Mr Nick Hawkins (Surrey Heath, Conservative)

I beg to move amendment No. 89, in

clause 33, page 20, line 3, leave out paragraph (a).

Mr Alan Hurst (Braintree, Labour)

With this it will be convenient to discuss the following:

Amendment No. 91, in

clause 34, page 20, line 19, at end insert 'within the specified period'.

Amendment No. 96, in

clause 38, page 22, line 33, leave out paragraph (a).

Mr Nick Hawkins (Surrey Heath, Conservative)

The amendments in this group run together. Amendment No. 96 to clause 38 effectively makes the same amendment for Scotland.

Clause 33(3)(a) is too wide. We should never have a situation in which absolutely every financial institution can be included under the draconian measures of the clause. Amendment No. 91 would introduce a time limit, which would be a useful protection.

We can see the logic of stating in subsection (3)(b) that the application may specify a particular description or descriptions of financial institutions, and that, in subsection 3(c), a particular financial institution or institutions may be specified. However, to state that an application may specify all financial institution reinforces the point on which my hon. Friend the Member for Leominster was helpfully supporting me earlier. We are talking about onerous burdens in terms of the amount of work that will be created. Surely, it must be possible, when an application is being made, that those applying should be able to specify at the very least either a particular group or a description of financial institutions. The clause should not apply to the entire financial sector, as that is too wide.

The phrase ''financial institution'' is defined widely for the purposes of the Bill. We know that there has been huge expansion in recent years because of the success of the City of London and banking in the UK; we are one of the world's great financial centres. However, it is far too wide to allow an application to be made, albeit on worthy grounds, without the other side being heard by a judge in chambers—in other words, ex parte—which states that every financial institution in the whole of the UK must provide particular information. Although the amendment is small, it reflects a matter of concern.

I know from the people with whom I worked when I was group legal adviser for a large financial institution—I used to have meetings with those on the legal committee of the British Bankers Association—that this kind of all-embracing legislation causes problems. I hope that we will have the opportunity to cut down the breadth of the application and put the onus on those who are applying for the order. They should be able to specify either a financial institution or a group, and not the whole financial sector.

Mr David Heath (Somerton & Frome, Liberal Democrat)

I have great deal of sympathy with the hon. Gentleman's comments. It worries me that the classification of a request to all financial institutions has two effects: it creates a great deal of work for many people at inordinate cost; and it renders of less value the information that comes back.

One of the facts that we know about financial investigation is that the amount of information that is coming in, mainly to the National Criminal

Intelligence Service, is vastly in excess of what it is successfully able to work its way through to good effect. Unless we shall have a doubling of the resources that are available—I literally mean doubling—to deal with such matters, I am not sure that useful information will be gained by an all-embracing request that covers every financial institution.

If the intelligence on which the request were based were so weak as not to narrow the scope from all financial institutions to a class of financial institutions, it seems that that intelligence would not pass the original test. It would not be a genuine request for information to enable an investigation to proceed. It would become much closer to a fishing expedition that seeks evidence when none is available. That worries me, too. I hope that the hon. Gentleman's words will be listened to with some care. No one wants to reduce the efficacy of the process. My argument is that the provision would increase the efficacy of the process by focusing it on certain classes of financial institutions.

We should not discount the implications for the industry, nor the investigations and work that will be required to comply with requests. If a customer information request is aimed at all financial institutions and one of them does not reply, it will be guilty of an offence under the Bill. That is inappropriate. Whether or not the institution has valuable information, it will be guilty of an offence. I do not want to overburden either the industry or investigating organisations in such a way that they cannot do the job that we want them to do effectively and at a reasonable cost. I hope that the hon. Lady will seriously consider the amendments.

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

We have had a good debate about customer information orders, not wasting time and not being frivolous. We discussed how good it is to be clear about the protocol and how it applies to all the countries taking part in accordance with the Secretary of State when making a decision to proceed. It is important to remind the Committee of that debate, because no one wants a situation in which resources are used unwisely, as the hon. Member for Somerton and Frome said. That will put a burden on those who are investigating, because they could not do anything with the information with which they were provided. There may be an occasion when an order has to specify all financial institutions. That would not happen in each case, but it would be given considerable consideration. We want the provision to be in the Bill, because there may be occasions when it is needed.

Mr Bill Wiggin (Leominster, Conservative)

Does the Minister have any examples in her notes of the type of situation in which all financial institutions would have to be included?

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

Let us consider a terrorism case, when no evidence points to an account at a particular bank, but the seriousness of the offence and the need to trace any account was such that we would consider that it justifies a search of all banks.

Mr Bill Wiggin (Leominster, Conservative)

The Minister specified a type of financial institution in her example. I am sure that, given the lack of more specific information, Conservative Members wholly agree that a situation of that seriousness would justify that example.

However, she specified a type of institution. That is why the provision is an example of weak drafting.

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

I beg to differ. We envisage that such circumstances are likely to be unusual, but the provision is essential. The ability to target an order at all financial institutions is important on rare occasions. The Bill gives both the Secretary of State and the court discretion about whether or not to make an order. There are safeguards in the clause. The Secretary of State will consider whether a request meets the conditions of the protocol, and specifically whether he is satisfied that the requesting authority has demonstrated why it considers that the information is likely to be of substantial value to its investigation and has grounds for presuming that accounts are held there. If he is not satisfied with that and the request appears to be a fishing expedition, he can refuse it.

The clause is also consistent with the 2002 Act, which contains the power to make an order specifying all financial institutions. If we can do that for overseas money laundering investigations, it is logical by extension to make similar provision in the Bill to enable us to do it for other serious crimes.

Mr Nick Hawkins (Surrey Heath, Conservative)

The Minister will understand that we made the same point during the Proceeds of Crime Bill, on which I sat on the Opposition Benches. The provision is much too wide. The fact that that Government did not accept that does not mean that we are not going to make the same point again. Two wrongs do not make a right. The Government were wrong before on the 2002 Act, and they are wrong now.

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

We shall have to differ on that. It was correct to include the provision in the 2002 Act and, having considered other areas of serious crime that require access to information, it would be illogical not to pursue the same direction in the Bill. We stand by our argument during the passage of the 2002 Act. We need the clause to safeguard the occasional need to use the power.

Mr David Heath (Somerton & Frome, Liberal Democrat)

In what way does the Minister feel that if subsection (3)(a) were missing, paragraphs (b) and (c) would not cover all potential circumstances in which the power needed to be used? It would allow for particular descriptions of financial institutions, which could include all of them if that were necessary, but it would not suggest that that was a norm.

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

As I have said, we believe that referring to all financial institutions in the clause allows us to be clear, if and when a customer information order is requested, and it is also requested that the search should be wide-ranging. The provision will allow us the power to do that. We have included it in the Bill because it was, as I have said before, used in the 2002 Act and we feel that it should be re-used to make logical the Bill that we are passing. We might not be able to define a particular description. This is a catch-all provision that will ensure that we can enable requests appropriately.

Mr Nick Hawkins (Surrey Heath, Conservative)

In a previous debate, the Minister put a great deal of stress on the fact that the Government consulted widely with the financial world and that they knew that it was supportive. However, the Minister

cannot say that in relation to the amendment, because my noble Friend Viscount Bridgeman said in another place that the genesis of the amendment deleting paragraph (a) was based on

''the concern of the British Bankers' Association, which although strongly supportive of many parts of the Bill, is very concerned that an undue and excessive burden should not be placed on the financial community.''

That is what we are saying. My noble Friend continued, saying:

''Would that not be too burdensome in practice?''

He added that the provision would

''allow fishing expeditions by police authorities with no real direction, at huge financial cost to the banks, bearing in mind that the smaller the bank, the greater the proportionate burden on it''—[Official Report, 27 January 2003; Vol. 643, c. GC 127.]

The Minister ought to reflect further, especially on the helpful point made by the hon. Member for Somerton and Frome, who said that the clause would not be weakened very much if paragraph (a) were removed. If paragraphs (b) and (c) were left, the clause would still be pretty wide, but there would not be the possibility of something incredibly burdensome.

I remind the Minister that we are talking about an ex parte application to a judge in chambers, in respect of which the financial institutions will not have the opportunity to attend and object. The application will be made in private at the insistence of the state, whenever that situation arises. We must be careful that the Government do not make the legislation too wide.

I shall not pursue the matter, but the Minister and her advisers must reflect further on the matter, because we could, and perhaps should, return to it later, given that the Government are not giving any ground on a point on which we strongly feel that they have gone too wide.

Mr Bill Wiggin (Leominster, Conservative)

Perhaps I should have spoken earlier on the issue. I have a great deal of sympathy with the Minister; if I were in her position, I think that I would defend the brief in just as stalwart a fashion.

I also appreciated the argument advanced by the hon. Member for Somerton and Frome, because paragraphs (b) and (c) cover the gamut of financial institutions—and paragraph (a) seeks to cover them, too. We have an impasse in some senses, because all financial institutions can be picked up. The difference, and the Minister put it well, is that the provision requires us to think about the process, rather than use a broad-brush stroke. It is that extra thinking that we need in our legal system, because it protects not only the smaller financial institutions, but the sensitive institutions, particularly in our country. Such institutions are price-sensitive and—

Mr Alan Hurst (Braintree, Labour)

Order. The hon. Gentleman's intervention is too long.

Mr Nick Hawkins (Surrey Heath, Conservative)

I am grateful to my hon. Friend the Member for Leominster, because I understand that he, like me, brings past expertise to the matter. As my hon. Friend says, the Government and the Opposition are at an impasse. I shall not pursue the matter today, but tell the Minister seriously that we may have to

return to it later, and I hope that she will reflect on the issue. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Nick Hawkins (Surrey Heath, Conservative)

I beg to move amendment No. 90, in

clause 33, page 20, line 11, leave out paragraph (c).

Mr Alan Hurst (Braintree, Labour)

With this it will be convenient to discuss the following:

Amendment No. 92, in

clause 35, page 20, line 40, leave out from 'apply' to 'for' in line 41.

Amendment No. 95, in

clause 36, page 21, line 31, leave out paragraph (c).

Mr Nick Hawkins (Surrey Heath, Conservative)

The amendments address a point that is, to some extent, similar to one that we dealt with a few minutes ago in relation to the Secretary of State's powers. Amendment No. 90 would amend clause 33, and amendments Nos. 92 and 95 would amend clauses 35 and 36 respectively to the same effect. We are saying that it should be a senior police officer who takes a stance under the clauses, and want to delete clause 33(4)(c), which says:

''a constable authorised by a senior police officer to make the application''.

It is perfectly reasonable for senior police officers, but not mere constables, to deal with the matters in the clauses. We are talking about quite significant issues. As I said earlier, we are talking about a draconian provision; surely the power should be restricted to senior officers. I hope that the Minister will understand that small but important point. I will listen with interest to what she has to say.

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

The amendments would prevent a constable from being able to apply for customer information orders or account monitoring orders on the instruction of a senior officer. The senior officer would have to apply for the order in person, whatever the circumstances of the case.

Under the present drafting, the constable can apply only for customer information orders or account monitoring orders on the instruction of a senior officer; he cannot make an application off his own bat. The senior officer will always be accountable for the decision to seek the order, but will not have time to go to court to make the application in person. Requiring applications for CIOs or AMOs always to be made by a senior officer would impose a disproportionate burden on the police and would not be a sensible use of senior officers' time. Clause 46 states that a senior police officer must be of at least superintendent rank.

The drafting of the Bill follows existing practice, as constables already have similar powers in relation to money laundering investigations under section 378 of the Proceeds of Crime Act 2002, which defines constables as ''appropriate officers''. Furthermore, it is likely that the request for an order will arise from an ongoing investigation, of which it is likely that the constable, not the senior officer, will have in-depth knowledge. If a case arises in which it is appropriate

for a senior officer to make the application, the present drafting allows the flexibility for that to happen.

Mr David Heath (Somerton & Frome, Liberal Democrat)

Will the Minister confirm what I believe to be the case, which is that the constable referred to does not necessarily mean a person holding the rank of constable, but merely a person holding the office of constable, that is to say, to any officer up to the rank of superintendent?

Ms Caroline Flint (Parliamentary Under-Secretary (reducing organised and international crime, anti drugs co-ordination and international and European issues), Home Office; Don Valley, Labour)

I can confirm that that is correct.

Given that we think that it is right that a constable should be able to apply for an order on the authorisation of a senior officer, it follows that they should also be able to make an application to discharge or vary an order. An order may be discharged or varied if, for example, the requesting authority no longer requires the information or is able to narrow down the banks from which information is sought—possibly on the basis of additional information obtained from other aspects of its domestic investigation.

This is about ensuring that there is the safeguard that a senior officer authorises the instruction: we do not want to delay investigations by creating a bureaucratic and time-consuming process.

Mr Nick Hawkins (Surrey Heath, Conservative)

I hear what the Minister says, and I will not pursue the matter further today. We wanted the Minister to confirm on the record what the position was, and she has done that. Therefore, at this stage, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 33 ordered to stand part of the Bill.