Clause 324 - Failure to disclose: regulated sector

Proceeds of Crime Bill – in a Public Bill Committee am 4:30 pm ar 22 Ionawr 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Amendment proposed [this day]: No. 487, in page 187, line 27, leave out from 'suspects' to end of line 28.—[Mr. Grieve.]

Question again proposed, That the amendment be made.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I remind the Committee that with this we are discussing amendment No. 524, in page 187, line 28, leave out 'suspecting' and insert 'reasonably believing'.

May I remind members of the Committee that the issue before them is extremely narrow? It concerns the difference between reasonable grounds for knowing or suspecting and reasonably believing. That is all.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

We are also speaking to amendment No. 487, which has a slightly broader interpretation, Mr. McWilliam. Our return to the Room three and a half hours after commencing the debate reminds me of our shenanigans on clause 321. I think that that took almost four hours to debate.

I was coming to the end of my comments when we rose this morning, but I want to express to the Minister our worry about an objective test for suspicion. No one would want professionals who genuinely suspect that money laundering is taking place to get off scot-free. However, providing for an objective test of reasonable grounds is more than a statement of the Government's desire for the greater duty of diligence to which the Minister referred.

This is a matter of degree, and there must be respect and a balance of judgment. I worry—particularly when dealing with professionals in financial services or the legal world—about a provision in respect of money laundering. There will no doubt be similar provisions in other areas of regulation that will, in effect, bar professionals from using their judgment. Above all, a person who asks for advice from a professional—

particularly a legal professional—wants a judgment. Such a person would not necessarily receive the right answer, because as we all know, such matters are open to interpretation. It would be a retrograde step for people in the financial services industry to be debarred from using their judgment because of fear, and have to take a restrictive and negative view.

I want to talk briefly about the provision being seen as a wildly anti-European statement.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

There is nothing wrong with that. [Interruption.]

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

I fear that what lies behind much of part 7—and it goes back to angst on the part of the European Union about the grand international movement of moneys—is, in part, a worry about state control. I expect that that issue will be raised by my hon. Friends.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I think that the hon. Gentleman is trying to introduce into the debate issues that are far broader than the import of the amendments, and I shall have to take a view when I decide whether we should have a clause stand part debate. If he wants to do that, that is fine, but he knows what the consequences may be.

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

On a point of order, Mr. McWilliam, I am sure that you have been briefed by Mr. O'Brien, who was in the Chair this morning. The debate was wide, and my hon. Friends and I know that it will have an impact on whether there is a separate clause stand part debate; indeed, my hon. Friend the Member for Beaconsfield (Mr. Grieve) and I will not seek much of a stand part debate. However, it is fair to point out that this morning we talked about some of the European implications that arise from seemingly minor amendments.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

That may be so, but I have to deal with the selection list in front me, on which are two amendments that are narrow in scope, as they merely deal with the test. I would be obliged if hon. Members would stick to that subject.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

I apologise, Mr. McWilliam, and I will say no more, as I appreciate that the Committee has to deal with seven groups of amendments under clause 324, and that other hon. Members wish to speak.

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

On point of order, Mr. McWilliam. It would be helpful if Hansard were to record that a few moments ago, in response to my hon. Friend's powerful contribution expressing his sceptical approach to European matters, the hon. Members for Glasgow, Anniesland (John Robertson) and for Glasgow, Pollok (Mr. Davidson) both loudly stated that there was nothing wrong with such an approach. To record that would be especially helpful, as the hon. Member for Glasgow, Pollok has made an appearance in today's press.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I fail to understand what opinions expressed in today's press by the hon. Member for Glasgow, Pollok—or by any other hon. Member—have to do with these two amendments. They are narrow in scope; they merely deal with the test of negligence.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

I thank my hon. Friend the Member for Surrey Heath (Mr. Hawkins) for his comments, and I will say no more, other than urging the Minister to give serious thought to agreeing to the amendments.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I rise to speak to the clause and the amendments—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. We are dealing only with this narrow group of amendments. I treat all Committee members in the same way, so the admonition that I gave to the hon. Member for Cities of London and Westminster (Mr. Field) applies to the hon. Gentleman, too.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I rise to speak on this amendment to this clause, because, unlike the hon. Member for Cities of London and Westminster, I do not believe that it merely raises points of degree. I believe that it raises both a point of principle and a drafting point, and I wish to bring both of them to the Committee's attention.

Although the clause creates a single offence of failure to disclose, that offence can be committed in one of two ways. The first condition is that a person

''(a) knows or suspects, or

(b) has reasonable grounds for knowing or suspecting,

that another person is engaged in money laundering.''

The first of those alternatives is a subjective test; someone would have to know or suspect that another person was engaged in money laundering. However, the second alternative is an objective test; someone would simply have to have reasonable grounds for knowing or suspecting—and that alternative would not be engaged at all if he did know or suspect, because that would be covered by the first alternative.

Therefore, we are now contemplating the creation of an offence of negligence whereby someone can be convicted of failure to disclose the information that another person is engaged in money laundering, when he did not know or suspect that to be the case, although objectively he should have been aware of it.

The purpose of the amendment is to remove that objective offence of negligence not only from this clause, but from the entire Bill. That raises a question about drafting: is it right to exclude that offence from the section? It also raises a question of principle: is it right to exclude it from the entire Bill? I wish briefly to take the Committee through both those issues in turn.

As for the pure drafting point, I believe that it would be a massive improvement if the clause were to cover only the offence of knowing or suspecting that another person was engaged in money laundering and failing to disclose the information that gave rise to that knowledge or suspicion. It should not cover the objective offence as well.

I say that for several reasons. If the words to which the amendment refers were deleted, and various other consequential amendments were made, that would leave a perfectly explicable, clear and certain offence of failing to disclose information when one knew or suspected that the person was engaged in money laundering. Essentially, the offence would have four elements. First, one would have to know or suspect that the person was engaged in money laundering, and

it would be irrelevant whether there were reasonable grounds for that knowledge or suspicion. Secondly, the information that gave rise to that knowledge or suspicion would have to have come to one's attention in the course of one's business within the regulated sector. Thirdly, one would have had to fail to disclose that information, even though one knew or suspected that the person was engaged in money laundering. Fourthly, there would have had to be no reasonable excuse for that failure to disclose. That would seem to create a sensible criminal offence, which would be perfectly clear and better worded than that in the Bill, which, by incorporating the objective offence within the same provision, creates inherent unnecessary confusion.

Taking those four elements in turn, the first condition of the objective offence is not that one knew or suspected but that one should have known or suspected that the person was engaged in money laundering. The second condition is that the information came to one's attention in the course of one's business, and the third that one never alerted anyone to that information. Of course one would not have alerted anyone to that information, because one would not be suspicious and one would not have known its importance. My hon. Friend the Member for Wirral, West (Stephen Hesford) and I had a discussion earlier about whether that meant that the condition could never be fulfilled. The fact is that it is never engaged, and is inevitably fulfilled. If one is not aware of the significance of the information, one will, of course, not disclose it—unless one routinely discloses all information whether one is suspicious or not, which would be absurd.

The fourth condition is also inherently difficult if we seek to define the objective offence within a single clause, as you would be exempt if you had a reasonable excuse for not disclosing the information. Intuitively, if the reason why you have not disclosed is that you did not realise that it was important, that is a reasonable excuse. However, that cannot be right, for all the reasons given by the Minister and by my hon. Friend the Member for Redcar (Vera Baird), because that would remove the offence altogether. You would automatically have a defence when you did not know or suspect, as that would be the reason for not disclosing, so the offence could not be established.

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

I agree with every word the hon. Gentleman says about the drafting aspects. I simply venture to suggest that the reason for such problems is that the model that has been used is section 52 of the Drug Trafficking Act 1994. That has been reproduced, with twists to try to encompass circumstances in which the test is not knowledge or belief but an objective test. That is why this part of the Bill is in such a mess.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I am grateful for that. I am not especially aware of the origin of the drafting, or why a statutory provision has been created in such a way, but however it originated, I agree that it can be improved by the kind of amendment suggested. Although that would improve the clause, it would not improve the Bill. I say that because as a matter of principle, there should be an objective offence, but it would be better

to create it in a separate provision of failing to disclose information when you had reasonable grounds for knowledge or suspicion that the other person was engaged in money laundering. A simpler objective offence would deal with the drafting problems that I mentioned.

We are dealing with the regulated sector, and with a massive social problem. We should therefore impose high burdens of professionalism on people who are dealing with the proceeds of crime in the regulated sector. Objectively, if there were reasonable grounds for suspicion of money laundering, people working in the sector should disclose that information. If they are not up to that standard, they should be penalised for that failure. It is not unusual to have such a standard of proof in a professional area, but we can take a better approach to the clause by dividing those two offences. You must make it clear that there are two offences that are committed in two different ways, and make it clear that there are two levels of seriousness, so that different penalties will probably be appropriate.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon 4:45, 22 Ionawr 2002

May I remind the Committee that the word ''you'' refers to me? That word was used many times in that contribution.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I remind the Committee that the hon. Member for Cities of London and Westminster has admitted that the purpose of his contribution to the debate was to water down the clause. We must ask ourselves whether the Opposition's amendments were designed to make it more difficult to catch misbehavers—or easier. It is absolutely clear that their proposals would make it much more difficult to catch and punish white-collar employees, workers or agents who are collaborating with drug dealers and other criminals, and without whom the said criminals could not be nearly as effective or as prosperous.

All major crime figures—certainly in the west of Scotland, and, I am sure, in the rest of the country—have staff such as drivers, enforcers and, in some cases, killers, but they will also have lawyers, accountants and bankers. Any person from those categories is just as bad as the others, inasmuch as he is supporting the actions of major criminals.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

Understandably and rightly, the hon. Gentleman has drawn attention to a problem. Major gangsters have an infrastructure of support that goes beyond the driver and the heavies to the white-collar professional. No doubt anyone who was collaborating would fall under the clause, even if our exemption were accepted. There is no question that those who know or suspect that money laundering is taking place would be guilty. We do not dispute that. What we are worried about is the idea of a reasonable suspicion that was not held not by the individual concerned, but objectively, some months or years later, by the court. Those who collaborate in the distribution of the proceeds of crime should rightly feel the full brunt of the law.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. That was rather a long intervention, but it had the merit of bringing the Committee back to the amendments, and I should be grateful if the hon. Member for Glasgow, Pollok would deal with them.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Indeed, it did, Mr. McWilliam—and in a helpful way, too. Subsection (2)(b) refers to

''reasonable grounds for knowing or suspecting''.

It ties together the argument about collaboration put forward by the hon. Member for Cities of London and Westminster in response to my point. The good old phrase, ''There are none so blind as those who will not see,'' is important. A substantial number of lawyers, accountants and bankers choose to turn a blind eye to the sources of the moneys with which they deal and from which they profit. It is only subsequently that that defence is tested in the court. They work their way through various arrangements, pretending that they did not understand, and it is only when they go to court that judgments are made about whether their actions were reasonable.

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

Obviously the hon. Gentleman appreciates that Opposition Members take the problem seriously, but we may differ from him about its scale. He has often expressed a general view about lawyers, accountants—and, indeed, Conservatives—but what does he regard as a ''substantial'' number of such professionals? Will he give us a ball-park figure of how many he considers are involved in such corrupt practices?

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. Can we come back to the amendment?

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Thank you, Mr. McWilliam.

I must point out that there was a mistake in the Hansard report of our last sitting. I was quoted as saying:

''I do not think that all lawyers are crooks and shysters, and not just because some of them are good lawyers.''—[Official Report, Standing Committee B, 17 January 2002; c. 1044.]

I actually said, ''not just because some of them are dead'', which is not quite the same thing.

I shall follow up the question of what a person should have known: the ''didnae ken'' defence. It seems that much depends on the culture of the institution in which the individual operates. If there is a culture of compliance, it is likely that there will be few difficulties. If the attitude were, ''We do not want to be involved in this in any way whatever'', problems would be minimised. However, that is not the culture, and legislation along the lines in the Bill is desirable.

The question of culture may seem to take us wider than the clause, but it is essential to allow us to make a decision about subsection (2)(b). May I refer to an article from a newspaper last year that was about exactly this point of culture? The headline is, ''Swashbuckler who just could not resist a deal'', and the article says:

''The SFA's public punishment of Sir Michael Richardson is a sad finale to a 50-year career in the City''.

Apparently, two independent tribunals found that Sir Michael was

'' 'no longer fit and proper' to work in the City.''

The question of his attitude is relevant to our debate.

That article appeared not in the Morning Star, Socialist Worker, or Militant, but in The Daily Telegraph, which is not known as an instigator of

the overthrow of capitalism—unless things have changed drastically. It is against the European Union, but not necessarily against all things. The article continues:

''It is a sad ending to a 50-year career that spanned Panmure Gordon, Cazenove, Rothschilds and Smith New Court. Sir Michael spearheaded privatisation, is known for his unswerving loyalty to clients and was once considered a brilliant judge of stock markets. He describes his knighthood in 1989 as the 'high point' of his career. Sir Win Bischoff, chairman of Schroder Salomon Smith Barney, says: 'I first came across him when he was working on a number of transactions for Hanson Trust. He had a very good read of the markets and an extremely good bedside manner. He handled his clients extremely well.' ''

I remind the Committee that Sir Win Bischoff was referring to someone being described as

'' 'no longer fit and proper' to work in the City.''

The article continues:

''Lord Walker, former energy secretary, describes him as 'a very tough, very good corporate financier'.

Richardson's public punishment has shocked his contemporaries. Sir Evelyn de Rothschild, chairman of the family bank, describes it as 'quite unnecessary. He should have been warned off or given a slap on the wrist, but to ban somebody for life at 70-odd is out of all proportion. He did a terrific job here at Rothschilds, and we owe him a tremendous debt of gratitude,' he adds. 'He has a strong character and he invigorated our corporate finance department.' ''

That is a pretty glowing reference from a person who is obviously very high up in the City. It may help the Committee if I outline what Richardson did, because it is relevant to the idea of a person who has reasonable grounds for knowing or suspecting.

The Daily Telegraph states:

''The fall started in October 1998 when, as vice-chairman of Hawkpoint Partners, then a division of NatWest, Richardson wrote a letter on headed notepaper on behalf of an acquaintance, Alan Shephard.

'I knew him well and he'd had three major jobs while I'd know him with top American companies,' Richardson explains. 'I believed in him.'

The letter declared that 'up to $350m' was available, subject to certain guarantees. Over the next 10 months, Richardson wrote at least four similar letters for differing sums. 'See how simple they are,' he says, placing two on a coffee table.

A letter from a financial company 'assured me that the money was there and, secondly, they told me that corporate business would come to me,' he explains. 'I was employed to get corporate business for Hawkpoint,' he adds defiantly.

Unfortunately, Shephard has a background. He was once accused of advance-fee fraud in America''—

I shall not go into detail and explain what advance-fee fraud is, as I am sure that Conservative Members have a greater knowledge of such matters than I do. The article continues:

''Richardson never sought approval from NatWest or Hawkpoint to write the letters. It was only when he introduced an acquaintance of Shepard's to NatWest, who 'opened an account and put £100m in it' that the alarm went off.

'NatWest immediately closed the account,' he admits. 'Then they came to me and said, 'we don't want you to introduce any more banking business from your acquaintance to NatWest,' which I didn't.' ''

The Daily Telegraph goes on to state:

''This is typical of the man. He cannot resist the deal, but nowadays his recollection of events may not be as clear he thinks.

There are glaring inconsistencies in his account. Friends suggest his memory is not what it was.''

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Yes, the Guinness. story. Could this be another remarkable case of a cure for Alzheimer's disease being discovered in the City of London?

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. First, reading extensively from documents is to be deprecated. Members should précis them. Secondly, the hon. Gentleman must focus on money laundering. He has not yet done so.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Thank you, Mr. McWilliam. I shall now refer specifically to City attitudes to having

''reasonable grounds for knowing or suspecting''

that people are engaged in money laundering. The City's culture is the key to this issue. The question is whether folk can be trusted in such matters—I apologise for my digression on the subject of Alzheimer's disease.

Mr. Field rose—

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

That is an appropriate touch of Alzheimer's disease.

The issue of culture has rightly been raised. The antics of Sir Michael Richardson have nothing to do with money laundering, although I understand that the hon. Gentleman wanted to make a particular point. In an earlier contribution I tried to make the point that the culture has changed greatly. Sir Michael Richardson was a major City figure and his referees, to whom the hon. Gentleman referred, were from a bygone age of the City of London. The culture is now different, and the City is much better regulated. Everyone who works in the City, and all Conservative Members, agree that we need more regulation, but the culture that the hon. Gentleman mentioned has moved on.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. If the hon. Member for Glasgow, Pollok were to go down that road, and if I were to permit it, we would start to discuss Barings bank and all sorts of things that are not at issue under the amendment. Will he concentrate on the offence of money laundering and the tests?

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

In my view, it all comes down to whether someone

''has reasonable grounds for knowing or suspecting''.

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

I want to understand the case that the hon. Gentleman was making before my hon. Friend intervened on him. Is he saying that in the case about which he quoted extensively, the £100 million was part of a money-laundering exercise? If so—and that is what I thought he might be suggesting—is not the fact that NatWest immediately closed the account and said that it would not take any more funds an example of the system working?

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

That is an example of the system working, and I am glad that it happened. However, later in the article it becomes clear that some other arrangements were made, and in particular, letters were written, and those form evidence that the system

was not working. That is why I am unconvinced by the assertion by the hon. Member for Cities of London and Westminster that that is all in the past. There are further relevant references from individuals who are still active. The continued existence of that culture makes me wonder whether the City, and professions such as law and accountancy, can be trusted to police themselves.

Yesterday I brought to the Committee's attention a quotation that indicated that lawyers seemed to believe that money laundering regulations did not apply to them. That culture still exists.

May I also touch on the point about staff, Mr. McWilliam? I was struck that Conservative Members expressed concern for cleaners, as the Conservative party has not expressed concern about them in many other ways. I suspect that that point was raised as a red herring, and I am glad that the Minister dealt with it as he did.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 5:00, 22 Ionawr 2002

The hon. Gentleman is wrong to lack anxiety on that subject. The Minister might be able to satisfy us that schedule 6 is drafted in such a way as not to cover such people. Before lunch, I said to him informally that I would be delighted if they were not so covered, but that my initial reading of the schedule had not suggested that that was the case.

I find abhorrent the idea that executives or staff who have nothing to do with their organisations' regulated functions should be criminalised as a result of, for instance, overhearing a chance disclosure, and not knowing what to do about it. I inferred from the Minister's remarks that he shared my view about that, which is why I raised the point that I did.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. Can we save that subject for the debate on amendment No. 97? We have not got there yet.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Thank you, Mr. McWilliam.

I think that the hon. Member for Surrey Heath wished to say something. Has it been covered by the comments of the hon. Member for Beaconsfield?

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

No, I wanted to make a slightly different point—although of course I agree with what my hon. Friend said.

The Minister is incorrect: schedule 6 is not drafted to exclude cleaners. The hon. Gentleman believes that Conservative Members do not care for anyone outside the professions and the City of London, but I have frequently raised issues on behalf of blue-collar workers in connection with a variety of legislation.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

The hon. Member for Surrey Heath, the cleaner's friend! I will bear that in mind.

It is important to discuss the degree of responsibility of junior staff, because it raises serious issues about having reasonable grounds for knowing or suspecting. If someone walks into the building with an enormous bag full of used fivers, should it be a defence that reporting that is the responsibility of a senior member of staff? I understand the point about back-office staff; some of them will have responsible jobs and some of them will not. However, everyone

involved in the chain of transactions ought to have a separate and individual responsibility for reporting.

I would much rather the same transaction were reported twice or thrice than not be reported at all. What happens if everyone in an organisation leaves the responsibility for reporting a transaction to someone higher up the chain, and that person deliberately chooses not to report it, claiming that they had no reasonable grounds for knowing or suspecting, even though that is patently untrue? They will be guilty of an offence, but the transaction will not have been reported. That highlights why subsection (2)(b) is crucial; it refers to having

''reasonable grounds for knowing or suspecting''.

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

I understand the hon. Gentleman's point. He believes that it does not do any harm to have multiple reports, and says that he would far rather a suspicious transaction were reported twice or thrice than not at all.

We agree that there ought to be a report, where there is proper ground for one. However, if the policy that the hon. Gentleman advocates, which would lead to multiple reporting, were introduced, and it created a huge bureaucratic empire in NCIS, caused the City of London to grind to a halt, destroyed the economy of this country and had all the City's business going to Frankfurt or Paris, what would he think about that?

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. Can we come back to order? We are not dealing with reporting. That is covered under a different part of the clause. Will the Committee deal with the narrow point with which it is supposed to be dealing, and not wander off in all sorts of directions? We are dealing only with amendments Nos. 487 and 524. The debate will go no further.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Indeed, Mr. McWilliam. I am glad that you have dealt with the matter and rightly rebuked the hon. Member for Surrey Heath, who was attempting to lead me down all sorts of highways and byways. A few more rebukes to him would not go amiss.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. It strikes me that the hon. Gentleman does not need much leading.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Have I not followed the Minister's lead throughout the debate?

Finally, I turn to the issue of—

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

In common with most of my hon. Friends, I give ''finally'' a particular parliamentary and political meaning, which is that we are about 40 per cent. through our speeches, but we want to give our audience hope.

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

Before the hon. Gentleman says ''finally'' a second time, I must point out that we are not blessed in this Committee with the presence of the acknowledged parliamentary expert, the hon. Member for Southwark, North and Bermondsey (Simon Hughes), who usually says ''finally'' about six times in each speech.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I have already ruled in a previous Committee on the language used by the hon.

Member for Southwark, North and Bermondsey. Members of Committees must use language that the Chairman understands—and when that hon. Gentleman says ''finally'', we understand exactly what he means.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. I must first say that the hon. Gentleman was not a Member of Parliament when I made that ruling in respect of the hon. Member for Southwark, North and Bermondsey.

Photo of Norman Baker Norman Baker Democratiaid Rhyddfrydol, Lewes

I should point out for the record that my hon. Friend the Member for Southwark, North and Bermondsey does not say ''finally'' on a regular basis. He may say ''seventeenthly'', but not ''finally''.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

That is a new one on me.

It is helpful to have a view from the Liberal Democrats. We had only one Liberal Democrat member of the Committee at yesterday's sitting—and if I remember correctly, he had two opinions: the hon. Member for Orkney and Shetland (Mr. Carmichael) was able to have a discussion with himself. It was noticeable this morning, when two Liberal Democrat Members were on the Front Bench, that they were unable to reach a view and abstained on the one Division that was held. Surely with two Liberal Democrat members in the Committee, at least four opinions could have been advanced. There are now two Liberal Democrats in the Committee again, but it is significant that one is sitting on the Front Bench and one on the Back Bench. I am not clear whether that means that one of the four of them has a casting vote—but I shall not continue with that line of argument, Mr. McWilliam. In fact, I shall not mention it.

The hon. Member for Henley (Mr. Johnson) is absent from our proceedings at the moment. Following what he said yesterday, as is recorded in column 1021 of the Hansard report, about the similarities between his constituency and Pollok, I understand that he is searching for the Pollok regatta, but has not been able to locate it yet.

In the light of my potentially relevant remarks, I urge the Committee to reject the amendment. I draw again to the attention of my colleagues the fact that I regret that the Scottish nationalists are absent from our proceedings.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

May I helpfully remind the hon. Gentleman that the Scottish nationalists did not make any requests to be members of the Committee?

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Goodness me, I had forgotten that. I am grateful to the hon. Gentleman. I think that it was the hon. Member for Orkney who drew that matter to my attention yesterday, and it is the hon. Member for Shetland who is telling me about it today. It is a particularly helpful and constructive point.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

To follow up the hon. Gentleman's earlier point about the meaning of language, will he

make it clear that when he says ''yesterday'', he means last Thursday?

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

It was the previous day in Committee, so I assumed that as we live a virtual universe here, that was the appropriate term to use. I am glad that somebody from Orkney and Shetland has been able to contribute constructively to our debates, and I look forward to his career on the Liberal Democrat Back Benches.

We have heard wonderful words from the hon. Member for Cities of London and Westminster, but the fact is that the Conservative proposals would water down the provision. There are no ifs or buts: they are concerned not with strengthening the provision or with finding other ways of catching people, but with watering it down. That is a disgrace. If the Conservatives had tabled amendments that attempted to toughen up the provision, we would have listened to them. The hon. Gentleman says that he represents, among others, some of the most corrupt people in the country—[Interruption.] I hope that I am not being too subtle for the Liberal Democrats; perhaps I should explain my point later on. In any event, we should mark their cards accordingly, and I look forward to reporting the matter as widely as possible.

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

During the intervention by the hon. Member for Orkney and Shetland, I was struck by the thought that the hon. Member for Glasgow, Pollok—who is, after all, a politician well versed in his skills—had forgotten that during an earlier intervention the hon. Member for Orkney and Shetland had told him that the SNP had not asked to serve on this Committee. Yet it is such forgetfulness that we plan, through the Bill, to criminalise. The hon. Member for Glasgow, Pollok might like to reflect on that point, and on whether making references to the SNP a criminal matter within the Labour party—sometimes one feels that they already are—might not be too onerous and draconian a step.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

That is a helpful point. The amendment would delete the phrase

''has reasonable grounds for knowing or suspecting''.

Have we reasonable grounds for knowing or suspecting that the SNP did not ask for a place on this Committee? [Hon. Members: ''Yes.''] Perhaps we have, and that undoubtedly should be an offence. I do not want to labour the point, but it is worth drawing it to people's attention.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. So far nobody has accused the SNP, the Liberal Democrats or any other party of laundering money.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

As my hon. Friend says, there is still time, which is why we are in favour of openness in political accounting. Is it not true that Sean Connery's supplying huge amounts of money from abroad did not perhaps come across as clearly as it might have done? The general point is a useful one, and we will probably want to pursue it on another occasion.

Mr. Carmichael rose—

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Perhaps the hon. Member for Orkney and Shetland wants to make a point.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

We merely wished to suggest that the fact that the SNP did not ask to be included on this Committee, but has made such a fuss about its proceedings, is in itself criminal.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

That is a very useful point, although the hon. Gentleman's reference to himself as ''we'' perhaps displays delusions of adequacy.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Sedentary interventions are to be deplored at any time, but I should also point out that the Chairman never displays delusions of adequacy; he always knows where the enemy is.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

Yes, that was an outrageous attack on you, Mr. McWilliam, for which you properly rebuked the hon. Gentleman.

''Ignorance is no defence'',

said a long-standing friend of Sir Michael Richardson. The friend continued:

''He is very, very upset by it all. I think if he'd been called Mr. Tiddlywinks, you would not have heard about this. He is not self-seeking but Michael has always gone out of his way to have a high profile and I suppose this is the result . . . It is not the substance of what he has achieved in his career.''

The article then returns to the question of culture:

''Yet friends and contemporaries admit that, at times, Richardson has demonstrated a remarkable naivety about his clients.''

How many other people in the City display a remarkable naivety about their clients?

''He introduced Robert Maxwell to Smith New Court, even though both Cazenove and Rothschilds, his former employers, had flatly refused to do business with the fat fraudster.''

That reflects to the credit of Cazenove and Rothschilds, and shows that not everyone in the City is a rascal—even those who are not dead.

The article goes on:

''Richardson had helped float Pergamon Press in the 1960s'',

and refers to a number of other issues in the past, but I do not want to touch on those. One of Mr. Richardson's friends said:

''I think Michael is an immensely generous and very imaginative man, who gives so much of himself to friends. But, ultimately, I think you can call into question his judgment.''

How many other senior figures in the City are there whose judgment could be called into question when they were considering whether they had reasonable grounds for knowing or suspecting? He went on:

''He is a very talented man, but he needs to be more shepherded. It needs somebody else to dot all the 'i's and cross the 't's. His judgment of a transaction was without doubt. When it came to people, it was sometimes suspect. He probably works best with somebody who keeps him in check.''

How many other senior figures in the City need somebody working with them to keep them in check?

We must therefore not only retain the paragraph that Conservative Members wish to delete but be conscious that the culture that they are defending is the same culture that protects the gangsters and drug dealers who ruin the lives of many in my constituency and in the constituencies of many of my hon. Friends.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath 5:15, 22 Ionawr 2002

I thank the hon. Gentleman. He always makes speeches that are both entertaining and partly serious, and his last point was a serious one. I am sure that all those, particularly at a senior level, in NatWest, Smith New Court and Cazenove will be especially grateful for his ringing endorsement of their high compliance standards.

The hon. Gentleman's serious point, for which he has used a particular case about which he has quoted extensively from the report in the Daily Telegraph, begs one question. It is the same question as those from the Law Society of England and Wales who advise my hon. Friend the Member for Beaconsfield and myself put to us when they discussed the matter with us during the lunch break: will the Minister in due course be able to give us any examples of what he and the Government think will, under their interpretation of the clause, be a reasonable excuse? I put that point seriously to the Minister.

I hope that when the Minister addresses the serious parts of the speech made by the hon. Member for Glasgow, Pollok, he will also say what the Government's view is on whether the kind of case that the hon. Gentleman describes would have been caught by the Bill as Conservative Members wish to amend it. We do not have the details; we only have the press report, but my view is that a person behaving in the way that the hon. Gentleman describes would probably be caught by the clause as it would be amended.

However, I want to hear from the Minister what the Government think would be a reasonable excuse, because we are concerned that what may in practice result from this part of the Bill, if it is not amended, is a huge amount of empire building within NCIS. We have made the criticisms of the current system that those at the sharp end believe are valid. We think that it will be 10 times worse under the new system unless our amendments succeed.

We believe that the Minister will also have to deal with the revised compliance cost assessment. We had a debate this morning, in which the Minister accepted some interventions from me, about the difference between us about the facts of how many reports there are and how, in the view of those at the sharp end, the number has grown exponentially since 1993. The Minister refers to it as a steady rise. We are advised that it was a dramatic rise.

May I add one further piece of information for the Minister? When we adjourned at lunchtime I was advised by our expert from the Law Society's anti-money-laundering committee that the details that he had came from a lecture given recently by a senior person from NCIS. I hope that when the Minister's officials check further, they will specifically check what senior people in NCIS are saying in public lectures to the experts in the City who are trying to combat

money laundering. If what is being said in public lectures is different from the advice being given to the Minister, some further thought needs to go into that.

This afternoon, Mr. McWilliam, you have rightly and regularly exhorted us from the Chair to concentrate on the specific amendment that my hon. Friend the Member for Beaconsfield so ably moved. I remind the Minister and the Committee that we put forward two alternatives. We did not want to hang our hat on just one piece of drafting, although my hon. Friend rightly said that we preferred one version. We wanted to give the Government a choice, but we genuinely feel that there is a danger of injustice unless some redrafting is done.

I urge the Minister, even if he does not listen with any great enthusiasm to what my hon. Friend and I say, to listen to the eminent counsel on his own side. The hon. Member for Wellingborough also thinks that there is something wrong with the drafting, although, in fairness, he does not go all the way with my hon. Friend and me. He accepts, I think, part of the spirit of what we are trying to do, agreeing that the clause as it stands is infelicitously drafted and could be improved.

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

My hon. Friend may also want to bear in mind something else that the hon. Member for Wellingborough said, which we have not developed. He referred to the possibility that although an objective offence might remain, it might nevertheless have a completely different set of penalties. The Committee has not had an opportunity to consider that. If the Government wish to come forward with such proposals, I am sure that my hon. Friend and I will consider them, even if we might continue to have serious reservations.

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

My hon. Friend is right to raise that issue. We may come back to it as later amendments tabled to the clause or penalties under this part of the Bill are considered. That might be another way of dealing with the matter, as the hon. Member for Wellingborough rightly said.

I simply repeat, especially to sceptical Government Members, and in particular to the hon. Member for Glasgow, Pollok, that we want a piece of legislation that will work, and that will not so overburden the authorities with reports that the entire system grinds to a halt. Our scepticism about that might be right. We are not claiming to be experts—although I worked in this field some years ago as chairman of a compliance committee for a major plc, and have also worked in insurance, banking and financial services, albeit under a previous regime—but we have been advised by experts. Those who are experts in the system as it has operated in the past few months and years tell us that it is not working now, even with a much lower level of reporting.

The hon. Member for Glasgow, Pollok, who is rightly trying to protect his constituents—we applaud him for that—wants a system that will work. The difference between us is over whether he is right in believing that everything that the Government introduce must be perfect simply because it will hit

the Mr. Bigs. I do not think that it is. No one looking at a Bill as complex as this can be absolutely confident that any Government have necessarily got it right. Even though they are a Labour Government I earnestly encourage him—were it not for politics, I would be calling him my hon. Friend the Member for Glasgow, Pollok—to be sceptical of any Government of any party who say, ''We are certain we have got this right.'' There may be circumstances in which even a wicked Tory Opposition, as the hon. Gentleman sees us, are right in saying, ''Hang on a minute, the Government might not be producing something effective here.''

I freely accept that the problems in my constituency are not as serious and deep-seated as those in the hon. Gentleman's, but there are people suffering because of drug pushers and dealers there, and I raise the issue regularly in the House. All of us who have dealt with drugs cases in the courts, as I have over many years, both in prosecuting and defending, know their terrible cost, and there are deaths from drug misuse in my constituency too. We want a piece of legislation that will protect my constituents as well as those of the hon. Gentleman.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

I have always seen myself as a critical friend of the Government—but they are always keener on friends than on critics. However, does the hon. Gentleman agree with the hon. Member for Cities of London and Westminster, who clearly said that he wanted the clause watered down? Does he accept that the phrase ''watered down'' does not give the immediate impression that the hon. Gentleman wants to strengthen it in a way that makes it work? Can we expect the young lad who has just got it wrong and given us the wrong line to be banished from the Committee, as the hon. Member for Henley has been banished?

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

My hon. Friend the Member for Henley will be returning, and has not been banished in any way.

My hon. Friend the Member for Cities of London and Westminster will no doubt speak for himself, and may want to make a further contribution to explain his use of that particular phraseology.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

When answering that intervention my hon. Friend pointed out that Conservative Members want to ensure that the Bill works properly. The worst possible thing is to have draconian rules that either are ignored and are not enforced, or which are so stifling that there is enormous bureaucracy in the City of London and all the other financial institutions, which would be a disaster. That would lead not only to work leaving the City of London but, more importantly, to disrespect for the law. This is all about making the Bill work. We simply wanted the draconian measures watered down, not their effect. Indeed, the opposite is the case. Our plan is to ensure that we get the law right, and that it is properly enforceable and enforced.

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

I agree with every word that my hon. Friend has just said. That is the complete answer to the hon. Member for Glasgow, Pollok.

I need not detain the Committee any longer, but I want to hear the Minister's response and, in particular, what he thinks—

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

Because of his lunchtime conversation with the representatives of the Law Society of England and Wales, the hon. Gentleman asks what might be a reasonable excuse. I am surprised that Conservative Members need to ask that question, which sounds alarms in my mind. I have jotted down four possible reasonable excuses, which are fairly obvious to anyone who applies his mind seriously to the subject, so I am worried about the expert who they have been talking to.

One possibility is that in the compliance procedure, a designated individual is given the information, and given the specific task of making that information available to NCIS. Somebody will say, ''I gave this information to my colleague. The company should now hand it over, and I expect that to have been done.'' Another possibility is that at the time under review, the person concerned may have been ill and may not have taken full cognisance of what was in front of him. I am sure that a court or the prosecuting authorities would want to take that into account. A third—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. This is not an intervention; this is a contribution. If the hon. Gentleman wants me to call him, I will call him, but after the hon. Member for Surrey Heath has finished.

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

Clearly I shall have the opportunity to respond after the hon. Gentleman has spoken. I understand some of the points that he is making, but may I put to him, for a change, not the view of the Law Society of England and Wales, or even of the Law Society of Scotland, but an example of the way in which the clause may go wrong? It also comes back to the point that my hon. Friend the Member for Beaconsfield made about who will be caught by the provision. The British Bankers Association says:

''the proposed offence of failure to report (clause 324) will place staff, especially junior staff, in an impossible situation.''

Again, that is the expert view of people at the sharp end.

The BBA continues:

''The reporting of suspicion goes one step further than reporting knowledge and having reasonable grounds for suspicion goes further still. Whilst it is easy for anyone using hindsight or working in a investigative role to decide that an action is suspicious''—

using 20:20 hindsight—

''it will not necessarily be so apparent to a member of staff in a line role. Such staff will have many day-to-day pressures and may rarely ever come across a criminal activity. The BBA firmly believe that criminal sanctions for negligence should not be extended to junior staff. We do not believe that it is consistent with the Human Rights Act''—

that is particularly pertinent, given that the Government have, as usual, certified that the Bill is consistent with that Act—

''for a staff member to be potentially liable to a five-year prison sentence for a failure to act where he/she has no criminal intent.''

The British Bankers Association thinks, as we do, that the Bill goes too far.

The BBA says that the following scenarios will become reportable if the clause is not amended. The first is:

''Customer A pays a cheque into his bank account, which he knows to be worthless. Prior to the cheque being returned unpaid, Customer A draws against the uncleared cheques. Customer A does not pay any further funds into his account to settle his account.''

The second is:

''Customer B, knowing that he does not have enough funds in his account to meet his liabilities, either by way of cleared funds or authorised overdraft, uses his Switch card to purchase goods and/or to obtain cash, before the bank can put a stop on Customer B's Switch card. If Customer B has no intention to pay further funds into his account to settle these liabilities, this is either a theft offence or an offence of obtaining a pecuniary advantage by deception.

Under the existing legislation, there would be no obligation on the bank to report those offences to NCIS, as the conduct does not constitute an offence of money laundering.''

In other words, those cases are treated as small banking matters that can happen on any day of the week to any high street bank.

The BBA continues:

''With the absence of a de minimis requirement in the legislation it would create a huge burden on the money laundering reporting officers.''

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

I am raising it now because the BBA's examples are both specifically concerned with clause 324, and I thought that I should deal with them together.

Will the Minister respond to the serious criticisms of the professional bodies at the sharp end? The British Bankers Association and the Law Society of England and Wales believe that the measure goes too far. The Minister may say, ''We don't agree; we have to hit all these organisations'', but we say that it will cause the entire system to grind to a halt. It will not hit the real criminals—the Mr. Bigs whom we all want to hit and against whom the Bill is really aimed. The procedure will be so unwieldy that it cannot be effective and will achieve the reverse of what the Minister is trying to do.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok

The hon. Gentleman has been giving us the views of the Law Society and the British Bankers Association. What is the view of the police? I understand that the police forces of England, Wales and Scotland support the Government's proposals and disagree with those of the BBA.

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

As the hon. Gentleman knows, I have asked the Minister on several occasions to produce something more specific from NCIS, but as yet, answer came there none. I am also interested in the views of the police, especially those who are specialists in the field. I heard what the hon. Gentleman and the hon. Member for Glasgow, Anniesland said about the views of a senior officer in the Strathclyde police. That was a relevant contribution to the Committee. I am sure that if the police had a round table meeting with the BBA and the Law Society and those two organisations said, ''If this clause is left unamended the whole system will grind to a halt''—according to the people who advise us, it is bad enough already because NCIS does not

respond when offences are reported, leaving transactions in limbo—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. We are miles off the amendment now. Can we return to the negligence test?

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

This is relevant, Mr. McWilliam, because if the test is different the number of reports is different. That is why the test should be based on negligence rather than on reasonably suspecting.

Photo of John Robertson John Robertson Llafur, Glasgow Anniesland

The Minister and I have both pointed out that the Bill is being backed by drug enforcement agencies not only north but south of the border. Would the hon. Gentleman like to comment on that?

Mr. Hawkins rose—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. Not unless they are backing this particular point about the negligence test.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

Will the hon. Gentleman give way?

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

In a minute. I repeat the answer that I gave the hon. Member for Glasgow, Pollok: I would like to see a round table conference on whether the system will be unwieldy, involving the British Bankers Association and the experts of the Law Society of England and Wales, who believe that this will not work, and the drug agencies. If the hon. Gentleman has something in writing from the drug enforcement people that touches on that point, which he can share with the Committee, I will be interested to see it.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

Is it not the case that were the Opposition amendments to be successful, they would have no impact on the number of cases reported, because subsection (2)(b) refers to those who should report having

''reasonable grounds for knowing or suspecting''?

If they do not know, they will not report, and there will therefore be no increase in the number of cases reported.

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

I do not think that hon. Gentleman's logic is right, but I will not take up the Committee's time by going through the semantics. His interpretation is not mine. I will not labour the point, but will be interested to hear what the Minister thinks is a reasonable excuse.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

I want to finish my earlier lengthy intervention. I gave two examples, and I notice that the hon. Gentleman did not demur from them. A third example of a reasonable excuse could be that the employee was not trained sufficiently, which would not have been his responsibility. The Minister said that because of other regulations it is incumbent on a company to train its staff properly, and that it will commit an offence if it does not; those elements should run side by side. The fourth legitimate excuse could be that the compliance with the requirement for training that the industry has set up and which is addressed in subsection (6), is not up to the job at the time.

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

I am interested in the hon. Gentleman's remarks. I can understand his argument in respect of illness, but it strikes me that the reasonable excuse that he now offers is ignorance of the law. I am a little startled to discover that he thinks that that could constitute a defence.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

The hon. Gentleman entirely misunderstands. My argument is not that anyone who falls under the four categories that I have outlined would be ignorant of the law. They would know the law, but because of specific circumstances they could be absolved in terms of what would otherwise be an objective test. That is not the same as being ignorant. Such people may well know what should happen.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. May I direct the hon. Gentleman's mind to subsection (6)? He seems to be arguing about that, rather than the subsection that we are debating.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

Subsection (6) addresses itself to subsection (2)(a) and (b). With respect, unless we discuss the failure to disclose as a whole, we will be discussing matters in a vacuum, and we will never fully expand the point.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. The hon. Gentleman misunderstands me. The Committee has the opportunity to discuss subsection (6) under other amendments.

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

On a point of order, Mr. McWilliam. It must surely be in order to allow discussion of parts of a clause that are directly related to the amendment in question. The issue that faces the Committee is whether to remove the objective test and keep only the subjective test in respect of guilt. If other clauses merit being looked at, because they temper the harshness of clause 324, that must be relevant to the Committee's consideration of this amendment.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

It is in order only in a clause stand part debate. It is not in order under such a narrow group of amendments. The Committee's debate has ranged extremely widely, and I direct it to the amendment. The debate is on negligence, the test and nothing more.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

In that case, I shall sit down.

Photo of Vera Baird Vera Baird Llafur, Redcar

Much of what I was going to say has already been said. We are not discussing the watering down of the legislation. Certainly, Labour Members are trying to assist the Minister, who this morning said openly that he was prepared to listen on the question of striking the right balance, and to deal with the question of whether it is necessary to criminalise the innocent in order to regulate the financial sector efficiently against money laundering.

Amendment No. 525—I shall give way if I misunderstand it, and it can be explained to me—seems to make the situation no better. Under it, the condition would be that the putative defendant has reasonable grounds for reasonably believing that another person is engaged in money laundering, but it still does not require him to believe it.

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

I rather concur with the hon. Lady, which is one of the reasons why I have not developed my arguments a great deal.

Photo of Vera Baird Vera Baird Llafur, Redcar

Then we can put that aside and consider the real point: whether it is necessary to criminalise the innocent in order to regulate the finance industry. If we are not careful, that will be the result. My contribution is not intended as opposition—I want my hon. Friend the Minister to reconsider certain points.

The Minister said that it was necessary to make the City diligent in identifying and reporting money laundering. He made the point that the provision is applicable only to the regulated sector, which, he says, is aiming it at the right people. The fact is that the whole of the clause is applicable only to the regulated sector, which is therefore the victim or target of a separate offence that does not apply to anyone else. Subsection (2)(a) also applies only to the regulated sector.

To disclose money laundering, if one knows or suspects that it is taking place, is a defence for anybody under clauses 321 to 323, but if one does not disclose, it does not make one criminally offending under any of those clauses. If one is a member of the regulated sector, however, and one does not disclose, one becomes a criminal if one knows or suspects that money laundering is taking place. An extra burden on the regulated sector is implicit in the mere existence of clause 324. I question whether it is necessary to take that further.

The hon. Member for Orkney and Shetland made the point that the regulated sector—the financial sector—has extra rights and privileges, and should therefore have extra burdens, which are set out in subsection (2)(a). A person must merely suspect in the slightest way—we heard many contributions, mainly from the Opposition, about how low a test suspicion is—and it is only that test that must be passed before a criminal offence is committed if there is no immediate disclosure. That is quite strong.

The state of mind—although it is not fair to call it that—countenanced in subsection (2)(b) is that someone is guilty of not disclosing money laundering even if he does not know or suspect that it is happening. He does not need to have the slightest suspicion and may be utterly unaware of the laundering, but he would still be guilty of not disclosing what he does not know and does not suspect. He is innocent.

That is the purpose of the subsection. If there were sufficient grounds for prosecuting someone on the suspicion that he had been collaborating and knew or suspected, he would no longer be covered by that subsection but by another one. In other words, the deliberate intention behind the subsection is to criminalise the innocent. A person need not necessarily have known or suspected, turned a blind eye or been naive about something about which he should have been sceptical. Even if he had not collaborated and was unaware that anything had gone wrong, he could be found guilty.

Photo of Ian Davidson Ian Davidson Labour/Co-operative, Glasgow Pollok 5:45, 22 Ionawr 2002

Does my hon. Friend recall my point about Sir Michael Richardson, one of whose alleged friends said in The Daily Telegraph article:

''I think you can call into question his judgment''?

Could not that be a defence for almost anything? The question then becomes one of judgment—it is not even about defending the innocent. If something is open to judgment, people may be handed a ''get out of jail free'' card.

Photo of Vera Baird Vera Baird Llafur, Redcar

I would suspect that any court would be—and clearly was in that case—sceptical about the naivety asserted. We are not throwing away all prospects of prosecuting someone who everyone believes to have collaborated, as my hon. Friend suggests. Much the same evidence will be produced under paragraphs (a) and (b) in respect of suspicion. One could say that there were many reasons why someone such as Sir Michael Richardson must have suspected what was going on. The fact that he was a high flier, and his friend's comments about his judgment, would be in the court's mind. If the court was sceptical about his excuses, he would be convicted.

We might think that that was sufficient. The trouble is that we must consider the matter from the opposite point of view. I am concerned about those in my constituency who work in the financial sector, not those at the dizzy heights who are represented by Conservative spokesmen—or those whom my hon. Friend the Member for Glasgow, Pollok represents them as representing. I am talking about those working for building societies, credit unions and so on. Some of them are highly skilled, and some are not. The same provisions will apply to them.

Those who could be criminalised under the Bill include a learner in a job, who exercises all the skill and judgment that can be expected of him but who does not have the experience to spot what is going on. Another example is that of a mother or father whose child has had toothache for a week. Such a person may not have had much sleep, may be worried and may not be paying more than the basic tick-over attention to the job.

Remember that it is not the job of such people to look out for money laundering all the time. That must be one of their duties up to a point, but it is their job to deal with financial transactions. Anyone who is anxious or worried about something—perhaps they are getting a divorce, are bereaved, are moving house or are suffering the sort of minor disorientation with which everyone is familiar—might be guilty of inattention and would then be a criminal.

In a less sympathetic but none the less common example, a person may make a mistake for no reason or may just have a bad day. He may blink when he should not have, and that might stop him noticing that there is something odd about one or two transactions. All those categories of persons would be guilty of an offence that carries a penalty of five years' imprisonment and a fine.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I am following my hon. Friend's contribution with great interest, and understand her points. However, I wonder whether those mentioned in her latter examples would not fall within the categories of having reasonable excuses for not disclosing information. A more appropriate term

may be criminalising the negligent, rather than criminalising the innocent.

Photo of Vera Baird Vera Baird Llafur, Redcar

In my interpretation of the provision, the suggestions made by my hon. Friend may not fit the categories of reasonable excuses. When I come to that issue, I shall propose an amendment that might be of assistance. I am talking about criminalising the innocent. If he wants to say criminalising the negligent, and if that phrase more fairly represents the matter, that is fine. I am talking about people who have no moral culpability and would not be recognised as having done a bad thing or even a questionable thing. That a person makes a mistake that someone else would not have made is the test that will criminalise him.

I will take my life in my hands and make a brief lawyer's point in the presence of my hon. Friend the Member for Glasgow, Pollok. Offences of negligence are extremely rare in the criminal calendar. Negligence usually occurs during dangerous activities, such as driving a car. Obviously, drivers have a duty to take care and to concentrate, lest they endanger other people's lives. The serious sentencing proposed under the provision requires that a person's standards fall far below those of a reasonable person. There is no such qualification under the provision.

The hon. Member for Beaconsfield spoke about looking at one criminal offence and seeing how another crime differs from or resembles it. The nearest offence would be that of assisting an offender, when a person knows or suspects that another person has committed a criminal offence and gives him some peripheral help. To know or suspect is the test. Why is such a strong law needed? If a person knows or suspects that a crime has taken place and is in the unique position of being able to draw it to the attention of the authorities, he must do so. A person ought not to be guilty of a crime if he has not told somebody something that he did not know.

I want to make a couple of random points, but I will be as speedy as I can. The provision does not exist in the legislation that the Bill replaces. Throughout the Bill—and specifically under this part—all other criminal offences require that the person knows or suspects that the property that he is transferring, converting or doing whatever with is criminal property. It is against such a person, who is actively involved in money laundering, that the provisions are primarily aimed. Why should a person who is only a bystander—who is not charged with knowing, or suspecting, that money laundering is going on—be convicted of offences under a lower test of criminality than the people at whom the legislation is primarily aimed?

Earlier in Committee, we debated amendments that were designed to change the test under clauses 321 to 323 to knowing. It was implicit that in respect of all the main money laundering offences—as the explanatory note calls them—the Government were satisfied with the test of knowing or suspecting. What puzzles me is why it is necessary that the more peripheral a person's involvement, the greater his criminality.

Subsection (5) raises the issue of whether a person who has a reasonable excuse for not disclosing the information is committing an offence. As my hon. Friend the Member for Wellingborough said, a reasonable excuse for not disclosing information must be that a person did not know or suspect that there was anything to disclose. As he also said, that is not an excuse. The provision will criminalise people who do not know or suspect, because the authorities believe that they ought to have known or suspected and that there were reasonable grounds for suspicion.

Under subsection (2)(a), if a person knows or suspects, he can say, ''I have a reasonable excuse. I thought that someone else had told the authorised person.'' Alternatively, he could say, ''I was too afraid to speak up, because I was being pressurised by the person whom I knew or suspected was money laundering.'' If a person has a criminal state of knowledge—under subsection (2)(a), he would have—and has behaved in an immoral way, he could still achieve justice by giving a reasonable excuse. However, a person who is not immoral, and who does not know or suspect that another person is engaged in money laundering, would fall under subsection (2)(b).

There does not seem to be a reasonable excuse that can be made for failure to notify because the fact that a person did not know simply does not work. The reasonable excuse must be connected with the disclosure. The only possible reasonable excuse for not telling—''I didn't know'' is not one—is something like, ''I didn't see the nominated officer at the time.'' The Government link the reasonable excuse with disclosure. That means that they do not want reasonable excuses to be available for a person who neither knows nor suspects, because there can be no reasonable excuses for that.

My suggestion is that if the Government reconsider the clause but do not remove the subsection, they could add a reasonable excuse clause to exclude those who did not know or suspect money laundering to exist when there were reasonable grounds to do so. The woman with a sick child could say that the reason for her not knowing or suspecting is that she was preoccupied with the child or tired for want of sleep. That would make justice available to such people. I hope that I make that clear because the only excuse for not notifying is, ''I didn't know.'' That is not an excuse that can be used under these provisions, because in order to find justice for people under subsection (2)(b), one must find a reasonable excuse for not appreciating what the authorities claim that a person should have known or suspected.

An amendment could be tabled to ameliorate the danger of injustice by inserting subsection (5)(c), stating that a person would not commit an offence under subsection (2)(a) if he had a reasonable excuse for not disclosing information, and a person would not commit an offence under subsection (2)(b) if he had a reasonable excuse for neither knowing nor suspecting that money laundering was taking place, despite the existence of reasonable grounds.

The correct way to progress is not to switch the burden of proof, allowing a policeman to say, looking back with 20-20 vision, that money laundering should

have been suspected, and thus to require a person to prove why that was not done. With respect, the matter should not be that way round.

I shall make my final couple of points—when I say finally, I mean finally. A good test of a crime is for a person to ask, ''How can I avoid doing it?'' People can usually avoid dishonesty and most criminality—I can avoid that—but how does one protect oneself against inattention at work? One tries to concentrate, but with the best will in the world, that is not how people work.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. May I assist the hon. Lady? I am having great trouble this afternoon in doing just that.

Photo of Vera Baird Vera Baird Llafur, Redcar

You are very supportive, Mr. McWilliam—from a vantage point of total neutrality, of course.

How does one avoid committing the crime if one is tired or worried? Every time one is worried about something, the only way to avoid committing the crime would be to take the day off. That is in nobody's interest. Is that not a good test of how wide the power is?

There are other ways of dealing with inattention at work, such as internal disciplinary measures. By definition, the only time when people would be prosecuted for the offence would be when their employer knew that they failed to notice that money laundering was occurring, although they should have noticed it. If the employer was satisfied that there was no criminality under subsection (2)(b), he could act to punish inattention. In that way, the Minister's aim of disciplining the City so that it as safe as possible could be achieved, without the damaging consequence of deliberately criminalising the innocent.

Photo of Norman Baker Norman Baker Democratiaid Rhyddfrydol, Lewes 6:00, 22 Ionawr 2002

Does the hon. Lady agree that it might be a question not simply of inattention but of a failure to appreciate? One of my concerns is that someone may be judged to have been in a position to know or suspect that there were reasonable grounds for reporting a transaction, but did not do so, although they were carrying out their work in a proper manner. Their character may be such that they would wish to prevent money laundering: they would have taken action to prevent it, if they had been aware that it had taken place. However, if it had taken place, but they simply did not appreciate that it had, it might subsequently be levelled at them that they should have known.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

Although we have fully debated the matter, I wish to make two points.

First, I endorse the remarks of my hon. Friend the Member for Wellingborough about the clause, and especially his recommendation that the subjective and objective offences should be split. I want the Minister to consider doing that.

Secondly, the key issue regarding subsection (2)(b) is whether someone should be criminalised because of what I would describe as a mistake. I do not agree with my hon. Friend the Member for Redcar that such a

person would be entirely innocent, because we are talking about circumstances in which someone has made a mistake, which means that they did not attain, or maintain, a reasonable standard in the performance of their work. It is relevant to note that we are discussing the regulated sector.

My point is that there are circumstances in which the criminal law imposes liability on individuals who are negligent.

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

The hon. Gentleman is right. For example, to pick up the point about road traffic law, there is an offence of driving without due care and attention. However, it is notable that a distinction is drawn between that offence—for which one can be fined, or at most disqualified for a period under certain circumstances and after the points have been totted up—and dangerous driving, where one has to fall well below the acceptable standard, and the penalties are much more serious. That is significant: serious penalties can be incurred as a result of a due care and attention test.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

It is also the case that, for example, manslaughter can be established on grounds of negligence.

The issue of policy that we are making a decision about is whether the effect of this subsection is strong enough to persuade institutions in the City to increase the monitoring element of their work. That is the key point with regard to these provisions, and we must not lose sight of it. Do we consider the matter to be important enough for us to compel institutions in the City to improve their performance? As our constituents' feelings and experiences tell us, offences such as drug trafficking have a deeply negative effect on the communities that we represent.

The issue of policy that we must decide about concerns the question of balance. It is very difficult to make a decision about that, and we have heard different opinions about what to do. I wish us to focus on this point, and to decide whether we consider the issue to be sufficiently important to import this offence into the legislation.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

It might be helpful if I remind the Committee that if we do not finish debating the amendment before 7 o'clock, the knife will fall at that time, because I will not be in a position to put the programme motion.

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

I have already been reminded of that by the Whip, so it is good that you have reminded the Committee of the position, Mr. McWilliam.

I have listened with great interest to the debate and many serious points have been made, and well made, too. I can only hope that all members of the Committee will listen to my response. My starting point is a combination of the points made by my hon. Friend the Member for Wrexham (Ian Lucas) and the hon. Member for Orkney and Shetland. It is necessary and it is to be expected that a burden of proof at that level is all that should be available to the prosecution when dealing with only the regulated sector.

My hon. Friend the Member for Redcar said that there were other issues and clauses, but they can apply

to the whole of the population. As she knows, clause 324 applies to the regulated sector. Is it necessary and will it be effective? Will it bring the culture change that we require in the regulated sector? Is it a price worth paying? Is there any other way in which to deal with the matter? Those are the issues that we should be thinking about as we deal with the amendments.

I believe that the clause will be effective. I am not trying to be funny, but some of the arguments advanced by the hon. Member for Surrey Heath were those that impressed me least. I am sorry that he is not here. He made three substantive points, one of which was that he questioned whether we are listening to NCIS about the past record of reporting. All he can bring to his argument is a second-hand report of what a senior NCIS officer said at a lecture somewhere in the country and pray that in aid against what NCIS is saying to the Home Office and the Committee about the reporting record. Its views go to the heart of the matter. As my hon. Friend the Member for Wrexham said, we are concerned about the necessity for such a provision.

I have replied to the British Bankers Association and made it aware of what NCIS is saying to us. NCIS believes

''that this is a vital change to the current legislation. The absence of a negligence test has resulted in abuse of the system. Professionals working within the financial sector have, on numerous occasions, facilitated the laundering of criminal assets, claiming as a defence that they had no suspicion or knowledge of money laundering.''

I invite the Committee to believe that, in many such cases, such claims are nonsense. It is effectively impossible under the current legislation to prove that suspicion. My hon. Friend the Member for Redcar asked where the need arises. I have explained that.

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

Let me pick up on two points that the Minister has made. I understand his argument, although I am sure that he will agree that part of the problem is that only NCIS is telling us that. We are wholly reliant on its expertise for the evidence for the failure to declare what it believes is major money laundering. Secondly, my hon. Friend the Member for Surrey Heath may be wrong, but it was right to flag up that he had been given contrary information to that of the Minister. If the latter can confirm the number of declarations and what has happened over the past three months, that will clearly reassure the Committee that we have the factual evidence right. It was plainly not wrong to show that to the Committee and to ask him to confirm his position.

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

Considering the time, and the dilemma that we are in, as you have rightly pointed out, Mr. McWilliam, I do not consider that such issues are essential to our consideration of the amendments. The matters raised by my hon. Friend the Member for Wrexham and the hon. Member for Orkney and Shetland are exactly what we need to consider now.

The hon. Member for Surrey Heath referred to the British Bankers Association, person A and person B and the cheque that subsequently bounced and so on. I sat and waited for him to say that somebody in the organisation might be accused of having reasonable

grounds, but he never did so. I do not know whether he was talking about de minimis regulations, or some other matter. We should not be surprised that financial institutions are worried about our introducing a negligence test. However, he did not raise the issue of grounds for suspicion, knowing or reasonably being expected to know. The point that he raised was irrelevant to the case.

The other point on which I want to touch quickly is that raised by my hon. Friend the Member for Wirral, West, because I agree with him. It has been suggested that the fact that having reasonable grounds to suspect is included in the prosecution's armoury will lead to a huge increase in reporting. How will that happen? It will happen only if people suspect or know of money laundering now, and the fact that they can be prosecuted if we can show that they had reasonable grounds to suspect leads them to make a report that they should have made anyway. If that cultural difference is made, the number of reports will increase. However, reasonable grounds on its own will not lead to an increase. As my hon. Friend points out, if people do not know or suspect, they will not make a report. The only way in which the provision will make a difference is if it raises standards as we want them to be raised.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

I have been accused of all sorts of things, and on many occasions rightly, but I am afraid that I did not make that point. I have not made any of those points. I agree with the Minister.

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

I am sorry. I am getting my hon. Friend mixed up with my hon. Friend the Member for Wrexham, who made the point in a previous intervention.

The hon. Member for Surrey Heath also asked what would be reasonable grounds for not making the disclosure, which relates to what would be caught by the provision. Ultimately, that will be a matter for the court. The point about illness, it will be a matter for the prosecution. If the prosecution decides to go ahead, it will be a matter for the court. Of course, if somebody had been put into a job or position, and wound up having information thrown at them when they were a brand new learner on the job, the prosecution would have to consider that before targeting them rather than their employer for having put them in that position. I cannot say what will be the parameters of what is acceptable as a reasonable excuse. That will be a matter for the prosecution and the court. For the benefit of the hon. Member for Surrey Heath—despite the fact that he is not present—it will be an English court, not a foreign, European one, about which he worries all the time.

My hon. Friend the Member for Redcar said that the provision is not in the existing legislation, and not in the other offences. It is not in the other offences because they apply far more widely than the regulated sector. It has been included in the Bill because the existing legislation is not working, as we are not managing to prove cases.

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

Are there, then, numerous instances of NCIS being unable to prosecute because it concluded that it could not show that the matter amounted to

more than mere negligence? We have not received that detail, although the statistics must be available. Facts are bandied about without evidence that may be important. I do not know whether the Minister wishes to amplify the point, but I would be grateful to hear whether there have been numerous instances when NCIS has wanted to have a go at a company to set an example under the Drug Trafficking Act 1994, but has been unable to do so. Is that the case, because I am not aware of it?

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 6:15, 22 Ionawr 2002

I read NCIS's position to the Committee. There are people who have facilitated the laundering of criminal assets in numerous offences but who claimed the defence that they had no suspicion or knowledge. Obviously, if the matter continues to worry hon. Members, I will attempt to amplify on that.

My hon. Friend the Member for Redcar asked why such cases could not always be dealt with as an internal matter. In many cases, they could and should. As I told the Committee before, a minority of organisations produce most of the reports. However, there are organisations in which there is neither the will nor the ability to prove matters and to bear down. We must put pressure on such organisations because they are more likely to be involved in money laundering. We must remove excuses that can be used to prevent prosecutions.

The central worry that remains was mentioned by my hon. Friends the Members for Wellingborough and for Wrexham. They said that things would be better if we split the Bill and made two separate offences with, perhaps, two levels of penalty. Currently, we propose the single offence of failure to disclose. As my hon. Friend the Member for Wellingborough rightly said, the measure on which people may be judged is a mixture of the objective and the subjective. We believe that that will work in practice. The consequences of splitting the offence are not simply drafting matters, and he knows that.

There would be situations in which it would be impossible to prove that one or other offence led to continuing money laundering through an organisation. The Bill closes that loophole. Many examples of such circumstances may come to mind, although I cannot think of an exact example. An individual may have information that is passed through them all the time. As the clause is structured, we must be able to show on the objective or subjective test that that person knew or suspected something, or had reasonable grounds to believe it. Of course, if the court is satisfied beyond reasonable doubt that the person had such suspicion or knowledge, there is no doubt that it will take that into account when sentencing. If it is not satisfied of that, there will be differentiation.

If there were separation, we would make two different offences. One offence would be knowing or suspecting, which currently exists in legislation and is difficult to prove, and the other would relate to reasonable grounds for suspicion. The potential for us to be able to prove one or the other issue and the

dichotomy that that would give to the prosecution about which offence to bring in the first place could be very real. The matter is more than a drafting problem. To split the offence in such a way will potentially give the prosecution a real problem.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

Indeed, it is my suggestion to draft the clause in such a way as to make two different offences, the reason for which is that, first, such a measure would have an advantage by being drafted in the way that I have outlined. Secondly, it is arguable that we should be looking at different levels of penalty under the Bill for different levels of criminality and the criminalising of the negligent. Thirdly, as my hon. Friend the Member for Redcar said, there are additional protections that we would wish to draft into an offence of negligence in any event. That is a good reason for not appreciating the criminality, rather than not disclosing it.

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

I hear what my hon. Friend said. As I have said, I shall think about his argument as we proceed. I hope also that he will consider what I have said. I do not think that he has come back to me about the difficulties that could be caused by one or the other type of offence. The dichotomy that will be given to the prosecution is that it goes for one or the other offence.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

I do not understand why the Government could not draft the Bill so that it will enable prosecutions in respect of the alternative offence.

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

There could be real difficulties in taking such action. As drafted, the clause covers the simple offence of failing to disclose and the level of proof applies if the person

''knows or suspects, or . . . has reasonable grounds for knowing or suspecting''.

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

I seek clarification from my hon. Friend. Is it the policy that there should be one offence?

Photo of Stephen Hesford Stephen Hesford Llafur, Wirral West

The offence has two potential limbs. A person can know, if that is the state of the evidence; a person can be shown to suspect, if that is the state of the evidence or such an offence should be known or suspected if there are reasonable grounds for so doing. If my hon. Friend agrees that there is one offence, can the prosecutor decide under the Bill to prosecute on either of the limbs if he believes that the state of the evidence warrants it? If a prosecutor said that he was prosecuting on knowledge because that is the most serious level on which to prosecute, would not that show to the court the appropriate penalty?

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

I do not know. I should have thought that it was for the court to listen to the evidence and to take that into account before sentencing.

Photo of Norman Baker Norman Baker Democratiaid Rhyddfrydol, Lewes

Government Back Benchers are making some important points. If the proposition that they are advancing is correct and the prosecutor can separate the charge that is being made—whether it is A or B—different levels of penalty should be prescribed, and in a sense that would be separating the offence as

they suggest. However, if there were no such opportunity, the offence of knowing and suspecting would be equated with that of having reasonable grounds for knowing and suspecting. Given the comments of the hon. Member for Beaconsfield about dangerous driving and driving without due care and attention, members of the Committee do not support the two offences being put together.

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

I am being asked to contemplate splitting the clause. This is a key clause, as the hon. Member for Orkney and Shetland pointed out. If we render it ineffective, we will do a great injustice to part 7.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

The Minister is right—I did make that point—but I also made it clear that I supported the position of the hon. Member for Wellingborough.

There are, perhaps, stronger parallels than that which the hon. Member for Beaconsfield mentioned. One that springs readily to my mind is the misreporting of fish landings, as that offence used to comprise a substantial part of my practice. There were two offences: knowingly misreporting, and recklessly misreporting. The alternative charge was always made, which is also the practice with regard to several similar offences. However, the Criminal Procedure (Scotland) Act 1995 contains provisions that state that where two offences exist, and one is greater than the other, evidence can be led in respect of the greater, but a conviction will be allowed on the lesser, if that is what the evidence justifies. A similar provision probably exists south of the border.

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

I acknowledge the hon. Gentleman's point. I have also listened carefully to what some of my hon. Friends have said about the matter, and it is clear that there are serious concerns. However, I am also concerned about the time.

There is not a proposal before the Committee to split the offence, so we could not consider that now, even if we wanted to—and in any case I am concerned that if we decided to do that, we might create difficulties, and the legislation might become less effective.

At the moment I can deal only with the amendments before us, and I urge the Committee to reject them, because it is essential to preserve the current wording of the Bill. Although I acknowledge that a serious problem has been identified, and that it needs to be tackled, we are dealing with a key clause, and I do not want it to be watered down. With regard to that phrase, I note that the hon. Member for Cities of London and Westminster (Mr. Field) has been pulled into line: he is now talking about the clause being ''made effective'' rather than ''watered down.'' However, he said what he said.

Although my hon. Friends have raised serious concerns, I hope that they will think about the fact that changing the clause could cause damage. We have pored over the matter. People are worried about issues concerning junior staff and untrained staff, and representations about that have been made to us. If the legislation could be made effective without that

burden being put on such staff, we would consider going down that road. However, it is such staff who have the information that can prevent money laundering from taking place to anything like the current extent, and if we do not take the kinds of measures that are in the Bill, we will not effect the sea change that is required to achieve our goal.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I wish to remind the Committee that if the motion to change the business is not reached before 7 o'clock, the original motion will stand, and the knife will come in.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

I will not speak for more than a few moments, Mr. McWilliam, because that is the point that I wish to raise with you and the Committee.

Some of the Committee members who have not contributed to the debate feel strongly about the matter, and they would like to contribute. If they could do that, it would enable us to vote sensibly, and on mature reflection, at the next sitting. However, we cannot do that. In my judgment, it is in the best interests of the Committee to focus as a priority on the business motion, so that other things can be considered in a sensible fashion. We should give notice that we are prepared to make no more speeches and to press the matter to a Division. We can return to the subject on Report if necessary. My hon. Friends and I judge that we need a business motion more than anything else at the moment.

Photo of Norman Baker Norman Baker Democratiaid Rhyddfrydol, Lewes 6:30, 22 Ionawr 2002

I shall be brief for similar reasons. I have heard a good discussion and many useful contributions, and I do not want to let the matter pass without putting on record my concern that we have not yet dealt with the sensible points raised by the hon. Members for Wellingborough and for Redcar in particular, and also those of the hon. Member for Beaconsfield. That is not to say that the amendment is right—I believe that in some ways it is flawed. As my hon. Friend the Member for Orkney and Shetland said this morning, we shall not support it. However, that is not the same as pretending that the clause is perfect.

I am concerned by the Minister's response. He has failed to deal with the suggestion that there is a difference between those who know or suspect and those who, retrospectively, had reasonable grounds for knowing or suspecting. If someone had reasonable grounds but did not know or suspect, they could not have disclosed information. That is an important difference, but that was not reflected in the Minister's reply.

The Minister seems to be equating the offence under subsection (2)(a) with that under subsection (2)(b), although they are patently not the same offence. The only reason that he wants to do that is that, as we have heard, prosecuting authorities currently have difficulty persuading the courts that someone knows or suspects. He wants to lower the threshold in order to get more successful prosecutions. Of course, we all want him to find some way of ensuring that those who genuinely know or suspect are brought to justice. However, he must make sure that innocent people,

who have simply been negligent or did not know, are not caught up in that net.

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

The purpose is to secure an adequate level of reporting, not of prosecution.

Photo of Norman Baker Norman Baker Democratiaid Rhyddfrydol, Lewes

With respect, I do not think that that is the issue. Disclosure is mentioned in subsection (5)(a). Of course anyone who knows or suspects should disclose, and if they do not, they should be brought to book. However, that is not the issue, which is about those who should suspect but do not—those who are caught under subsection (2)(b). I am talking about protecting those people and separating the two offences. We heard a driving analogy from the hon. Member for Beaconsfield, a fishing analogy from my hon. Friend the Member for Orkney and Shetland and a point about splitting the offences from the hon. Member for Wellingborough.

This is a serious matter. If the Minister persists in not splitting the offences, and does not recognise that they have different impacts and vary in seriousness—one is complicit and one is negligent—there will be consequences. Either those who are simply negligent will face a higher penalty in the courts than they should, or the court will regard the law as unfair. That will weaken the Minister's position. Those who are caught under the provisions—there may be too few of them for the Minister—may have offences of knowing or suspecting downgraded by the court, as the offence is lumped together with that of having reasonable grounds. In other words, it would be like ensuring that those few people who are caught driving dangerously were prosecuted for driving without due care and attention.

The Minister may be weakening his own case. The amendment is flawed, but the hon. Member for Beaconsfield was right to table it. The Minister should, even at this late stage, say that he recognises the issue. He should consider the issue carefully and table an amendment to deal with it, if not today, at another sitting or, better still, in another place. I hope that he will agree.

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

This has been an interesting debate. I am grateful to hon. Members of all parties for their contributions. I say that because issues relating to the amendment have arisen about the clause and its wording. One of those issues had not occurred to me before this sitting. It is about how one would draft an indictment for the offence. I am mindful of the passage of time, and I shall ensure that I am sitting down and we can have a vote on the matter in time to take the other business. I want to make that clear beforehand, so as to reassure the Whip, who otherwise will wonder why on earth we went through this exercise.

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. May I make it clear that we have to dispose of the other business, and it is debatable.

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

I appreciate that.

First, the intentions of the Government and the Opposition are not far apart. We all want a system in which people give time and attention to whether to make disclosure. I am also happy with the concept that there should be a criminal offence in relation to those

who know or suspect but do not make that disclosure. However, I have great anxiety about the reasonable grounds for knowing or suspecting and imposing an objective test when there is no guilty knowledge.

I commend the speech of the hon. Member for Redcar to the Minister. She expressed the position well, by identifying clearly her anxieties about the way in which the legislation might work in practice. Although the word may have been abused during the Committee, she came close to saying that the Bill was slightly tyrannical. It puts people in a climate of total uncertainty, and indeed fear of whether they are committing or might be committing a serious criminal offence unwittingly. That form of criminality that does not commend itself to me. On that score, I hope that the Minister will think again.

I want to turn to what seems to me to be another important point. In a sense, it is not a repetition of what I said earlier, as it emerged during debate. It started with the contribution of the hon. Member for Wellingborough. Looking through the Bill, and wishing to support the Minister 90 per cent. of the way, he identified the curious drafting of the clause. At the slight risk of repeating myself, the reason for the curious drafting was the adoption of section 52 of the Drug Trafficking Act 1994, which reads almost identically, and includes the defence of a reasonable excuse, which appears at exactly the same point in the clause. He properly picked up on the oddity of that when no reasonable excuse could be available because the person would not have known in the first place, and was still being criminalised.

The model of the Drug Trafficking Act 1994 has been adopted when it does not make sense in practice. Although it made sense in terms of an offence of knowing or suspecting, it no longer makes sense given two limbs—knowing or suspecting or having reasonable grounds for knowing or suspecting. Thereafter, the saving clauses do not make sense. If nothing else, that ought to be a good reason for the Minister to reconsider the drafting aspects, even if my view is that he should go much further than that.

The hon. Member for Wellingborough asked why the two offences are not separated, and he continued—this was much more heretical—to suggest two different penalties. I have wondered what I would do if somebody asked me, as a counsel, to draft an indictment under clause 324. Would I draft it to state that a person knew or suspected, or had reasonable grounds for knowing or suspecting, and that that is his criminality? If the Minister intends that to happen, a serious problem arises. When the case reaches court, the prosecutor must nail his colours to the mast, and someone who is convicted may have to be sentenced on the basis that he had only reasonable grounds for knowing or suspecting, although the evidence may be glaring that he knew or suspected all along.

The only way out of that would be to request a special verdict. That is frowned on in our courts, although it has been done. The judge would have to ask the jury a twofold question to secure a conviction. He would ask whether the members of the jury believed that the defendant knew or suspected, or

that he had only reasonable grounds to know or suspect. Of course, if we had two clauses, one could draft two counts on the indictment—one for each offence. The jury could be invited to return an either or verdict on one or the other.

However, the issue goes further than that. We have discussed—I hope that the Minister is listening, because I am trying to help him—a person who commits an offence. However, the Minister will agree that a body corporate could also commit an offence. A person and a body corporate are identical for legislative purposes. The Minister could consider that knowing or suspecting must apply to people, but there could be an offence against a corporation of having reasonable grounds to know or suspect, which could be punishable by only a fine, if the mischief that the Minister is so anxious about is imposing a financial penalty or sanction on large organisations.

The suggestion does not necessarily commend itself to me, although it commends itself far more than the Bill, which criminalises individuals who do not have guilty knowledge. There is a much greater track record of individual corporations that are liable for negligent acts, such as in the area of health and safety at work. Allegations in such cases would not normally be made against an individual, but in any event there is no sanction of imprisonment. It is absolutely astonishing that the Committee should contemplate a person losing their liberty because of the negligence that we are discussing.

The Minister might consider that the matter is worth exploring. I anticipate that we will lose the vote, although I will press the amendment to a Division. I hope that he considers the matter with his officials, because he may table an amendment on Report, or in another place. He may find that people's minds are working in the same direction and would reach an outcome that would satisfy his desire to raise standards and satisfy those of us who are alarmed at the prospect of individuals being criminalised and imprisoned for offences in which there is no guilty knowledge of any kind.

However, for the moment, I must go with the evidence behind the amendment and my position. In such circumstances, I would not do justice to my arguments or those of the hon. Member for Redcar—I am sorry that she has slipped out of the Committee; I hope that that was not because she thought that she would be delicately situated on the matter because of her arguments—if I did not press the matter.

I detected that the view expressed by the Liberal Democrats, perhaps understandably, differed between this morning and this afternoon. I understood that they would support the Government rather than the amendment. I hope that they reconsider that position because the clause is totally unsatisfactory.

In such circumstances, the correct procedure is to vote on the amendment. I commend it to the

Committee because it removes a provision that is poorly drafted, criminalises individuals and is wrong. If the Minister returns on Report with a further amendment, I will listen carefully.

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 15.

Rhif adran 28 Adults Abused in Childhood — Clause 324 - Failure to disclose: regulated sector

Ie: 3 MPs

Na: 15 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly negatived.

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

I beg to move,

That, in the Programming Order of the Committee of 13 November 2001, paragraph (1) be amended in line 3 by leaving out ''five minutes to Nine o'clock'' and inserting ''a quarter-past Nine o'clock'' and the Table be amended as follows—

(1) in the second column in respect of the 31st sitting by leaving out the words there printed and inserting ''Clauses 321 to 324, Schedule 6 and Clauses 325 to 329'';

(2) in the third column in respect of the 31st sitting by leaving out ''7 pm'';

(3) in the second column in respect of each of the 32nd and 33rd sittings by leaving out ''Part 8'' and inserting ''Clauses 321 to 324, Schedule 6 and Clauses 325 to 329'';

(4) in the second column in respect of the 34th sitting by leaving out the words there printed and inserting ''Clauses 321 to 324, Schedule 6 and Clauses 325 to 329 (so far as not previously concluded), New Clauses and New Schedules relating to Part 7, Part 8, New Clauses and New Schedules relating to Part 8''.

As you reported to the Committee, Mr. McWilliam, the Programming Sub-Committee met immediately prior to our sitting. The draft motion has been circulated, although it may look a little complicated on paper.

The first part of the motion, at the request of the Opposition, changes the starting time on a Thursday morning from 8.55 to 9.15 for the remainder of the Committee. That cuts our available time by 40 minutes. The Opposition are happy with that, and the Programming Sub-Committee agreed the change unanimously.

The second part of the motion simply removes the knife that we face at 7 pm. That allows our deliberations on part 7 to continue and eat into the time that is allocated for part 8.

Question put and agreed to.

Further consideration adjourned.—[Mrs. McGuire.]

Adjourned accordingly at ten minutes to Seven o'clock till Thursday 24 January at a quarter past Nine o'clock.