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Disclosure Of Proceeds Of Offences

Volume 113: debated on Tuesday 31 March 1987

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'(1) If any bank or financial institution, or any other body suspects that any proceeds of drug trafficking or gold bullion smuggling are or have been under its control or in passage through its banking or financial system, it may disclose the circumstances to the Chief Officer of Police for the area, or to any constable in his stead, and may follow any directions which he may give.

(2) In disclosing information or following the directions of the police, in accordance with subsection (1) above, any institution shall have statutory protection and shall not be liable to any person for breach of contract, confidence or duty in that respect.'.— [Mr. Alex Carlile.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

I move this new clause because of certain evidence that is now in the public domain concerning large-scale gold bullion smuggling. This clause is not well drafted, and I apologise for that. I will deal with the matter quickly, because I hear messages of sympathy from the Minister, and I do not want to lose his sympathy by prolixity. I recognise that drugs are provided for adequately in section 24 of the Drug Trafficking Offences Act, which I supported.

Johnson Matthey Bankers specifically gave rise to this new clause. That bank lost a great deal of money as a result of large-scale smuggling of gold bullion. Considerable international efforts are being made to track down those responsible, and the proceeds of the smuggling. The money resulting from the smuggling of gold bullion has been laundered through both domestic banks and banks abroad. They include those in the City of London and others in the Isle of Man and in Florida.

A matter for major concern is that some of the banks have strong suspicions that the money represented both the proceeds of gold bullion smuggling and also fraud of a sister bank, JMB. The banks concerned, it would appear, would have liked to disclose their suspicions to the police. However, the case of Tournier v. the National Provincial bank of England, which was decided in 1924, does not make it easy for the banks to know what their duty is, and where their responsibilities lie. There are those who say that Tournier's case imposes on banks an obligation of secrecy. Whether that is so is in doubt, as can be seen from the difference between Lords Denning and Boardman in the debate in the other place in Committee on the Drug Trafficking Offences Act.

2.45 am

The object of the new clause is to permit banks to disclose such information as they have which gives rise to suspicion in the bank's mind, and yet to protect banks from any possible consequences such as breach of contract arising from that disclosure.

For gold bullion smuggling, there is no requirement for as severe provisions as are clearly required for drug trafficking offences, and as are provided under the Drug Trafficking Offences Act. Nevertheless, something is required.

It is my considered view that the banks would welcome the clause because it would represent a form of mutual aid in the banking system, which would also increase the public reputation of the banks.

I am grateful to the hon. and learned Member for Montgomery (Mr. Carlile) for raising this point, and I am sympathetic to it. I wish to discuss the issue with the banks and other institutions which would be affected by a wider form of voluntary disclosure provision. I take the hon. and learned Gentleman's points and will report back to him in due course on how we have got on, and I hope to do that in time for any matter which might arise thereby to be inserted in the other place.

I am grateful to the Minister for that rapid and helpful response. I look forward to seeing what he has to propose at a later stage. In the meantime, I beg to ask leave to withdraw the new clause.

Motion and clause, by leave, withdrawn.