assets recovered has increased year on year since the 2002 Act, and one of this Government’s first steps on entering office was to do away with some of the arbitrary targets that the previous Government imposed on law enforcement professionals. This has galvanised their professionalism and their approach to ensuring that more assets are recovered or frozen. Certainly, the UK is recognised as a leader in this field. However, the Government want to do more, particularly on international asset recovery, as we made clear in our organised crime strategy of July 2011.

In 2008, it was estimated that some £560 million-worth of UK criminal assets were held abroad. That underlines the level of sophistication that a number of organised crime groups are seeking to deploy in order to hide or to shield assets. Improved international co-operation is therefore a necessary step towards recovering that money. That is why we welcome the aims of the directive, if not some of its provisions. It is right that we seek to drive up standards throughout the EU and find better ways of working together with our EU partners. To that end, the directive covers confiscation following a criminal conviction, extended confiscation, third-party confiscation, non-conviction-based confiscation, and powers to freeze assets. The UK already has all those powers under the Proceeds of Crime Act, and so, in almost all areas, we exceed the minimum standards established by the directive.

The purpose of the directive is to require member states to be able to freeze and confiscate the proceeds of cross-border serious and organised crime. The Commission argues that the confiscation of the proceeds of crime in the EU is under-utilised despite the existing EU legal framework. It says that there are three problems with the current EU legal framework: its incomplete or late transition into domestic law, diverging national provisions that make mutual recognition more difficult, and the low utilisation of confiscation in practice. The directive therefore creates minimum standards for the freezing, management and confiscation of the proceeds of crime. The Commission intends that minimum standards will lead to greater co-operation, but a mutual recognition instrument has not yet been published.

It is vital that we get the detail right, and we must pay great attention to the effect of the directive on our existing domestic regime and its likely operational impact. In that regard, the Government have identified a serious problem with the directive. As drafted, it poses a very real threat to our domestic non-conviction-based confiscation regime. Operational partners have expressed concern that opting in at this stage poses a risk to the powers used by our law enforcement agencies to target and disrupt the most serious organised criminals. Our non-conviction-based confiscation powers are civil law measures that allow prosecution agencies to take action against property that they think has been acquired through unlawful activity. The action is not taken against an individual, and no criminal conviction is necessary. As I said, it is a particularly useful tool for tackling the high-level organised criminals against whom it is very difficult to achieve a criminal conviction.

In 2011-12, approximately £20 million-worth of criminal assets were recovered using non-conviction-based confiscation powers. It is important to note that the Proceeds of Crime Act, and the use of the civil standard of proof as structured within the Act, has been upheld by the Supreme Court, and therefore its operation has been subject to judicial scrutiny at the highest level. Because of its criminal law legal base, the directive risks placing non-conviction-based confiscation measures in the UK on to a criminal law footing, opening new avenues of legal challenge to our powers and, in many ways, undermining the court judgments that have been secured in relation to the operation of the Proceeds of Crime Act. If criminal law procedural protections and a criminal law standard of proof were introduced, our domestic regime would be severely weakened and our law enforcement agencies would find it harder to disrupt the workings of some of the most dangerous organised criminals.

This is a technical argument, but it is of great importance to the law enforcement agencies that protect our country from organised crime. Under qualified majority voting, there is no guarantee that we can secure the necessary changes to the text. This Government will not risk hindering the work of law enforcement agencies in tackling high-level criminality. The risk is simply too great.

--- Later in debate ---

[Keith Vaz (Leicester East) (Lab)]

It is always a pleasure to follow the hon. Member for North East Somerset (Jacob Rees-Mogg). I do not know whether he was implying that the Government were holding the debate this evening because the European Scrutiny Committee had gone to Cyprus, but I am glad that he was left behind—or remained behind—to participate in it.

[Jacob Rees-Mogg]

I should have thanked the Government rather than criticising them, because they gave me a chance to speak for a little longer than normal.

[Keith Vaz]

I am sure that the Government are most grateful for the hon. Gentleman’s thanks.

Last night I was present at the launch of a document produced by the hon. Member for Bournemouth West (Conor Burns) about the operation of the European arrest warrant and what it has delivered over the last few years. I know that the hon. Member for Esher and Walton (Mr Raab) is a frequent commentator on its justice and home affairs implications for our country.

I think that we should be cautious in dealing with these matters. The EU document needs to be considered with great care. I am not one of those who believe that we need a directive in order to secure co-operation between EU partners, but I think that my right hon. Friend the Member for Delyn (Mr Hanson) deserves the explanation that he seeks. I think that he deserves to be told why the Minister in the other place was so enthusiastic about the directive, and why the Government have apparently changed their mind. Of course, if there is a valid explanation, and if the various agencies—the Serious Organised Crime Agency being one of them—make representations to the Government pointing out that this is going to create problems for our legislation, it is important that that advice is shared not only with the Minister, but with the House.

The hon. Member for South Ribble (Lorraine Fullbrook) and I recently returned from an official visit to Colombia as part of a Home Affairs Committee delegation, where we were looking at the drugs trade. We noted a very important fact: only 2.6% of the profits from the trade in cocaine remain in Colombia. Some 97% of cocaine profits are administered and laundered within the European Union—in our country and other countries of the EU. That means that our existing structures are not used appropriately enough to catch the people who are responsible for drugs having become the biggest illicit activity in the world.

Even though a directive would help, it will not provide the answer. The Government are right not to opt in unless and until there are further negotiations, therefore. We need to make sure that the structures that are in place in the various countries of the EU can work together to catch those responsible for laundering the profits from drugs. I hope that the Government will use the time that will be available to them as a result of their decision not to opt in constructively and productively, and that they look at the institutions and organisations and make sure that that co-operation is improved. There are, of course, organisations—such as Europol and Interpol—which can be used effectively. I do not think Europol is used enough. We have a very good British director of Europol, Rob Wainwright, who was trained at SOCA. We must co-operate much more closely, without legislation from Brussels being needed.

Drugs is one example. The other is human trafficking, which is the third biggest illicit activity in the world, with profits of £32 billion a year. Through our co-operation with the Romanian authorities in Operation Golf, we showed that it is possible to have mutual co-operation with other EU countries without having a further directive, if there is willingness on the part of our European partners to work with us to deal with illegal activity.

[Mark Reckless]

The right hon. Gentleman mentions Europol and the issue of trafficking. Does he recall that when the Home Affairs Committee visited the Greek-Turkish border, one of the issues we found was that the structures of Europol were not well designed to secure co-operation with Turkey? Very often, the European basis of Europol and the insistence on doing everything through that framework was getting in the way of practical co-operation.

[Keith Vaz]

I am happy to agree with the hon. Gentleman, who is also a fellow member of the Home Affairs Committee; he is absolutely right. The EU looks at these issues only within the confines of the EU. Because Turkey is not a member, it is not included in any aspects of co-operation. An example of that is the way the RABITs were deployed in Greece to deal with illegal immigration. Because the UK was not part of Schengen, we were not allowed to be a formal part of the activity of the RABITs. As a result, we were left marginalised.

Mr Speaker, I can see that you are about to tell me that I am out of order. [Interruption.] Oh, you are not. You were frowning, Mr Speaker, and I have known you long enough to know that a frown may have indicated that you were about to stop my flow. Let me go back to the original reason behind this debate. I was tempted along the other path by the hon. Member for Rochester and Strood (Mark Reckless).

[Mr Speaker]

Order. I am sorry if the right hon. Gentleman was concerned that I was frowning. Perhaps I can satisfy simultaneously his curiosity and that of the hon. Member for North East Somerset (Jacob Rees-Mogg). I have made inquiries, as the hon. Member for North East Somerset would expect, and I am now in a position to tell him and the House that the word in question, maximal, is the penultimate word in the second column of page 1,720 of the new “Shorter Oxford English Dictionary”. I know that the hon. Gentleman already knew that, but I am just reminding him.

[Keith Vaz]

I am enormously grateful that my speech will go down in history as the one in which you made such an important ruling, Mr Speaker, and thank you very much for choosing my speech in which to do it.

Let me conclude by saying that I hope the Minister will use the time available to the Government to make sure that the structures I have described are used to their maximum to ensure that we get the greatest amount of co-operation.

[Bob Stewart (Beckenham) (Con)]

Before the right hon. Gentleman finishes, will he kindly tell me what the heck a RABIT is?

[Keith Vaz]

Of course. A RABIT—rapid border intervention team—is a rapid deployment force used by the EU to go to countries that face influxes of migrants who are illegally trying to enter the European Union. It is not the furry thing that runs around the hon. Gentleman’s constituency.

When the Minister winds up—I will read his reply in Hansard, and I apologise, Mr Speaker, for not being here for the wind-ups—I hope that he will look at the issue of the new National Crime Agency to see whether any of this affects the way in which the NCA is going to deal with the mutual co-operation that exists between our agencies and other EU countries. I have mentioned the visit that the hon. Member for South Ribble and I made to Colombia. The one agency that was praised, from a front-line commander in the middle of the jungle that we visited to the President of Colombia, President Santos, was the Serious Organised Crime Agency. It was praised particularly for the way in which it has worked with the Colombians and with other Governments throughout the world to combat illegal drug activity.

[James Brokenshire]

As the right hon. Gentleman will not be here for the wind-ups let me say now that I will reflect on his comments. I am certainly very appreciative of and recognise the work that SOCA undertakes around the globe in a number of different regions. The development of the NCA, and certainly the utilisation of legislation on the proceeds of crime, will be part of our approach to strengthening and developing our response to organised crime. The NCA is one part of that.

[Keith Vaz]

I thank the Minister for that answer.

Finally, when we spend money on organisations such as SOCA, on which we spend £0.5 billion pounds a year, we expect value for money. We expect it to be able to go out there and seize assets. At the end of the day, that is how the public will judge the effectiveness of these organisations. Working with our European partners can only help us to achieve that. We do not need more legislation or, necessarily, more directives, but we do need the co-operation of our partners to succeed.