'(1) Where a person receives, in the course of a business in the regulated sector, information or other matter which gives him reasonable grounds for knowing or suspecting that another person is engaged in money laundering, he commits an offence under this section, unless subsections (2) or (3) below apply.
(2) No offence is committed under this section if a disclosure within section 330(4) is made in relation to the information or other matter in question.
(3) No offence is committed if either of the circumstances in section 330(5) applies.
(4) Schedule 6 applies for the purposes of this section as it does for the purposes of section 330.
(5) Section 330(6) applies for the purposes of this section.'.—[Mr. Grieve.]
Brought up, and read the First time.
Amendment No. 72, in page 192, line 28, leave out from "based" to end of line 29.
Government amendment No. 93.
Amendment No. 175, in clause 332, page 194, line 11, at end insert—
'(3) A person guilty of an offence under section [negligent failure to disclose: regulated sector] shall be liable to a fine not exceeding level 5 on the standard scale.'.
On the second day of our consideration of the Bill on Report, we come to part 7 which relates to money laundering. As the House may be aware, some controversy has arisen as regards the impact of the measure on those who will have the duty of providing information to the Assets Recovery Agency—eventually through the National Criminal Intelligence Service—to ensure that money laundering is stopped.
In Committee, we discussed issues relating to money laundering and to the offence of failure to disclose in the regulated sector. That debate was, in fact, the largest single debate during the whole Committee stage. I am sure that the Under-Secretary of State for the Home Department, Mr. Ainsworth, will agree that the debate reflected the importance attached to the issue—especially by Government Back Benchers, although concerns were raised on both sides of the Committee about the existing legislation.
Clause 330 provides that a person commits an offence if, within the regulated sector, he
"knows or suspects, or . . . has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering . . . The second condition is that the information or other matter . . . on which his knowledge or suspicion is based . . . which gives reasonable grounds for such knowledge or suspicion, came to him in the course of a business in the regulated sector."
The third condition is that he has not availed himself of the opportunity to disclose the information
"to a constable, a customs officer or a nominated officer as soon as is practicable after it comes to him."
In Committee, serious disquiet was expressed about the fact that subsection (2)(b) will criminalise not only those who know or suspect that money laundering is taking place and who fail to pass that information to the authorities, but those who may have been merely inadvertently negligent in not noticing what a court might regard, with hindsight, as the evidence that would have allowed them to know or suspect that money laundering was taking place.
As I said, that gave rise to serious disquiet, which a number of hon. Members expressed fairly eloquently. I shall not take up the House's time by reading out chunks of what was said in Committee, but the hon. Members for Redcar (Vera Baird) and for Wellingborough (Mr. Stinchcombe) both expressed concern about how the proposal would work. They spoke about the risk of unfairness, and of criminalising people who normally would be regarded by any right-thinking person as innocent. Such people would not deserve the frankly draconian penalties that are attached to the offence. The maximum penalty is a possible five years' imprisonment.
The Government's response was encapsulated in what the Minister said in response to the debate, which was that the Government
"consider that an objective test is necessary because we want the financial industry at large to be much more diligent in identifying and reporting instances of money laundering. It is already the test for the requirement to disclose information on transactions relating to terrorism. The relevant provision can be found in the provisions inserted into the Terrorism Act 2000."—[Official Report, Standing Committee B,
It seems to me that the question of money laundering goes much further than the prevention of terrorism. Although the Minister showed considerable willingness in Committee to appreciate the concerns that had been raised, his justifications for the proposal were inadequate.
The other issue raised in connection with the clause concerned its drafting. Clause 330(2) is unusual in that it seeks to encapsulate two separate offences. The prosecutor who has to draft an indictment will have to choose whether the accused either knew or suspected that money laundering was taking place, or had reasonable grounds for knowing or suspecting. I remain unconvinced that that choice will be easy to make. I suppose that we will end up with an either/or offence, and that the jury will be offered the choice of convicting on the greater or lesser charge. However, the clause is also unusual in that it makes absolutely no distinction with regard to the penalty to be imposed, except in so far as the court's discretion might apply.
I am sure that the Minister would be the first to agree that the category of seriousness of an offence will be very different if the person who carries it out does so inadvertently or through negligence, or deliberately. However, Parliament does not seem willing to cater for that difference.
When we discussed the matter in Committee, the proposal that I put forward was fairly straightforward. It was that we should delete from the Bill a negligence offence. The Government resisted that proposal, even though I had the impression that some Government Back-Bench Members on the Committee would not have viewed such a course of action unfavourably.
From a sedentary position, the hon. Gentleman says, "Indeed not." In Committee, he tended to be the great exacerbator of all offences. Given the criminality of some of the penalties to which he wanted recourse, I do not think that I can mention them on the Floor of the House.
In an echo of issues that were raised yesterday by my hon. and learned Friend Mr. Garnier, may I ask this? Are not the really big operators in money laundering—those who commit the most serious crimes—likely to be operating outside this jurisdiction? Has my hon. Friend turned his mind to that problem? Am I right in assuming that the Bill, as and when it becomes an Act, will apply only within our domestic jurisdiction?
My hon. Friend is right that the jurisdiction is territorial, although there are clauses in the Bill that provide for international co-operation to prevent money laundering, including the exchange of information. I hope that we will have an opportunity to consider these matters further because they raise difficult issues about the propriety of exchanging information between states which may have been derived from confidential information obtained in the United Kingdom from, for instance, the Inland Revenue, through the director. My hon. Friend is also correct that those who derive benefits from the proceeds of crime in this country may well launder their money elsewhere.
The issue that we are considering concerns the regulated sector in this country—those in banking, finance and accountancy who are asked to carry out transactions by clients which may reveal to them a suspicion or knowledge that the client may be dealing in tainted money. The Minister knows that Opposition Members—indeed, Members on both sides of the House—find unexceptionable the principle of requiring disclosure by the regulated sector, and, indeed, outside it, where we hope it will take place. The question is how we enforce a criminal sanction on the regulated sector to ensure compliance that does not end up being unfair. The amendments would still allow that, curiously enough. Amendments Nos. 71 and 72 on their own would still allow the House, if it wanted, to remove the negligence element from the offence. They are consequential upon new clause 7.
New clause 7 suggests the creation of a separate and distinct offence. Rather than clause 330 rolling into one the dual offence of either knowing or suspecting or having reasonable grounds for knowing or suspecting—as is currently the case—we suggest that it would be sensible to amend clause 330 to remove the negligence offence and then, if the Government wish, to create a new offence which rests upon the test of negligence, but to associate it, as we suggest in amendment No. 175, with a penalty that is only financial. Let me say in passing to the Minister—I dare say that he will say it to me when he replies—that I am aware that amendment No. 175 as it stands is not wholly adequate to fulfil our purpose. However, that in no way reduces the validity of new clause 7, which goes to the principal issue.
If the amendment were accepted, there would be two separate and distinct offences within the regulated sector. In the first case, the offence would be committed when someone knew or suspected that money laundering was taking place and did not make disclosure. That is a serious offence, punishable by up to five years' imprisonment. In the second case, the offence is similar but would be committed only when the person had reasonable grounds for knowing or suspecting. In those circumstances, the penalty would be only financial. In amendment No. 175, I stipulated
"level 5 on the standard scale", which would be £5,000. However, that could apply only in summary proceedings; if the matter were to go to the Crown court, the fine would be at large. That is the normal practice in those circumstances.
The essential feature of the new clause is that a person could not lose their liberty as a result of committing an offence through inadvertence. That ties in closely with general principles of law in a wide field of statutes, whereby the criminalisation of individuals for acts of negligence normally attracts only a financial penalty. For example, under the Health and Safety at Work, etc. Act 1974 a negligent omission would generally—with very rare exceptions—attract only a financial penalty, albeit possibly a substantial one.
I commend the new clause to the House. If it were accepted, we would still be sending out a powerful message to the financial regulated sector—too powerful, some might argue. In the light of the proposal that I made in Committee, I have great sympathy for those who say that there should not be an offence based on negligence at all. However, assuming that hon. Members desire that such an offence should exist, the new clause would provide a valuable distinction. It would also improve the drafting of the Bill, bearing in mind the comments that were made in Committee about the unwieldiness of clause 330.
Will the hon. Gentleman clarify the reference in amendment No. 175 to
"a fine not exceeding level 5 on the standard scale"?
Which standard scale is that? As the scales in England and Scotland may differ in this respect, the amendment would appear not to cover Scotland.
The hon. Gentleman makes a good point, although, as he may have heard me say a few moments ago, I accept that amendment No. 175 does not fulfil the requirements that I should have wished of it. That is my fault, and I take full responsibility.
This makes no difference to the general issue on which the House can vote. The question is whether there should be a financial penalty for the offence of negligence. In England and Wales, level 5 on the standard scale is £5,000 in a summary jurisdiction. If the matter were to go to the Crown court I would normally expect the fine to be at large. That is why I accept that amendment No. 175 would not fulfil the criteria.
If we found that there was a different scale of fines north of the border, hon. Members would have to decide—and inform the Minister, if he was minded to go down that road—whether they had a view of what the fine level should be. As a great respecter of the devolution settlement in Scotland, I acknowledge that there may be a degree of variety. However, some of the issues under discussion are reserved matters and it would be odd not to have uniformity as regards penalties north and south of the border. I suspect that even the hon. Gentleman might be capable of agreeing with me about that, but I may be mistaken.
I appreciate what the hon. Gentleman is saying. However, does he accept that if, by some mischance, the House voted to accept amendment No. 175, the clause would be rendered completely meaningless as far as Scotland is concerned, because the financial aspect will not be the same there? If he does not agree with that, does he think that the matter should be referred to the Scottish Parliament for a decision on Scots criminal law?
No, I am afraid that I cannot agree with the hon. Gentleman at all. His argument is without foundation. If hon. Members wish, they can vote on new clause 7. By doing so, they would demonstrate to the Government that they wished to have a separate, lesser penalty for negligence. The Minister, with the help of his advisers, would be in a position to tidy things up—as he has done on many previous occasions. I see the Minister nodding his head approvingly. Indeed, if he were minded to accept the substance of the new clause, the normal practice would be for him to say so and I would then of course withdraw it. There is no problem in those circumstances.
The hon. Gentleman is too generous.
There is some merit in the point that the Scottish nationalists are making. However, it should have been made in the Committee. Had they asked to serve on it, no doubt they could have made their representations there.
On a point of order, Mr. Deputy Speaker. From reading Hansard this morning, I know that the matter that Mr. Davidson raises was mentioned many times yesterday and that the occupant of the Chair ruled it out of order on three separate occasions. For the sake of clarity, can we have another ruling on that, because there are many important matters to discuss and that would save everyone's time?
Mr. Davidson makes a valid point, but we are going wide of the mark. Part 7 deals with money laundering. It is clear that it is intended to apply to the whole of the United Kingdom, because clause 327 states:
"from England and Wales or from Scotland or from Northern Ireland", and clause 332 appears to impose common penalties for money laundering. The Minister will correct me if I am wrong, but I assume that in passing the Sewel resolution, the Scottish Parliament was content with the notion that there would be a common legislative framework for money laundering north and south of the border.
He could had he bothered to read the amendment paper before he came into the Chamber. His contribution borders on the absurd. Throughout our proceedings, hon. Members on both sides of the House have done their best to improve the Bill. We might have got things wrong and we might have fallen out, but we did not descend to the nit-picking banality that characterise his interventions.
I thoroughly agree with the hon. Gentleman's sentiment, if not his point. However, can I drag us back to the issue of negligence? Does he not accept that he is inventing an excuse or a get-out for criminals who could use negligence in their defence instead of being charged with a view to sending them to prison? They could claim that they are negligent and happily pay the money. The hon. Gentleman is giving them a cop-out that allows them to get away with it.
Let me set out the approach that the hon. Gentleman should take. People who work in the regulated sector are for the most part—there may be terrible exceptions—likely to have been law-abiding citizens prior to the events covered by the Bill. I should be surprised if there are many chartered accountants lurking around who have strings of previous convictions.
I would apply the same test to a criminal matter as that which applied to any other. Let us suppose that the hon. Gentleman picks up a book in a book shop and, because his mind is elsewhere and he is not concentrating, walks out clutching it. If he is prosecuted for that, he knows that provided that he satisfies the court that it was unintentional, he will be acquitted. He would probably agree that to convict someone of a serious criminal offence of dishonesty when he had no intention of being dishonest would be a parody of the legal system. In the light of such circumstances, why should a different test apply to somebody who commits a mistake by wrongly assessing the information that he receives, which would lead him to make the disclosure?
The Minister argued that, in the regulated sector, people should be fully trained, aware of the issues, and capable of picking up the problem and shouldering the burden—just as employers have to shoulder the health and safety burden in respect of their employees, including being criminalised for potentially negligent acts. I disagree, however, that that would provide an easy refuge. Any prosecutor who had to consider whether an offence was committed wilfully or negligently would probably have little difficulty extrapolating the answer to that question, and he could still pursue both offences and leave the jury to make up its mind.
The point at issue is that it is wrong as a matter of principle to establish a criminal sanction with a potential maximum penalty of five years' imprisonment for somebody who may ultimately be found to have acted inadvertently, given that, with the benefit of hindsight, others might say, "You ought to have realised that there was something funny about this transaction." That is an overly onerous provision.
If Parliament passes excessively onerous legislation that appears to weigh down heavily on people, the danger is that it will lead to all manner of unintended consequences. First, it will bring the law into disrepute, and when applied the sanction itself will appear to outsiders to have little merit. Secondly, people in the financial sector will be in a state of fear and less willing to participate.
The oddity is—the Minister will doubtless agree—that the entire money-laundering provision is dependent on the good will and honesty of the regulated sector in co-operating with implementation. The sanction exists for the rogue element who might not co-operate, but the assumption is that people will be willing to come forward and help. If, however, they are so fearful of the sanctions that they close down the hatches and do not want to co-operate, it will remain very difficult to gather the information because the regulated sector will provide none at all. That is a compelling reason why we should be particularly careful about criminalising people by imposing a penalty of up to five years' imprisonment for what will ultimately prove an offence committed purely through negligence.
In discussing negligence, the hon. Gentleman mentioned shoplifting, and I can give him an example with which Conservative MPs will doubtless be familiar. Their former colleague Jeffrey Archer was caught shoplifting suits from a shop in Canada, but was given the benefit of the doubt because he had no previous. He pleaded negligence, rather than deliberate intent, and was let off, but he proved to be a proper bad'un, didn't he?
Then he copped it, as the Liberal Democrat so eloquently puts it. Given those circumstances, are we not entitled to be a trifle suspicious of the defence of negligence and innocence? After all, the people involved in financial services are not babes in arms. Most of them are well aware of the way in which they operate, and in general they are exceptionally sharp in their dealings. Surely negligence should be no defence.
I disagree with the hon. Gentleman. Ultimately, a court or judge will decide in such cases. The particular matter that he mentions never came to court, so it could not be ruled on and I am unable to comment on it. A court and, potentially, a jury will have to decide whether a person has acted wilfully, negligently or with no negligence at all. The court will be able to consider those three possible outcomes. I simply want to make sure that where the court finds that there has been negligence, there will be an appropriate criminal sanction that properly reflects the gravity of the offence, and in my view that should be a fine, not a sentence of imprisonment. When the hon. Gentleman considers that argument, he may see some force in it.
Before I sit down—I do not want to take up too much time, but my remarks have taken longer than I expected—I shall make a few comments about Government amendment No. 93. The Government have attempted to go some way towards dealing with the anxiety expressed in Committee, but they have done so by tabling an amendment that will, for the purposes of negligence, decriminalise those who have not been provided by their employer with
"such training as is specified by the Secretary of State by order for the purposes of this section."
I welcome that, but it is not sufficient.
The amendment does not solve the problem of the excessive penalty for the negligence offence. I am concerned also that it will require the defendant in such cases to prove a negative. At the very least, it will complicate the issues. I have some anxiety about how a court will establish that a person was not provided by his employer with such training as is specified by the Secretary of State. For those reasons, I commend new clause 7 to the House and, subject to what I hear in the debate, I can tell the Minister that I am likely to press the matter to a vote, but I wait to hear from the Minister and other hon. Members how they view the matter.
As Mr. Grieve said, in Committee I expressed considerable concern about both the principle and drafting of clause 330. My concern arises from the inclusion in a single subsection of two offences, the first of knowing or suspecting and the second of negligence.
The question of principle is a simple one: do we believe that there should be a crime of negligence in the regulated sector? As a matter of principle, I do believe that. I disagree with the Tories on that point for two reasons. The first is that money laundering causes huge social problems. In my constituency, which is in leafy middle England, in Northamptonshire, there are some estates where up to 10 per cent. of young mums and dads are addicted to drugs and every single eight-year-old whom I have talked to has found needles in their garden. Those communities are ravaged by crime.
The second reason for establishing a crime of negligence in the regulated sector is that that is where we should be making regulations. We should be regulating people who, as my hon. Friend Mr. Davidson said, are not babes in arms and, moreover, are making huge amounts of money out of the business that they conduct. For both those reasons we should establish the strongest possible professional codes of conduct.
I was about to come on to that. In Committee, the Conservatives wanted to remove the offence from the Bill, but having heard some of the arguments of Labour Members, they have modified their position. However, the hon. Member for Beaconsfield made it clear in his arguments that, as a matter of principle, he still has residual objections to the crime of negligence being in the Bill, and I am simply putting on record why, despite my reservations about the way in which the offence of negligence is included in this legislation, I believe, as a matter of principle, that it should be in this Bill.
Yesterday, we did not discuss many of the clauses, so if the hon. Gentleman will forgive me, I will make progress so that I can deal with some points of drafting. It seems clear to me that the Government have tabled amendment No. 93 precisely to try to deal with some of the drafting points that I raised in Committee.
In Committee, I asked three questions—two of detail and one of more significance. First, how should the indictment be drafted? I appreciate the points made by the hon. Member for Beaconsfield, but, on balance, indictments can be drafted using the either/or formulation and that issue can be resolved. Secondly, what should be the appropriate penalty for the offences? I asked that question because it seems likely that different thresholds should be established for the two types of offence, given that different culpability will be attached to them. I simply tell the hon. Gentleman that, yesterday, he argued for judicial discretion. The current proposal will preserve such discretion, so the judge can reach his conclusion on what the appropriate penalty should be in the circumstances of any case, and there is some force in that argument.
I perfectly understand the hon. Gentleman's point about judicial discretion, but most statutes provide upper and lower limits—usually upper limits—for penalties, based on Parliament's assessment of what is correct in public policy terms. For example, no one can be sent to prison for 16 years for a single theft offence. So, surely, there is no reason why, if the House considers that a financial penalty is appropriate in cases of negligence, we should not spell that out. Does he seriously think that someone should be sent to prison for an offence of negligence that relates to this type of default?
I can conceive of certain circumstances, involving gross negligence and huge sums, where such a penalty might be appropriate. I simply tell the hon. Gentleman that I understand his concerns and fully appreciate them—indeed, I raised them in Committee—but I also understand the force of the Government's argument, "Let us leave it to the judge to decide in any circumstances that come before him."
The issue of greater significance in respect of the offence of negligence that I raised in Committee—I do so again now to discuss whether the Government have dealt with it in amendment No. 93—is that we provide a defence, an opt-out, for all offences under the clause as drafted: the person can say that he did not disclose the information because he had a reasonable excuse not to do so. Of course, if an individual did not appreciate that someone was a money launderer when he should have done, he would not disclose it. Prima facie, that would be the most obvious and reasonable excuse, and the individual could say, "I did not do it, because I did not realise that I had to, or could have done." Otherwise, everyone would disclose all information, and that cannot be right.
That point seems to be dealt with technically in a satisfactory manner under Government amendment No. 93, because it states that no offence has been committed if the person
"does not know or suspect" that other circumstances apply. That meets the drafting point, but the question then arises as to whether it meets in a satisfactory way. We have to decide whether to criminalise people on the basis of their negligence when they did not know or suspect that someone was engaged in money laundering, but when they should have done because they had been provided with appropriate training.
I am persuaded that that is the correct approach, for the very first reasons that I advanced for agreeing with the offence of negligence in principle. We are dealing with the regulated sector and people are making money out of that sector. Because it is regulated and because of the harm that can be done in estates in Glasgow and Wellingborough, we should require appropriate professionalism of those professionals. To amend clause 330 so that it will be mandatory to provide such training and to take it seriously is a very sensible way forward.
Not for the first time, I rise to support the broad thrust of the comments made by Mr. Grieve. It worries me slightly to find myself agreeing with the Conservative party so much—I hope that I am not catching anything nasty in doing so. However, he raises some interesting and important points, which need to be addressed.
First, someone's intention when an offence is committed seems to be terribly important. There is a difference between someone who deliberately sets out to commit a criminal offence, whatever it may be, and someone who commits an offence inadvertently, even if he or she should have known that that offence was being committed and should have been able to take action to stop it. In other words, they had been negligent. There is a difference between being negligent and wilfully intending to commit an offence.
The example cited by the hon. Gentleman of shoplifting is not the most happy one. I am familiar with the example of a river pollution incident. An individual, through an error, allowed a river to be polluted, and that led to a great deal of environmental damage, the killing of many fish and consequences for innocent third parties such as other farmers, and the like.
Although the consequences were significant for those affected and the environment, that is very different from somebody deliberately setting out to kill those fish, poison that river and affect innocent third parties. The consequences for the third parties might be the same, but the intention in the person's mind is different. The law must recognise that difference. That is why I am uncomfortable, too, with the wording of clause 330.
Another reason is that subsection (2) is an either/or provision. It states:
"The first condition is that he—
(a) knows or suspects" that another person is money laundering. That is of course for the prosecution to prove. However, the subsection also says that a person commits an offence if he
"has reasonable grounds for knowing or suspecting".
That reverses the burden of proof and requires an individual to demonstrate that he did not have reasonable grounds for knowing or suspecting.
I am not sure that it does so entirely. Although the burden ultimately remains on the prosecution, it could construct a case for a person having reasonable grounds, and then that person must refute it. That would be different from the way in which he would refute the condition of knowing or suspecting in subsection (2)(a). They are not quite the same thing; the burden shifts slightly.
I welcome Government amendment No. 93, which picks up the point that people should be properly trained. Of course the regulatory sector should be properly trained, and to a high standard. It is not inappropriate for the Secretary of State to suggest the sort of training that should occur and to specify it in guidance. It would be more serious if someone had received such training and was still negligent. It is therefore right that the amendment will make the sector more regulated and the people in it more professional and properly trained. It also gives someone less of an excuse for negligence following such training.
The fact is, however, that somebody could still be negligent thereafter. They could fail to see something or inadvertently make an error that they should not have made and that the training should have prevented them from making, and be negligent. That is very different from deliberately setting out to commit an offence or from knowing or suspecting and doing nothing about it. If those two scenarios are different in someone's mind, the penalties for them should be different. That is why it is right to consider how the penalties could be separated. I am instinctively uncomfortable criminalising a wilful act in the same way as an inadvertent one. That is the essence of new clause 7, and I therefore support its premise.
The hon. Member for Beaconsfield will accept that amendment No. 175 does not work.
My hon. Friend says that it does work. It works in the sense that it would create separate penalties—but for crimes north and south of the border, which was not the hon. Gentleman's intention in tabling it. So, it might need some tightening up.
From having spoken to Mr. Carmichael, my understanding is that the comments from the Scottish National party Members are wholly erroneous and that level 5 on the standard scale in Scotland is identical to level 5 on the standard scale in England and Wales. However, I accept that the amendment could do with some tightening up with respect to summary jurisdiction and the Crown court.
I am informed that there is no need to specify, but I am tempted to say, as would Mr. Davidson, that it is a pity that that was not raised in Committee, but it might be inappropriate to make that comment in response to the point made by Mr. Weir.
There is a serious issue relating to a general point that I made throughout Committee. The Government have the best intentions and want to make sure that the Mr. Bigs of this world who commit such acts are caught and that loopholes are closed. No one disagrees with those aims. However, as we proceed we must be careful to ensure that in catching the guilty, we do not accidentally entrap the innocent.
As has been said, I, like my hon. Friend Mr. Stinchcombe, expressed disquiet in Committee about the whole notion of criminality by negligence, but I did so in a context different from the one in which my hon. Friend has set the issue today.
My hon. Friend refers to the regulated sector as though it were necessarily full of high-powered and highly trained people. On many occasions that will be so, but the schedule that defines the regulated sector is broad enough to include and specify building societies and credit unions. In building societies, transactions can flash across the screen before the eyes of people who may not be highly trained and may work part-time and who therefore do not fall within the category of persons whom we would regard as being capable of being complicit in money laundering. I worry about such people.
Far more do I worry about volunteers in Redcar, Grangetown, South Bank and other places in my constituency where there are credit unions. Those people run those credit unions on a wholly voluntary basis. Although I well appreciate that the answer might come back that little money is likely to be laundered through a credit union in Grangetown, the principle is the same: such people, who are not high-powered workers, will be in danger of being prosecuted for negligence. It is in that context that I expressed my disquiet, which I will not repeat at length today.
Throughout, the issue has been raised whether criminality should result from inadvertence and error. I merely mention in headline terms that the people whom we will be capable of criminalising by mistake include those whose child has kept them awake all night, so that they have not had much sleep; those who are worried about something, or who are not paying much attention and letting the job tick over; and those who have been divorced or bereaved.
We are all aware of the many reasons why someone might not pay proper attention to their job for a while, but some police officer, rightly, astutely and observantly, might come along later and say to such a person, "You should have seen that", with the result that that person is liable to the penalties that we have discussed. It is a less sympathetic example, but it is not uncommon for someone simply to make a mistake because they have had a bad day, and without real justification. Such people, too, may be criminalised. I am greatly concerned.
I am grateful for Government amendment No. 93. Another category of persons about whom I was concerned in Committee was learners, who might exercise all the diligence that they can but still fall below a reasonable standard and so be criminalised. The amendment brings into play the defence of lack of training. That helps and I am grateful for it. It provides evidence that a good deal of thought has been applied to the arguments advanced in Committee. That is proper, but generous as well.
Clearly, negligence in one form or another as a basis of criminality will remain in the Bill. NCIS says that that is important, and in Committee the Minister quoted NCIS's view that professionals have facilitated money laundering but claimed that they had no suspicion or knowledge. If it is to remain in the Bill, I ask that three issues be considered again in more depth than the evidence suggests has been the case up to now. I, too, raised an issue of drafting that was not dissimilar to that raised by my hon. Friend the Member for Wellingborough. If one considers closely the drafting of clause 330(2)(b), one sees that it is an offence if a person does not disclose when he has
"reasonable grounds for knowing or suspecting that another person is engaged in money laundering."
The point that everyone is making is that, even though such reasonable grounds exist, that person may not know or suspect but is still guilty.
As my hon. Friend also said, the defence in subsection (5) is that
"a person does not commit an offence if he has a reasonable excuse for not disclosing the information or other matter".
As he said, the reasonable excuse ought to be, "I didn't know it, so I couldn't disclose it." However, that is not a defence because the offence still exists under subsection (2)(b), even if the person involved did not know about it. A defence of having a reasonable excuse for not knowing or suspecting is therefore necessary. That would cover a situation in which a person had been distracted, perhaps because his child was ill or for another reason that I have given as an example.
Drafting such a provision might be over-elaborate. Is the Minister therefore prepared to confirm to the House that the defence in clause 330(5)(a) of a reasonable excuse is intended to cover a person who simply did not know that there was anything to report, and that the reason the person was negligent in not knowing about it is one of the things that would offer a reasonable excuse? Will he confirm that the clause is big enough to cover that situation?
As Mr. Grieve said, we discussed this matter in Committee at length. As he has graciously acknowledged, I have tried to pick up some of the points of concern. My reading of clause 330(5)—the legal mind of my hon. Friend Vera Baird may be sharper than mine—is that it does not confine itself to not disclosing and refers to having a reasonable excuse for not disclosing. That would apply to a situation in which a person did not disclose because he did not know, and it would equally apply to a situation in which a person should have known but did not disclose in any case. It would cover both situations.
If my hon. Friend is satisfied, I shall accept his assurances and not press the point. However, I am sure that the original drafting of the clause contains a non-link between the aspects that I have set out. I am nevertheless reassured and grateful to my hon. Friend.
I want to mention two more points. One of those has already been referred to extensively—that it would be wise to have two separate offences. I shall not repeat all the reasons that have been put forward for that, but there is an additional—if not huge—one. It is inappropriate that a person who is convicted of an offence that is the result of negligence, which could be seen as a disciplinary offence, should be labelled with the same criminal conviction as a person who has deliberately laundered money. Fair labelling—a well-known sociological concept—requires that there should be two charges so that a person who has had a bad night and missed a trick is not categorised by his previous convictions as a serious money launderer when he makes subsequent job applications. I therefore add my support to the proposal to have two offences.
In response to my suggestion in Committee that cases of negligence could be dealt with adequately as internal disciplinary matters, my hon. Friend the Minister was good enough to say:
"In many cases, they could".
However, he went on to say:
"there are organisations in which there is neither the will nor the ability to bear down."—[Official Report, Standing Committee B,
I appreciate why he made that point, but there will have to be a code of practice for prosecutions brought under the Bill. Will he therefore consider including in the code of practice the provision that no prosecution for negligent non-disclosure should be brought until it has been considered whether the matter can be met and will be met by internal disciplinary mechanisms? I invite him to consider the three points that I have made.
To return to the analogy with shoplifting, I am reminded of something that a legal jurist once said to me. He said that we have come across cases where people are so confused that they walk out of a shop without paying for an item, but they are never so confused that they pay for it twice. We are in the territory of legalistic definitions and passes being sold. We have subjective tests, and they were discussed in Committee; we also have an objective test, and I am afraid that we are stuck with it.
I support the observation of Vera Baird that there should be a distinction between offences whereby the negligent failure to disclose should be punished by a fine not exceeding level 5 and those committed by someone who clearly should have known that money laundering was going on and, knowing that it was going on, failed to take the appropriate action. That distinction should be flagged up clearly for the reasons that she set out. However, it appears that someone who has had a bad night or a bad day will not be treated in a proportionate fashion by the legal and sentencing system in this country.
I am particularly concerned by clause 330(5). The Minister has just referred to that subsection in an intervention, so will he explain whether, when a legal adviser claims privilege, that adviser must also have a reasonable excuse for not disclosing information? I do not understand what such a reasonable excuse might be. It appears as though the legs are being cut from underneath the privileged defence if the type of reasonable excuse must be of the type expected elsewhere in the clause. I am not at all clear how privilege will operate in that respect. It may be my lack of acuteness—which is uncharacteristic, I hasten to add—so perhaps the Minister will enlighten me.
The hon. Member for Redcar also made an excellent point about training. The level of training expected has not been made clear in the Bill or in any of the Minister's comments that I have heard. We all know that the British Bankers Association, among many other distinguished bodies, has training days and training courses, but they are for employees of a certain level in a banking or financial services institution. That is fine, but unless we are given a clearer idea of the sort of accredited courses that will be run, we shall remain in the dark. For that reason, Government amendment No. 93 is defective, and this debate is important in flushing out what exactly Ministers have in mind.
The Secretary of State will draw up regulations and prescribe certain forms of training so, for the reasons that the hon. Member for Redcar outlined, I hope that it will be clear what level of functionary will be involved. Will it be Tracey or Wendy in back office accounts or will it be Alan or someone else? Will it be someone with no interest in financial services? Perhaps they will come across the issue only when it flashes across their computer screens.
The Minister may smirk, but I characterise the issue in that way to make my point forcefully. We are talking not about managing directors of banks, or even branch managers of banks; we are talking about back-office staff. Instead of grinning, perhaps the Minister will tell us what comfort he will give us on this point and on that raised by the hon. Lady.
I understand that to a considerable extent those who work in the financial services sector are already subject to stringent requirements and reporting duties. It may be that the proposed legislation will beef up the relevant provisions to an extent.
The hon. Gentleman cites back-office staff. Surely the first people in a financial institution who would be well aware of their duties under existing money-laundering legislation would be back-office staff.
The hon. Lady states the obvious, but is she suggesting that every employee at every branch, however small it might be, in every village, market town, town or city—for example, every member of the Natwest bank or the Halifax—will receive the appropriate training? If she is, I fear that she has probably missed the point.
It is clear that people may slip through the net, and that is the point that I am making. It is the point that the hon. Lady made powerfully. She talked about credit unions and volunteers. The clause could easily catch such individuals. The Minister is shaking his head. If he thinks that we are wrong and that the credit union point is wrong, he will be able to say so. I am sure that he would want to do so. It is a point that needs answering.
Training has been mentioned by my hon. Friend Mr. Grieve. We are invited to believe that individuals who want to pray in aid the defence set up by Government amendment No. 93 will have to prove a negative. I shall be interested to hear the Minister explain how individuals might easily and conveniently do that. The amendment does not give us any clue how that process might work. I would appreciate the hon. Gentleman's answer to that question.
I am not a lawyer. I speak on behalf of victims who cannot speak for themselves. These are people who have already passed on and others who are drugged up to the eyeballs and cannot speak for themselves, and the families whom tried to support these people. These are the people whom I try to represent.
New clause 7 deals with a grey area, and in my opinion the purpose behind it is to try to cloud the issue. I feel that we are trying to introduce lesser sentences for those who deserve to be sentenced correctly. Clause 330 covers the rights of individuals, especially those who come into contact with those who have a criminal life style.
My hon. Friend the Minister of State, Scotland Office and I visited the Drug Enforcement Agency in Scotland. We had a long and frank discussion with representatives of it. It was amazing to me how they mirrored the discussion that took place when I and my hon. Friends the Members for Glasgow, Pollok (Mr. Davidson) and for Glasgow, Cathcart (Mr. Harris) visited Strathclyde police force. I commend the deputy chief constable, Graham Pearson. It was said that part of the problem rested with lawyers and others. That was a reference to those in the regulatory area. If they are part of the problem, they are the people on whom we want to focus, especially in terms of the clauses that we are considering.
Having read amendments Nos. 71 and 72, it strikes me that they are an attempt to introduce as a defence the claim, "I didn't know. I couldn't tell." That would take us down the road of a nice little fine and the person charged getting off.
Clause 330(3) states:
"The second condition is that the information or other matter—
(a) on which his knowledge or suspicion is based, or
(b) which gives reasonable grounds for such knowledge or suspicion, came to him in the course of a business in the regulated sector."
Amendment No. 72 would delete the words
"or which gives reasonable grounds for such knowledge or suspicion".
I understand why the hon. Gentleman should come to that conclusion. The amendment that he has just read out is similar to the one that was tabled in Committee, but as I explained to the House, it was linked to new clause 7. I would propose that those deletions should be made only if new clause 7 were incorporated, in which case there would still be an offence of negligence, but in the manner that I described, in a separate clause and with a separate penalty.
I thank the hon. Gentleman for his intervention. I am sure that the Minister will be pleased to hear that. However, as was said on many occasions in Committee, the amendments give the impression that the Opposition are the criminal's friend.
Reference has been made to a level 5 sentence, which is a maximum fine of £5,000. I should have thought that the Opposition, especially the Conservative party, with its law and order ethics, would want a punishment to fit the crime. A maximum £5,000 fine for someone who earns treble that in a week hardly seems a sufficient sentence for that person, particularly if the case involved severe negligence or fell just short of an offence having knowingly been committed.
With regard to the maximum sentence of a £5,000 fine, may I point out to the hon. Gentleman that that would apply in summary procedure which, by definition, applies only to the less serious offences? If it is appropriate as the maximum fine for any other offence on summary procedure, it must be appropriate for this offence on summary procedure. If it were on solemn procedure, an unlimited fine would be applicable.
I thank the hon. Gentleman and bow to his superior knowledge in matters of law. As I said, I am not a lawyer. I am speaking on behalf of the victims, not the Law Society. A fine of £5,000 is not enough. The sentence should be left to the judge's discretion and should match the crime.
Does the hon. Gentleman accept, however, that there ought to be a difference in the penalty applied to someone who wilfully commits an offence and to someone who inadvertently commits the same offence?
I thank the hon. Gentleman, but I do not see his point. The case will be heard, evidence will be taken, and the judge and jury will determine whether the accused is guilty or innocent. Depending on the severity of the offence, the judge will hand down a sentence to match the error of that person's ways.
In conclusion, the debate in Committee on clause 330 left me bewildered. We spent an inordinate amount of time on the matter, during which time I wrote myself a note, which states, "I have given up the will to live." I see that we are going through the same debate again.
If Mr. Stinchcombe had been more willing to give way, it might have been unnecessary for me to speak. The thought of people giving up the will to live was also something of an invitation for me to contribute.
Quite a while ago, I sought to intervene on the hon. Member for Wellingborough when he dismissed the view that the Opposition seek not to delete the offence of negligence, but to provide for it in a different way. After doing so, he made two observations. First, he said that he would not give way again because there would be no time to debate other matters if he did so. I must respond that it is not Opposition Members who determine guillotines, but Labour Members. If there is not enough time for him to do what he believes needs to be done, he should address his views to his Front Bench rather than complain to us. Secondly, he implied that it did not matter what we were proposing now, but that he held against us permanently the fact that we had made the same proposal before. That is very unfortunate. The Committee's proceedings were marked by the fact that the Government often listened to what Opposition Members said, accepted that we had made very good points and changed their mind. If he can support his own Government when they change their mind, he should not criticise us when the force of his argument helps us along.
My hon. Friend Mr. Grieve advanced the entire argument, but the fact remains that, like the Minister, we are sometimes prepared to say that we have heard and accepted what has been said. Just as I have thanked the Minister on a number of occasions for changing his mind and listening to what we say, I hope that the hon. Gentleman will manage to thank us—he can do so after the debate if not now—for behaving just as his own Minister has. I shall leave the matter there.
The process of 39 Committee sittings has begun to get me thinking sometimes like Mr. Davidson; I noticed a while ago that he was busily writing and I hope that I am not about to pinch his speech off him. I am not so sure that there should be such universal enthusiasm among Labour Members for Government amendment No. 93. I learned in Committee that if one thinks long enough about anything that is proposed in an amendment to this Bill, one will see it as a loophole. None the less, I invite him, the Minister and other Labour Members who want to support their Front Bench to ask themselves whether Government amendment No. 93 can be used as a loophole.
I am an unscrupulous employer. [Laughter.] I am not, but let us assume that I am such an employer for the purposes of this argument and that I decide to become involved in money laundering, but do not want the powers of the Bill to affect me. The Government are now saying that if an employee has not been properly trained, he has a defence. Let us imagine that, as an unscrupulous employer, I ensure that some of my employees who are party to what is happening are not trained. I then let them do what is necessary.
I think that I understand where my hon. Friend is leading the argument. Should not we be greatly concerned that, as he says, if the new clause is agreed, an untrained individual will not be liable, so the full force of the agency will be directed at the unscrupulous boss? That will lead to an enormous feeding frenzy for the lawyers who are involved in trying to unravel this rather ill-thought-through provision.
I understand my hon. Friend's point, but I am not sure whether the unscrupulous boss would be prosecuted under the Bill or any other legislation for aiding and abetting—or whatever the technical phrase would be—an employee.
The hon. Gentleman and hon. Member for Cities of London and Westminster (Mr. Field) served on the Committee and should be aware that employers in the regulated sector are required to train their employees. I think that he knows that.
I am sure that there is an obligation to give training, but whether the training is satisfactory remains to be seen. That would be a matter for debate, and could provide the loophole.
My hon. Friend Mr. Field said that he thought he could see where the argument was going. Perhaps he saw that I was trying to persuade the hon. Member for Glasgow, Pollok and others to vote against their own Government. That is where the argument is going. The greatest advocate of not watering down the Bill is the hon. Member for Glasgow, Pollok, and I look forward to hearing what he will say after hearing the Minister trying to water it down.
The Government's proposal could indeed be seen as a loophole. An employee who had deliberately not been given satisfactory training would be provided with an excuse, and could launder money to his heart's content. I am sure that that is not what the Minister intends, but I think that it is what he is about to do.
In the circumstances described by the hon. Gentleman, would not the unscrupulous employer have
"reasonable grounds for knowing or suspecting that another person", namely the employee, was engaged in money laundering? He would therefore be committing an offence himself.
That may be so, but the person actually doing the laundering would be given an excuse. I am sure that the unscrupulous could find a way of protecting the proceeds of crime by shunting it down the line. I hope that I have said enough to cause Labour Members to have serious doubts about the loophole that is being proposed.
John Robertson expressed concern about lesser sentences and punishments, as though, again, we were seeking to water the Bill down. I think that he has got the wrong end of the stick. I realise that a Member whose constituency has a serious drug problem will always want the guilty to suffer the maximum penalty, but to advance that argument is to misunderstand the point that we are making.
Let us say, for the purposes of my own argument, that I accept a maximum sentence of five years for the negligent offender. Let us not get into a discussion about whether we want to water that down. Surely the hon. Gentleman accepts that if five years is adequate for negligence, we should consider an even longer term for deliberate offenders. That is the only distinction that Conservative Members seek to draw: that there are two different crimes, one far worse than the other, and that one should attract a more severe punishment than the other.
Then the hon. Gentleman accepts our argument. The fact that he does not like our solution is one thing, but it is another thing to suggest, as was suggested in Committee, that we are the friends of the criminals because we want to dilute the Bill. However, he has at last accepted that that is not what we are trying to do. We are trying to achieve justice and fairness. If he thinks that five years is adequate for the negligence offence, he should have tabled an amendment to increase the sentence for the deliberate offence.
If I have helped Labour Members to understand that even their own Government can create loopholes, and if I can persuade just one Labour Member that we are not the criminal's friend and that we are talking a great deal of common sense, my speech has been well worth while.
My speech follows that of my hon. Friend Mr. Stinchcombe by coincidence; he did not provoke me into speaking. I nevertheless think it worth repeating some of the comments of my hon. Friend John Robertson about the framework of our discussions. I think that the Tories were a disgrace in Committee, and are a disgrace today. I still believe that they are weak on pursuing the collaborators of criminals.
Criminals need professional advisers, and I consider those advisers as bad as, if not worse than, some of the criminals themselves. Severe action should be taken against them. The Conservatives' form can be held against them in that regard. The nationalists will not recall this because they were not present, but those of us who were in the Committee noted the Conservatives' view that negligence should be a complete, absolute, utter, total defence. They believe that it should enable people to get off everything altogether. There is a difference, however, between the adjustments that the Government have made and the adjustments that the Conservatives suggest that they have made. We have retained our principles while being prepared to make tactical changes, which is why I am prepared to accept what Ministers are proposing.
This is not a change in principle by the Conservatives. I believe that they are still in favour, in principle, of having negligence as a defence, but have been forced by political circumstance to modify that position. They are, therefore, putting forward the weakest suggestion that they can. It is interesting that we have heard from a variety of sources about the "not trained, bad night" defence for negligence.
The hon. Gentleman will remember that, in Committee, one of the most powerful speeches against the negligence defence came from one of his Back-Bench colleagues. It therefore strikes me as odd that the change to which we have adjusted in the spirit of conciliation should be greeted with his particular brand of opprobrium.
Those on my side of the Committee who are now prepared to support a different position did not perhaps fully appreciate the majesty of the Government's position at that stage. They have now recognised that there are improvements within the same set of principles. I suspect that the Conservatives have retained the principle of wishing to water down this measure entirely.
Let me return to the "not trained, bad night" defence. There is an offence of careless driving; there is also an offence of negligent driving, worded in various ways. People can be found guilty of manslaughter through careless driving. Negligence is not a defence in those circumstances; nor should it be. If someone killed other people or caused horrendous consequences as a result of carelessness while flying a plane or driving a train, we would not say, "That's all right; it was just negligence. It's a terrible shame, but we'll let them off." In those circumstances, negligence should not be a defence.
Yes, but I take the view that manslaughter should not be excused on the ground of negligence. Negligence is, in itself, a culpable offence and ought to be subject to penalties. I accept that there will be some circumstances in which there is genuine negligence, but I believe that a defence of negligence would be argued in more cases than would be justified.
"liable to a fine not exceeding level 5".
Notwithstanding the points that the nationalists have made—which would have been better made in Committee—that would amount to £5,000 or so, and would apply to new clause 7 if it were agreed.
I and others referred in Committee to the scale of money laundering arising, for example, from the Nigerian incidents, in which billions of pounds were at stake. If someone involved in that exercise admitted negligence, perhaps on a plea bargain, would that mean that the maximum penalty to which they would be liable would be only £5,000?
I explained earlier—I am sorry if the hon. Gentleman did not understand me—that level 5 on the standard scale is for summary jurisdiction only. It is the maximum fine that can be imposed in a magistrates court on the standard scale. There is, therefore, no diminution of the force of summary jurisdiction in relation to other offences in the Bill. If the matter were to go the Crown court, however, the fine would be at large; it could be up to any level.
I very much welcome that sign of adjustment from the Conservatives. They were giving the impression that they were in favour of minimising the penalties. I am reminded of prostitutes in Glasgow who consider fines a business expense. I can envisage lawyers, accountants and others regarding a small fine of £5,000 as simply a business expense, so the penalty needs to be a great deal higher. No doubt accountants would write it off against tax.
I now turn to credit unions and the like. The idea that someone would come into a credit union with a plastic bag containing £500,000 and say, "I would like to lodge this." and the people at the credit union would not think, "There's something a trifle peculiar going on here", leaves me cold. I take a similar view of the excuse that has often been mentioned of the baby crying.
It is surely my hon. Friend who has talked not only about getting the Mr. Bigs, but about taking the heat out of the drugs industry and other evils at whatever level it occurs. No one was seriously suggesting high-level trade through a credit union, but the money that goes through credit unions in Redcar represents people's maximum savings and can equally represent big gains from drugs. The people who work in credit unions are subject to the same rules as the high fliers whom my hon. Friend detests so much and he will know that there are credit unions in Pollok, too.
Indeed there are, and I can tell my hon. Friend that if a Nigerian chief turned up with an address in Arden and a plastic bag with £2,000, never mind £2 billion, they would immediately be suspicious. So I have no qualms about the way in which the provision will apply to credit unions.
I find the "bad night" defence laughable, however. The idea that somebody had a bad night—the usual sympathetic context is that the baby kept them awake, though in financial circles it is more likely that they were out spending several thousand pounds on bottles of wine—and that the next day, because they had a sore head, they did not notice £500,000 flitting across the screen is laughable. We have to expect a certain degree of competence from people in the banking and financial sectors. Are we seriously expected to believe that the whole future of the British economy rests on the competence of the staff we love so dearly, yet the same staff could quite easily mislay the odd £500,000 as it flits across the screen? I think not. If we accepted that, the felons would pay for the nights out so that the excuse could be used.
We asked earlier how we could discover what went through people's minds when all these transactions were taking place. I have a pretty good idea of what is in the minds of accountants, lawyers, bankers and others who handle these ill-gotten gains. It is money, money, money. They do it for the money. We should be in no doubt whatsoever about it. We would be much better served in the House—and we would have been in Committee—if the Conservatives were prepared to accept that some people involved in those industries are corrupt, dishonest and guilty of offences. Instead, the Conservatives adopted the stonewall defence of trying to pretend that the problem did not exist.
I am glad to hear that Mr. Grieve—I apologise to him if I have misunderstood him—is in favour of collaborators of crime going to prison for substantial periods if they are caught. That is his position, as I understand it. Perhaps he is not quite as soft on crime as I previously understood him to be.
Finally, let me make two points—
Yes, about 40 per cent.
I was struck by the point made by Mr. Wilshire, who is no longer in his place, that if the regime were made too tough, people would launder their money elsewhere. That seemed to be his general point. In those circumstances, we have two alternatives. The first is to reduce our standards so as to attract such trade; the second, more reputable, option is to try to raise standards elsewhere in the world. The fact that the introduction of the highest possible standards might lose us some business is no reason whatever for allowing our standards to be watered down.
Finally finally, I have made my entire contribution without mentioning more than twice the absence of Scottish National party Members from the Committee. That must be a record.
As the House seems content to spend the whole of this part of the debate discussing one group of amendments, I wanted to intervene before we ran out of time.
I accept the point made by Mr. Grieve that the amendments might not be perfectly drafted and that they are meant to be read as a whole. I do not want to descend into any nit-picking arguments about that; rather, I want to address the major issue that he has brought to the House, which we also discussed at great length in the Standing Committee.
The effect of the amendments taken together would be to split the failure to disclose offence into two separate offences. There would be different tests for each offence and a lower penalty for someone charged with having "reasonable grounds" to know or suspect—but not with actually knowing or suspecting—that money laundering was going on and thus needed to be disclosed.
The negligence test is one of the key proposals in the Bill. It reflects the Government's commitment to strong anti-money-laundering measures across the United Kingdom. Such measures, including the new negligence test, are fully justified against the background of several money-laundering cases that have taken place in the City and which were not reported to law enforcement. It is in the interests of the City and its financial reputation that we demand the highest standards of diligence.
In Committee, I gave a commitment that I would look again into the drafting to see whether there was any merit in having two different offences—the issue that the hon. Member for Beaconsfield has raised again today. I considered the matter at great length with officials in the Department, but I remain of the opinion that the negligence test would be most effective in a single offence, as currently drafted.
An abundance of legal ability was available to me from members of the Committee. Some hon. Members suggested that the handling of the indictment could be strange and difficult. However, it has been explained to me that the indictment can be handled even if the offence contains all three mens rea elements of knowing, suspecting and having reasonable grounds to suspect. Everything that has been said in the debate confirms my belief that the indictment can be dealt with in that way.
An indictment may contain only one offence or more than one mental element. There is no difficulty in specifying both in the indictment. There are precedents elsewhere, as the hon. Gentleman knows better than me.
The standard indictment for rape is that the defendant knew that the victim did not consent, or was reckless as to whether she did. In criminal damage, the indictment states that the defendant damaged property criminally with intent, or was reckless as to whether it would be damaged. The same situation applies in various circumstances. Courts and prosecuting agencies are able to deal with them in drawing up indictments.
I am concerned about the analogy with rape. Does my hon. Friend not agree that the same level of criminality is probably involved when a man rapes a woman recklessly and does not give a damn about whether she says yes or no, and when a man rapes a woman knowing that she has not said yes? It would therefore be perfectly straightforward to charge the cases as alternative states of mind. We are talking in the Bill about two levels of criminality. Is it not difficult to see how a jury could inform a judge about the level of criminality of which it had found a person guilty?
I was trying to talk about the mental element of an offence. I think that my hon. Friend accepts that that is dealt with elsewhere.
I shall move on to how the matter will be dealt with in sentencing. As I said, the indictment could be particularised, or it could state that the defendant knew or suspected, or had reasonable grounds to know or suspect. Those are the three mental elements, but a judge might impose a sentence on the basis that only negligence had been established. That would depend on the evidence. As my hon. Friend Mr. Stinchcombe noted, we are effectively leaving it to the discretion of the courts to decide, as they will be able to take account of the evidence provided.
The key argument against splitting the offence is that the prosecution would then have to decide whether to risk basing an indictment on knowledge, or suspicion. That is the problem with the current regime—it is very difficult to prove subjective knowledge. It is highly likely that prosecutors would go for the lesser offence if the proposed single offence were split, as the offence containing the subjective tests would be used only rarely, if at all.
I confess that I do not see that. The new clause is drafted in a way that allows indictments to include alternative counts. For instance, a prosecutor may say to a jury, "Our view is that the accused acted wilfully. However, if you conclude that he did not act wilfully, we shall say that the evidence is that he acted negligently." So I simply do not see the problem with having two separate offences. Both can appear as two counts on the same indictment.
I do not accept the hon. Gentleman's argument that there is a major difficulty with the Bill as drafted. It would be far more problematic to require the prosecutor to decide at the outset how to frame an indictment, and to make him choose then between the objective and the subjective test. That would lead to the power being under-used. It certainly would not lead to what is central to the argument—a step change in the quality of staff in the regulated sector in this country, and the way in which that sector operates with regard to money laundering. I contend that history shows that that step change is badly needed.
Does my hon. Friend accept that the real difficulty with the new clause is that it would lead to alternative charges being placed on the indictment, and that the inevitable result would be plea bargaining? The less serious offence would regularly be accepted, especially if it involved only the imposition of a financial penalty.
I have said that that would be the dilemma facing the prosecutor. I believe that the hon. Member for Beaconsfield has accepted that that is what would happen, and that that is what he wants.
Why does the Minister insist that the prosecutor should make the decision? Surely such a decision is best made by the jury after hearing all the evidence given in court under oath.
The hon. Gentleman must realise that the jury can do precisely that under the Bill as it stands. The mental elements can be taken into account by the court and by the judge in sentencing. There is not a problem in that respect given the way in which the Bill is structured.
As far as the sentence is concerned, the judge will weigh up the case and form a view about the mental element and take that into account when deciding the level of penalty.
Is not the difficulty about the judge deciding the level of criminality so that he can impose the penalty that the jury might decide that the accused knowingly committed an offence while the judge sentenced him only for doing so negligently, or the other way around?
I think that the courts are capable of dealing with this offence in the way that the Bill provides, and I believe that my hon. Friend agrees. They can decide on the element of mens rea present in the offence and take account of that when a sentence is imposed. I do not think that it is beyond the capacity of the courts to do that.
We were asked to look at defences. Representations have been made to everyone involved in the Bill about the impact that the offence could have on junior staff. Concern was expressed that people might not know or suspect that money laundering was taking place because they had not had the necessary training. There is an obligation to provide training for staff, and a company could be prosecuted for not doing so. We thought that that was adequate to deal with the situation, but because of concerns that have been raised both in the House and by organisations making representations to us, we brought forward Government amendment No. 93 to cover the situation and provide the defence that no training was given. The measure was discussed extensively in Committee.
Government amendment No. 93 will accordingly provide the defence that the employer had not provided staff with the relevant training. The training that we have in mind is that which all employers are required to provide to their employees by reason of regulation 5 of the Money Laundering Regulations 1993. We intend to use an order-making power to enable the Secretary of State to specify the kind of training that will apply.
As well as giving us an insight into some of his deeper thoughts about whether Traceys and Wendys could ever be thought of as company managing directors, Mr. Ruffley asked whether there was a problem with clause 330(5). He wanted to know that the provision in paragraph (b) was not dependent on that in paragraph (a). It is not. A professional legal adviser would be protected and would not have to prove that he had a reasonable excuse for not disclosing information.
Doubtless Mr. Ruffley thought that Tracey was a man. Tracey is a man's name and that is why the hon. Gentleman believed that he might be a managing director.
We have discussed what constitutes a "reasonable excuse" under clause 330(5)(a). Vera Baird suggested earlier that a bad day or a problem with one's children might constitute such an excuse. I hope that I do not misrepresent her. Do such reasons constitute a reasonable excuse? If not, will the Minister give examples of things that might qualify?
No. I have not managed to respond to the intervention of Norman Baker yet. I cannot take another until I have done that. I do not want to stack up interventions, as the hon. Member for Bury St. Edmunds provokes me to do.
My hon. Friend the Member for Redcar sought some assurances about clause 330(5)(a). The offence for which the clause provides applies both when the person knows and when the person has reasonable grounds for knowing. Subsection (5)(a) provides a defence of a "reasonable excuse" for not disclosing. The examples that my hon. Friend gave would be raised with the prosecutor. She gave an amusing example of a police officer behaving obtusely or unreasonably, but the issues that she raised could be considered by the prosecuting authorities and accepted as reasonable excuses if they believed that they crossed the requisite threshold.
My hon. Friend also asked whether we could consider a code of practice. I am happy to continue the discussion with her if she wants to pursue the matter. However, I fear that introducing such a code could entail problems; it might be deemed to interfere with the independence of the Crown Prosecution Service. The CPS needs to decide whether to prosecute, taking all the facts of the case into consideration; it would not necessarily want to be bound by a code of practice that was imposed on it.
It is kind of the Minister to give way. I cannot yet read the record, so he must correct me if I am wrong, but in his earlier response to points about clause 330(5) he appeared to suggest that a person did not commit an offence under the provision if paragraph (a) or paragraph (b) applied. However, the clause provides that paragraphs (a) and (b) must be taken into account.
I must also repeat an earlier question: what constitutes a reasonable excuse?
The court would decide what constituted a reasonable excuse. I was explaining that in response to the points raised by my hon. Friend the Member for Redcar. The prosecuting authorities will decide whether to take a case forward. If they decide to do so, the court will determine whether the excuse is reasonable. We are not trying to fetter the court.
The word "and" does not link paragraphs (a) and (b) of subsection (5). The word "or" is implied, although I accept that it is not stated. I assure the hon. Gentleman that, if he reads the subsection carefully, "or" is implied. The professional legal adviser does not therefore have to be covered by paragraph (a). He—I should emphasise "he or she" because of the hon. Gentleman's difficulties—does not need the reasonable excuse for which paragraph (a) provides.
No, I shall not give way to the hon. Gentleman again. We are short of time, other hon. Members wish to speak, and we need to discuss other amendments before 6.7 pm. I hope that Government amendment No. 93 makes the clause acceptable to hon. Members, and I ask the Opposition to withdraw the new clause.
I intended to make only one narrow point in an intervention, but I have become increasingly irritated as the debate has progressed and I now have a number of issues to raise. I shall, however, try to give hon. Members a lesson in brevity in so doing and I hope that it is well taken.
That is rich coming from the hon. Gentleman.
On new clause 7 and the "bad night" defence, which at first I thought was a reference to Mr. Amess, I declare an interest as the father of an 11-month-old son who is cutting his first set of teeth. Vera Baird made her point well. The Minister yesterday invited us to sympathise with the two families living next door to each other in a terraced street, one of which was hard-working and struggling—perhaps failing—to make their mortgage payments. Overnight, his attitude has changed and it seems that those are the very people he is trying to persecute. The Minister and Labour Members must accept that a substantial number of ordinary hard-working low-grade employees are going to be caught by the Bill's provisions, and there is an inequity in that. Mr. Davidson drew parallels with careless driving. I do not want to get into that except to place it on the record that his points are absolute mince.
Some hon. Members mentioned alternative verdicts. That is complex. There are various ways in which alternative verdicts can be returned. If knowingly and negligently are alternatives in the same offence, a sheriff and possibly a jury can convict under deletion. I accept that that is open to them. However, the Minister must be aware that it is sometimes difficult to get a jury to convict under deletion. Instead, we get a conviction for the whole offence. As the hon. Member for Redcar said, that can result from a misunderstanding between the jury and the judge over conviction and sentence. There is much to commend in the prosecutor having the option open to draft the indictment with the negligence offence as an alternative.
"guilty of an offence under section"— whatever it is to be—
"shall be liable to a fine"— that is a term of art known to Scots law—
"not exceeding level 5 on the standard scale."
The hon. Member for Angus should know that level 5 on the standard scale is a term of art that is to be found in chapter 46 of the Criminal Procedure (Scotland) Act 1995. He said that the standard scale is not specified. That is not necessary in any piece of legislation that I have come across in practice and I see no reason why it is necessary in this regard.
Mr. Grieve did not know the separate scales. The Bill does not specify the scale, and it can contain differences. [Interruption.] Mr. Davidson makes a point about the Committee. Let me explain that amendment No. 175 is a Tory amendment. I support the Bill as agreed by the Scottish Parliament under the Sewel motion. Why should I table an amendment in the terms of amendment No. 175 in Committee or anywhere else?
I take it that the hon. Gentleman has nothing new to say. Section 225(1) of the 1995 Act refers to the "standard scale" in inverted commas. It is a term of art known to Scots law; it should even be known to a solicitor from Angus. I do not understand his problem.
I, too, shall be brief.
I accept that it is in the interests of the City of London that it is not seen as a soft touch for money laundering. I had intended to speak at some length on the money laundering provisions, but I obviously do not have enough time to do so. Instead, I shall make a brief point on over-regulation in the broader sense, which has the effect of exporting jobs. That has been the history of the City of London and all other financial centres in the post-war era. One reason why the Eurobond market is firmly in London is because of strict regulation in New York by the Securities and Exchange Commission in the 1960s and beyond. We should all remember that important lesson when we propose regulations.
On new clause 7, a multitude of hon. Members spoke about the failure to disclose. When we were in Committee, it was understood that we should distinguish between the regulated and the non-regulated sectors, which goes to the heart of the point made by Mr. Stinchcombe. I am worried, however, by the nature of the debate advanced by the Scottish mafia, the hon. Members for Glasgow, Anniesland (John Robertson) and for Glasgow, Pollok (Mr. Davidson), because they are looking at the entire matter from the point of view of their constituents who have suffered from drug offences and drug users. I understand their deep, honest and genuine concerns about that, but by throwing the book at anyone who could possibly be connected with money laundering we run the risk of inflicting great injustices. For that reason, new clause 7 is a sensible compromise in the circumstances.
There is a lack of understanding about the highly pressurised environment in which junior staff work in the City of London and the responsibilities that are placed on them. It is simplistic for the hon. Member for Glasgow, Pollok to suggest that every money laundering act will involve an individual turning up with a plastic bag full of tens of thousands of pounds. The reality is that hundreds, if not thousands, of transactions take place on a daily basis on the trading screens of City of London money brokers. Junior staff in particular who are not accustomed to working in such pressurised environments may unknowingly let things slip through the net.
Is it not important in such circumstances that the institutions have systems in place? Would not the offence encourage organisations and investment institutions to improve their systems that have failed so markedly?
I appreciate the hon. Gentleman's point. Clearly systems will be in place. However, if they become compliance and regulation-oriented, there is a risk that we will lose a significant amount of business because a raft of large global financial organisations will decide not to continue to work in the City of London. I accept that a balance needs to be struck. We do not want London to be a soft touch for money laundering or other financial offences. I hope that that is clear.
The hon. Member for Wellingborough is a barrister. It strikes me that until recently barristers could not be found guilty of negligence, a decision based on public policy grounds because of the independence of the Bar. If we put in place a major new criminal offence that allows of negligence, that will bring with it the juggernaut of state controls exercised by the Assets Recovery Agency. That is not a fair balance. There is a public policy issue at stake. Those criminal sanctions should be applied only in the most extreme cases if someone has merely been negligent.
I am not entirely convinced by the plea-bargaining argument that has been advanced, but I fear that there may be something in it. If new clause 7 is accepted, junior staff might more easily be found guilty under the negligence provisions. Proof would be easier to establish in that regard, and the courts would also bring to bear a certain amount of sympathy if this option were open. Senior individuals who turn a blind eye to, or actively collaborate with, money launderers will surely feel the full force of clause 330. The provision suggested by my hon. Friend Mr. Grieve is therefore sensible, and I hope that serious consideration will be given to it, either here or in the House of Lords.
This issue has given rise to an interesting debate and excited a lot of comment in the House, just as it did in Committee. It is with some regret that I say, however, that the further our debate has progressed, the more worried I have become. It became clear from the Minister's response—via his officials—that he envisages a single count on an indictment, with the two offences rolled together. Even under the Bill as drafted, it is technically possible to have two counts, but the policy view is clearly that the offence is a single offence. That worries me all the more, and leads me to believe that new clause 7, which would establish a separate offence and penalty for negligence, is the better option.
I am grateful to my hon. Friends the Members for Bury St. Edmunds (Mr. Ruffley), for Cities of London and Westminster (Mr. Field) and for Spelthorne (Mr. Wilshire) for their contributions, and to other Members who made the same point. I am afraid that the Minister has not persuaded me, and I intend to press new clause 7 to a vote.