Clause 435 - Crown servants and regulators

Proceeds of Crime Bill – in a Public Bill Committee at 5:00 pm on 5 February 2002.

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Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 5:00, 5 February 2002

I beg to move amendment No. 645, in page 253, line 4, leave out subsection (3).

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

With this it will be convenient to take amendment No. 646, in page 253, line 8, leave out subsection (4).

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The clause gives powers to the Secretary of State to provide that provisions apply to people who are in the public service of the Crown. That is an important provision and I support it, because such people could commit a money-laundering offence or prejudice investigations—although it would perhaps be surprising if that were to happen.

However, subsection (3) states:

The Secretary of State may by regulations provide that section 324 does not need to apply to persons who exercise functions—

(a) as or on behalf of supervisory authorities;

(b) as investigators.

Clause 324 addresses failures to disclose in the regulated sector.

Clarification is needed about the reasons for providing that power for the Secretary of State. What category of person would he seek to exempt, and why? I understand why he might wish to exempt investigators. However, the Committee should be concerned about exemptions for supervisory authorities. It might be suggested that the rules will be laxer in respect of them than in respect of other organisations, because although a supervisory authority might have a good reason for not wishing to make a disclosure, it might also make a disclosure in the usual way.

Photo of Mr Nick Hawkins Mr Nick Hawkins Conservative, Surrey Heath

I agree with my hon. Friend's points. They are important, and I hope that the Minister will respond to them.

I also wish the Minister to respond to a related point. The Government want to take a power for the Secretary of State to make regulations in the future, but would it not be simpler to declare in the Bill that the provisions will apply to Crown servants from the date that the Bill comes into force? Why wait until another stage? Why introduce subsequent regulations? Given that Opposition Members accept that there might be reasons why the provisions should cover Crown servants, why should they not cover them ab initio?

It makes me uncomfortable when Secretaries of State of any Government are given wide powers to do things at a later date—particularly if those regulations might be introduced by the negative resolution procedure. It would surely be better to specify in the Bill either that the regulations will apply from the beginning, or that they will be subject to the affirmative resolution procedure, so that the House can debate their exact terms properly.

Photo of David Wilshire David Wilshire Conservative, Spelthorne 5:15, 5 February 2002

The role of Crown servants is really a stand part issue, to which I should like to return to as a separate debate. The points that my hon. Friend the Member for Beaconsfield made are important and should be considered thoroughly. If I understand the explanatory notes correctly, we are being told that we can exclude the supervisory authorities because other legislation covers their conduct and makes it possible to take action against them.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

May I help the hon. Gentleman? I am re-reading the amendments, and between them they cover the clause. Debating the amendments will cover the clause, so any Member who wants to make a stand part point must do so in the context of the amendments.

Photo of David Wilshire David Wilshire Conservative, Spelthorne

Thank you, Mr. McWilliam. In that case I shall almost certainly return to the other point that I mentioned when I have finished this one, which relates directly to subsection (3).

The argument used in the explanatory notes is that we do not need the power because the Money Laundering Regulations 1993 deal with the matter effectively. However, I am not persuaded that that is an effective argument that the Bill should not cover them. We have talked about making absolutely sure that we close every possible loophole, and do

everything possible to ensure that the intentions behind the Bill are put into effect. A regulator or supervisor might find a reason why the Money Laundering Regulations should not apply, or, if they did, why they did not cover the conduct for which the person is being criticised, or for which someone was contemplating taking action against the supervisor.

I cannot believe that applying the provisions would negate the opportunity to refer to the 1993 regulations if that were the preferred route. However, if that were to fail, and the Bill could cover for the failure of that route, action could be taken against people who had broken the law—yet we have excluded the possibility of using the Bill to deal with such matters.

Unless the Minister can persuade me that under the amendment action could not be taken, or that it would harm the authorities' ability to take action under the regulations, I believe that the amendment is right and that we should have the fail-safe mechanism of using the powers as well as, or instead of, the 1993 regulations. I therefore believe that this is more than a probing amendment. It is sensible, and unless it harms other routes, or the Minister can give me a reason for doing so, I cannot object to it.

My other point, which would have featured in a stand part debate, is that I am amazed to discover that Crown servants are not subject to the definition of criminal offences in exercising their duties as Crown servants. If that is the current state of play, perhaps I should have known that long ago. We are stating in this case that we should ensure that Crown servants can be proceeded against. Earlier, we debated order-making powers to extend legislation and to introduce new legislation. Perhaps this is an opportunity to introduce a provision to ensure that Crown servants are accountable under the law for everything that they do, not merely money laundering. Can we apply the laws that apply to the rest of us to Crown servants, too?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

The order-making power in clause 435(3) enables the Secretary of State to make regulations to disapply the offence of failing to disclose that another person is engaged in money laundering under clause 324 to any supervisors in schedule 6. They include persons employed by the Financial Services Authority and the Bank of England.

The amendment has caused us to reconsider the rationale for clause 435(3) and (4). The provision is not new. It is also in section 36B(1) to (5) of the Drug Trafficking Offences Act 1986 and section 93G(1) of the Criminal Justice Act 1988. There are also the Drug Trafficking Offences Act 1986 (Crown Servants and Regulators etc.) Regulations 1994, which were statutory instrument No. 1757. Broadly, that regulation disapplied section 26B of the 1986 Act, which was inserted by the Criminal Justice Act 1993, from a list of supervisors. It was needed, and was used to place an obligation on the director of National Savings. The provision was disapplied in respect of appropriate people.

The principle underlying the present regulations is that there is already a separate requirement under

regulation 16 of the Money Laundering Regulations for supervisors to make disclosures to a constable. It was therefore appropriate that the offence of failing to report drug money laundering was not necessary. It was considered that it would be perverse to apply the offence to investigators who were also constables or persons authorised to undertake money-laundering investigations in the new law enforcement capacity.

The Money Laundering Regulations, which were amended last year, continue to place the same requirement on supervisors to report suspicions that another person is engaged in money laundering, so we can be satisfied that there is no loophole. It seems unlikely that a person falling within part 2 of schedule 6 who is acting in a supervisory capacity would be engaged in a business in the regulated sector, so clause 324 would not apply to such persons in any event.

That was a complicated run round all the existing legislation. In any event, there is some inconsistency in asking for reports to be made under regulation 16 of the Money Laundering Regulations and under the Anti-terrorism, Crime and Security Act 2001, but to exempt them under this clause by means of regulations.

As for investigators, where such officers know of or suspect money laundering, they may wish to act on that intelligence themselves, either through regulatory penalties or using their own prosecuting powers. In principle, however, the National Criminal Intelligence Service should still be apprised of such information, as it might be linked to other intelligence.

Having reconsidered the clause, I am not altogether convinced that there is a need to provide blanket immunity to law enforcement authorities in the way envisaged by the Bill. We are therefore grateful to the hon. Gentleman for giving us an opportunity to reconsider the clause, which raises several questions. The best that we can do is to offer to have further discussions with the supervisory authorities and NCIS to see whether the provision still serves a useful purpose. I thank the hon. Gentleman for moving the amendment, because he has highlighted a potential difficulty in the Bill. However, in the light of my comments about reconsidering the blanket exemption, I now ask him to withdraw it.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I thank the Minister for his comments. I am glad that the matter has been highlighted and I will be happy to withdraw the amendment. When I first looked at the subsection, the thought that immediately came to mind was the old Latin tag, ''Quis custodiet ipsos custodes?''—who will guard the guards? On principle, I believe that exemptions are undesirable, although I am prepared to accept that there may be circumstances in which the situation would become absurd. I am glad that the matter will be considered further, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 435 ordered to stand part of the Bill.