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

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

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

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

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

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

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

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