Clause 329 - Interpretation

Proceeds of Crime Bill – in a Public Bill Committee am 4:15 pm ar 24 Ionawr 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 4:15, 24 Ionawr 2002

I beg to move amendment No. 509, in page 190, line 28, after 'an', insert—


This is another way of approaching the issue that we discussed under the de minimis clause. A number of organisations suggested that criminal conduct should be confined to indictable offences, rather than any offence. This takes us back to the early stages of this legislation. However, I would be grateful for the Minister's comments on such a proposal, although I can foresee what he is likely to tell the Committee.

Photo of Mark Lazarowicz Mark Lazarowicz Labour/Co-operative, Edinburgh North and Leith

On reading the terms of the amendment, I wonder whether the hon. Gentleman fully appreciates

its consequences. As I see it, it would restrict criminal conduct to indictable conduct. Given that the proposed new section interprets criminal conduct for the purposes of that part alone, the effect of the amendment would surely be to restrict the exemptions available to officers of the law who undertake criminal acts as part of their normal duties. That would criminalise activity by law enforcement officers. We have already heard how the hon. Gentleman is soft on criminals, but being tough on law officers is perhaps going a bit too far.

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

The brevity of my remarks in introducing the amendment reflected the fact that I could see, notwithstanding that perhaps I tabled it in a fit of enthusiasm at the behest of others, that it was not without some difficulty.

Photo of Mark Lazarowicz Mark Lazarowicz Labour/Co-operative, Edinburgh North and Leith

I suggest that the hon. Gentleman should think more carefully before acting so quickly at the behest of others.

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

Much as I would like throughout my life to follow the hon. Gentleman's counsels of perfection, I have learned in the course of debating in this Committee that it may occasionally be wiser to try to fire a blunderbuss than to try to shoot a bullet. I apologise for that, but I would not wish issues to go by default and not be considered, however briefly, if only for an inadequacy in the amendment to be pointed out. I prefer to be humbled by his comments than to feel that a part of the Bill has passed without adequate scrutiny. I am sure that the Minister's comments will echo the hon. Gentleman's, and that we can then move on to other business.

Photo of Mr George Foulkes Mr George Foulkes Minister of State, Scottish Office, Minister of State (Scotland Office)

The hon. Gentleman may have been able to predict the reply to his amendment, but he was not able to predict who would give it.

As it is drafted, part 7 operates on the basis of the proceeds of any criminal conduct. No distinction is made between the proceeds of indictable offences or summary offences. As the hon. Gentleman is aware, this approach is consistent with that in parts 2, 3 and 4 in relation to the confiscation of proceeds following a conviction for a criminal offence. We believe that it is vital to have consistency across the Bill and that there should be no distinction between indictable or summary offences.

There are also real practical reasons why there should be no qualification to the type of offence caught by the provisions on money laundering. For example, at the stage at which a report would need to be made by someone in the regulated sector, he or she may suspect that the money used in a transaction was the proceeds of crime, without having any way of knowing the underlying predicate offence. The person would not know whether the initial offence that generated the laundered proceeds was an indictable or a summary offence. In addition, laundering the proceeds of a summary offence might be part of a larger pattern of other money laundering of which the person making the report was not aware. As we have said on many occasions, it is important that NCIS has as much information available to it as possible.

Restricting the reporting offence would limit the information that it receives.

As far as principal money laundering offences are concerned, the amendment would take us back to the position where having to identify the predicate offence to prove that money laundering was taking place acted as a barrier against successful prosecutions. That would be a negative step. We find it unacceptable in principle that the proceeds of some offences should effectively be exempt from the money laundering provisions. If conduct constitutes a criminal offence, as does summary as well as indictable conduct, we should also be able to prosecute the offender for laundering the proceeds of his or her crime or crimes.

As I have said, the classification of an offence is not the determining factor of whether proceeds are laundered. Even some summary offences can generate large amounts of proceeds and the Government cannot see any reason why those proceeds should not be caught by part 7. As the hon. Gentleman conceded, we rehearsed much of the argument in our debate on part 2, but it may be useful to repeat some helpful examples. Summary offences such as possession of video recordings of unclassified work for the purposes of supply, use of unlicensed premises for exhibition requiring a licence and offences relating to sex establishments can generate substantial proceeds. We cannot see any good reason why such proceeds should not be covered by part 7.

The Government are satisfied that the Bill as drafted adopts the right approach by applying the three principal money laundering offences to the proceeds of all crime, and I hope that the hon. Gentleman will withdraw the amendment. He hinted that he would do so when he moved it, and he is presumably even more intent on doing so having heard my convincing arguments.

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

The Minister has persuaded me that the amendment is unnecessary, and indeed possibly counter-productive. I am grateful to him for having given a complete and clear exposition of why that is the case. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment No. 510, in page 190, line 39, leave out paragraph (c).

As we discovered in Committee a week or so ago, the shortest amendments often elicit the greatest debate on matters of principle. This amendment is a case in point, because it goes to the issue of retrospection. Ministers or members of the Committee of any party will not be surprised to learn that there are concerns of principle about legislation having retrospective effect. I anticipate that the Minister will accuse us of being soft on money launderers. I will listen carefully to what he has to say on the special reasons why retrospection is justified in this case. Despite that, and the fact that I understand that he may have more of a case for retrospection in that field of law than in others, it would not be right to the let the matter go through

without at least discussing it, because it is rather like legal professional privilege.

Governments of all parties are always tempted to chip away at the traditional principle that provisions should not have a retrospective effect, and that is a danger. I am not making a partisan political point.

Photo of Vera Baird Vera Baird Llafur, Redcar

Will the hon. Gentleman make it clear how the provision is an example of retrospective criminalisation? It does not matter whether the criminal property being dealt with has acquired its criminal status before or after the Bill has been enacted. In what sense does that retrospectively criminalise a person?

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

I did not say, ''retrospectively criminalise''. Unusually for her, the hon. Lady misquotes me. I said that parliamentarians of all parties should be worried when part of a Bill can have a retrospective effect. One of the interesting things about the provision, as she has rightly identified, is that it refers to what happened to the property, rather than, as she would put it, retrospectively criminalising people.

We have debated the problem of cut-off times on previous occasions, and while it would be out of order to repeat our debates, I will touch on them briefly. My hon. Friend the Member for Spelthorne (Mr. Wilshire) gave a hypothetical example about property that had belonged to one of his now deceased relations, which had long ago been the subject of crime. The hon. Member for Glasgow, Pollok, who is sadly not with us at the moment, went into flights of fancy about property that may once have been the proceeds of crime and ended up on the Scottish borders in the hands of the ancestors of my hon. Friend the Member for Beaconsfield. There must be clear signs of where the line is drawn. It might be possible to say that it is immaterial whether the property was the proceeds of crime before or after the Bill was enacted and we have no defined cut-off point.

Let us suppose that some of the proceeds of criminal activity that took place 25 years ago or longer was not recovered at the time. An example could be the great train robbery, or the Brink's-Mat robbery. What if some of those proceeds of crime were to turn up now? Where is the cut-off point? It is that type of retrospection that we must be careful about.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough

Would the amendment change the criminal character of any criminal property, bearing in mind subsection (3)? If it would not, the purpose of subsection (4)(c) is to clarify the case.

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

As he so often does, the hon. Gentleman has touched on an important matter. It would have been possible for my hon. Friend the Member for Beaconsfield and myself to try to change any part of the Bill that might have dealt with timing. Certainly, I considered whether a consequential amendment to subsection (3) was needed. We did not say that our amendment was perfect. Indeed, neither of us would say that any of our amendments were perfect, although a couple of them—now known to members of the Committee as the Grieve amendment and the Hawkins amendment—cannot have been that bad, because the Government accepted

them. Most of the time, we do not place any great faith in our drafting skills, but we want to be able to raise significant issues. The Government could say, ''We accept that point, but we wish to amend subsection (3) as well.''

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

My hon. Friend asked why this is a significant issue. He said that the deletion would have no effect.

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

No, I think that the hon. Member for Wellingborough (Mr. Stinchcombe) said that removing subsection (4)(c) would have no effect because of the form of subsection (3). However, the hon. Members for Wellingborough and for Wrexham (Ian Lucas) will accept that we do not mind whether subsections (3) and (4) would need amending.

Photo of Mr Paul Stinchcombe Mr Paul Stinchcombe Llafur, Wellingborough 4:30, 24 Ionawr 2002

Does the hon. Gentleman accept that his amendment has no effect at all?

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

No, I do not. We often table amendments to raise an issue. That is the Committee's purpose. We do not say that our drafting is perfect, but we felt that suggesting the deletion was a simple and clear way in which to raise the issue. I have set out our case, and I will listen to what the Minister says. I anticipate that interesting issues will be raised by the question of what retrospectivity is.

Photo of Mr George Foulkes Mr George Foulkes Minister of State, Scottish Office, Minister of State (Scotland Office)

I do not think that we are talking about a retrospective effect in the way that the hon. Gentleman claims. I hope that I can convince him of that.

As currently drafted, the legislation provides that it is does not matter whether criminal conduct took place before or after the passing of the Bill. It would be quite impractical to apply part 7 to only proceeds that were acquired through conduct that was committed after the Bill came into force. That would mean that the Bill would have no effect for many years, and it would create uncertainty about the status of the present law, which also catches conduct committed prior to the date on which the relevant provisions in the Drug Trafficking Act 1994 and the Criminal Justice Act 1988, as amended by the Criminal Justice Act 1993, were brought into force.

I emphasise that the way in which subsection (4)(c) is drafted does not mean that the actual principal offences or the failure to report an offence may be retrospective. Those offences can be committed only if the laundering occurs, or the actual knowledge or suspicion for reporting purposes is formed, after the Bill comes into force. The subsection does, however, mean that a person who committed an acquisitive crime before or after the Bill comes into force, and who then launders the proceeds of that crime after the legislation has been commenced, or who fails to report his suspicions after the commencement, will commit an offence under clauses 321 to 324. Hon. Members will agree that that is sensible.

In order to commit a money laundering offence, a person must know or suspect that property is the

proceeds of crime. If the person has that suspicion, he should stop any dealings with it, regardless of how long ago the offence was committed. I hope that that convinces the hon. Member for Surrey Heath.

The construction of the offences, which replicates the approach taken in existing legislation, is fully compatible with the European convention on human rights. Article 7 of the ECHR requires that there shall be no punishment without law. However, in order to commit a money laundering offence, a person must do something in addition to the original crime that generated the proceeds. People who have already generated proceeds from criminal conduct will have time to become aware of the provisions of part 7 before they come into force. They will be able to take steps to ensure that they do not commit a money laundering offence.

In view of that explanation of the operation of part 7, I hope that the hon. Gentleman will withdraw the amendment.

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

I anticipated that the Minister would take such a line and at this stage—and only at this stage—I am willing to withdraw the amendment. However, he may have to be a little cautious because some issues may yet be raised by much more expert lawyers in another place. From reading their debates, I know that any issues that touch on even the slightest retrospection always cause Law Lords grave concern. I am not sure that he is completely off the hook in the long term, but for now I am prepared to say that I concede some faults.

I know that the Minister would recognise from the intervention of the hon. Member for Redcar that the measure was not retrospective in the full sense, but we thought that that such matters were worth raising. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 286, in page 190, line 40, leave out 'or a pecuniary advantage'.

No. 287, in page 190, line 41, at end insert—

'(5A) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.'.

No. 288, in page 191, line 4, leave out 'or pecuniary advantage'.—[Mr. Bob Ainsworth.]

Photo of Mr George Foulkes Mr George Foulkes Minister of State, Scottish Office, Minister of State (Scotland Office)

I beg to move amendment No. 289, in page 191, line 6, leave out subsection (8) and insert—

'(8) Property is all property wherever situated and includes—

(a) money;

(b) all forms of property, real or personal, heritable or moveable;

(c) things in action and other intangible or incorporeal property.'.

The amendment is technical. It will have no effect on what is meant by property under part 7. Its purpose is to avoid unnecessary confusion if the definition under part 7 is compared with the definitions of property under parts 6 and 8.

Amendment agreed to.

Amendments made: No. 267, in page 191, line 19, leave out 'but excluding a lease which is not a long lease'.—[Mr. Foulkes.]

No. 514, in page 191, line 30, at end insert—

'(10A) For the purposes of a disclosure to a nominated officer—

(a) references to a person's employer include any body, association or organisation (including a voluntary organisation) in connection with whose activities the person exercises a function (whether or not for gain or reward), and

(b) references to employment must be construed accordingly.'—[Mr. Bob Ainsworth.]

Clause 329, as amended, ordered to stand part of the Bill.

Photo of Anne McGuire Anne McGuire The Lord Commissioner of HM Treasury

I beg to move, That further consideration be now adjourned.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

I believe that this is a debatable motion. I am not about to do anything silly, but I want

to put on record that there could have been a guillotine a sitting and three quarters ago that would not have enabled us to have such discussions. It would be churlish not to say that it was helpful of Labour Members to make that possible, given that such discussions were worth having. I hope that they were taken in the spirit in which they were meant. I am not conscious of time wasting, other than if that means raising matters that people did not want to hear. Genuine points were made and I wanted to say, on behalf of colleagues, that I appreciate the courtesy that has been shown to us to enable us to reach this part of the Bill.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes to Five o'clock till Tuesday 29 January at half-past Ten o'clock.