The clause introduces a new provision into the Proceeds of Crime Act 2002. As the action plan for anti-money laundering also set out—it seems to make a regular appearance—the Government see public-private partnership as central to tackling money laundering and terrorist financing. A major part of that approach is to provide support for the effective exchange of information, both within the private sector and between the public and the private sectors, to increase our collective knowledge of threats and vulnerabilities, to help the regulated sector to protect itself and to improve the quality of the UK’s financial intelligence.
Both the private sector and law enforcement agencies hold significant amounts of information that can be of great use to each other. The private sector holds data on financial transactions and related personal data; law enforcement agencies hold intelligence on money laundering and terrorist financing. When those data have been shared, there have been benefits to both sectors.
This model has been piloted through the joint money laundering intelligence taskforce—a unique partnership between a number of major banks and the National Crime Agency. The pilot has demonstrated that information sharing supports effective action against money launderers, and we want to build on the success of that work and encourage information sharing, particularly to tackle serious and organised crime. The nature of money laundering is that illicit funds move across the regulated sector and through business structures, and sometimes only the regulated sector entities can see how those flows, or the interactions between money launderers, occur. By providing better information drawn from across the sector, the NCA will have a better picture of how money launderers abuse the regulated sector.
The clause will allow members of the regulated sector to share information between themselves, on a voluntary basis, where they have a suspicion of money laundering. It will allow the regulated sector to submit joint suspicious activity reports, providing the whole picture of complex money laundering schemes to the NCA in one comprehensive suspicious activity report. It will also allow the NCA to seek information about money laundering on a voluntary basis from across the regulated sector.
We believe that a number of significant benefits will flow from the new proposal. It will allow better information flows within the regulated sector, and between the regulated sector and law enforcement agencies, generating better intelligence. It will also support the development of a common understanding of the highest priority risks, and will provide the basis for the focused and efficient use of public and private resources on money laundering and terrorist financing threats.
The clause provides immunity from civil and criminal liability for those in the regulated sector who share information in good faith and for that purpose only. That is a significant level of immunity, and we recognise that there will be concerns in relation to the sharing of personal data between private sector institutions. To allay those concerns, and to ensure that any interference in citizens’ rights is necessary and proportionate, we have proposed that such sharing should be done only where there is a suspicion that money laundering is taking place.
Suspicion is a test that is understood by the courts, and it forms the basis on which much of the anti-money laundering activity set out in the Proceeds of Crime Act 2002 is undertaken. While we recognise that that does not allow as much information sharing to take place as some would like, we believe that it strikes the right balance between the benefit to be derived from the sharing of information, and the protection of individuals’ data. There is a balance to strike and we will continue to consult with the banks and others.
Any organisation sharing or receiving data will also be required to handle the data in accordance with their existing data protection requirements. I stress that the sharing of data is entirely voluntary. That in itself provides an additional level of protection, as a regulated sector company will not be required to provide information to another company if it does not know or trust it.
I described joined-up thinking in my remarks on amendment 2. The Minister has reassured us. I have seen that some people have civil liberties concerns, but he has told us that the sharing of information will be a last resort in extreme cases, and that it will happen largely on a voluntary basis anyway.
The Government action plan on money laundering said that what is needed is a
“collaborative approach to preventing individuals becoming involved in money laundering.”
It discussed different agencies, supervisors and the public and private sectors working together. The clause does all those things, and we support it.