EUC Report: Money Laundering

Lord Dykes Excerpts

Monday 19th December 2011 Lords Chamber

[Lord Dykes]

My Lords, I am sure that the whole House will very much appreciate the sensible comments of the noble Lord, Lord Hannay of Chiswick. It has been some time between the publication of the report in January and this debate. Perhaps there is an important point there about the need for greater speed on a matter of enormous interest to large numbers of people. I commend the report in every way and, on these Benches, we give full support to the main points to which the noble Lord, Lord Hannay, referred and to the other details in the report.

I must declare an interest as a member of the full European Union Committee, which by implication and by asserting itself in the background has given its support to this report. Sub-committees’ reports are always published as reports of the whole committee. I hope that the Minister will respond positively to some of the important points made by the noble Lord, Lord Hannay. I add my support to his comments at the end of his speech about the problem of ship ransoms, which needs to be dealt with.

The need to find a balance in these matters is always difficult, as the noble Lord declared. I agree, and the balance will be a question of continued supervision and surveillance as time goes on, and is not an easy matter. However, we live in a world where not only technology but international capital transactions and flows have improved. As has been said, there has been the removal of national and collective exchange controls of one kind or another—particularly in this country many years ago. There have also been other developments on a rapid scale in the use of the internet and communications systems. People with crime as their intention and activity, rather than just ordinary citizens in different countries, use the same systems and technologies as others to pursue their very evil objectives in the field of terrorism and the organisation of serious crime, which is in many ways a worldwide phenomenon on a gigantic scale. The statistics are very chilling indeed when one begins to examine those matters in depth.

Therefore, that balance and government rules on access to details on any database that is growing exponentially have, as has been said, produced a great deal of anxiety among the highly educated citizens of advanced countries and others in the world who are wondering how this balance will be maintained in the future. It is very difficult.

It is not right for us automatically to begin to criticise the authorities and the Government for how they deal with this because, for them, it is a difficult balance. They must support the agencies of protection for us—the secret services as well as the police authorities, our other security agencies and the military—in how they defend this country by their resistance to the ominous developing activities in serious organised crime and worldwide terrorism. But they must protect the sacred freedom of the individual citizen from the ever-more intrusive snooping that public authorities can easily slide into if they do not have the necessary legislative and administrative controls and fierce determination by Ministers to ensure that that control is exercised practically to help the citizens of this country dealing in innocent transactions which are wrongly put onto a database for reasons that need to be explained.

I was very impressed with some of the suggestions made in the latest report which, as the noble Lord, Lord Hannay, said, followed the original report under the noble Lord, Lord Jopling, from the same Sub-Committee on Home Affairs. In the recommendation for future action on page 19, paragraph 6.1 states:

“The Commissioner makes a number of recommendations to help ensure that the processing of personal data on the ELMER database complies with the requirements of the Data Protection Act and on the legislative approach to the reporting of suspicious financial activity”.

There is a mention below in the subsequent parts of paragraph 6. In paragraph 6.1.5, the sub-committee suggests:

“That the Government considers whether, in the light of experience, the current arrangements for reporting of SARs continue to be justified, whether they are both effective and proportionate and whether they could be improved. Consideration should be given to whether there is a pressing social need to justify the requirement to report any transaction which is based on a very low threshold of suspicion that handling criminal property or money laundering is taking place”.

In relation to the accumulation of names and information on the database at a very rapid rate, the exclusions announced by the Information Commissioner have been very modest. I should have thought that the number could be greater and I look forward to the Minister’s response on how he thinks that process is developing.

In the original July 2009 report on money-laundering and the finance of terrorism, the wider subject, rather than the more narrow one on money-laundering and data protection for suspicious activity, the definitional base of what is money-laundering was set out very clearly. That, too, needs more attention to detail as experience has developed of the phenomenology of money laundering, the detail of how it is done. The knowledge of public authorities about that is not perfect; they need to investigate more and share information with other Governments and collective bodies such as the European Union. We need to consider future EU legislation to strengthen the European basis for the control system without, as I said, denting significantly the precious freedom of the individual citizen, which I hope is dear to everyone in this House.

We strongly support the contents of the report and the suggestions made by the noble Lord, Lord Hannay, tonight, particularly his final remarks on ships’ ransom construction, and hope that they will be met with agreement in all parts of the House, subject to what my noble friend can say to us to guide us on how the Government will deal with those matters with the Information Commissioner.