My Lords, I beg to move that the Bill be now further considered on Report.
Moved accordingly, and, on Question, Motion agreed to.
moved Amendment No. 47A:
47A: After Clause 61, insert the following new Clause—
“Terrorist financing and money laundering
Schedule (Terrorist financing and money laundering) makes provision conferring powers on the Treasury to act against terrorist financing, money laundering and certain other activities.”
The noble Lord said: My Lords, this is a further step in my parliamentary induction. In moving Amendment No. 47A, I will speak to government Amendments Nos. 47B through to 47R, 49A, 61A and 61C. I will also comment on the non-government amendments in the group, Amendments Nos. 61AA to 61AP, 61B, and 61BA.
I should stress that I am aware that this is the first time that I stand before the House to discuss the Bill. I know that the Bill has undergone careful consideration during its passage to date and that there has been intense debate on a number of aspects of it both in this House and in the other place. In that context, I am conscious of the impact of moving at such a late stage these amendments, which add to the length and the scope of the Bill. This is clearly far from ideal and I assure noble Lords that I would not be doing so if I did not feel that the amendments are both necessary and urgent. As the House is aware, there is increasing international concern about the constantly evolving threats to national and international security by money-laundering, terrorist financing and the proliferation of nuclear, radiological, biological or chemical weapons.
The UK has been in the vanguard of international action through the UN, the EU and the Financial Action Task Force to tackle these threats. The Government are determined that we should continue in that way. We are seeking these late amendments to the Counter-Terrorism Bill in the light of shifting international political dynamics within the Financial Action Task Force that render our current powers less effective than we previously hoped. On 16 October 2008, the Financial Action Task Force issued a statement calling on its members to take further preventive action to protect their financial systems from the risks posed by terrorist financing deficiencies in Iran and money-laundering deficiencies in Uzbekistan.
As I set out in the letter that I deposited in the Library of the House last week, the FATF is the foremost international body in the development and promotion of national and international policies to combat money-laundering, terrorist financing and similar threats to international stability. It has 34 members and, through the affiliation of nine FATF-style regional bodies, over 175 jurisdictions are effectively included in its membership. We anticipate that there may be further calls for increased action at the FATF’s next meeting in February 2009.
I shall now explain why the Government are seeking urgently to augment their powers in the Bill. The power in the UK’s Money Laundering Regulations 2007 requires a decision by the FATF to formally invoke “countermeasures”. Keen students of the FATF will have noticed that the public statement issued by the FATF following its meeting in October did not use that term. The FATF works by consensus and, as with other similar bodies, not all of the membership necessarily wishes to move at the same speed against certain jurisdictions. It is becoming clear that some of the members have concerns around the use of such terminology in certain circumstances. The language used in the October statement therefore exposed potential difficulties with the UK’s legislation. If we cannot guarantee the use of the term “countermeasures” in the FATF’s pronouncements, we are unable to use the powers in the Money Laundering Regulations no matter the scale of the risks.
In order to mitigate any detrimental impact that tabling an amendment at this late stage may have, I have, in the short time available, attempted to address the situation by providing information to the House as well as arranging an open meeting to discuss the matter. I take this opportunity to thank noble Lords on the Conservative and Liberal Democrat Benches, as well as on the government Benches, for their constructive engagement to date, which has enabled us to refine our original proposals.
We have sought to consult the private sector, consistent with our industry-led approach to the UK’s anti-money-laundering and anti-terrorist financing regimes. In the time available, we have actively engaged with, among others, the British Bankers’ Association and some of its members and the Joint Money Laundering Steering Group, which is a group of financial services systems and control experts.
I shall now set out in more detail the content of the amendments that I shall be moving today. These will provide for the Treasury to apply financial restrictions in respect of non-EEA countries because of the risk posed by money-laundering or terrorist financing, either in accordance with a recommendation of the FATF or on its own initiative if such activity poses a significant risk to the UK’s national interests. Financial restrictions may also be imposed in response to proliferation activities carried on in such countries where this poses a significant risk to the UK’s national interests.
Specifically, the amendments will allow the Treasury to impose on firms, first, stricter requirements for customer due diligence—identifying clients, beneficial owners and the nature of business relationships; secondly, stricter requirements for ongoing monitoring of transactions; thirdly, a requirement to undertake systematic reporting of all transactions with designated entities; and, finally, a requirement to limit or stop business with designated entities. As I shall go on to explain, there are a number of safeguards and reporting requirements to be put in place to enable proper treatment of those affected by the directions and suitable parliamentary oversight.
Noble Lords might ask why the Government did not simply choose to amend their Money Laundering Regulations. The Money Laundering Regulations that implement the EU’s third money-laundering directive contain some powers to implement FATF countermeasures, but they are limited by the restricted scope of the directive and by what can be provided for in such regulations. The directive does not provide the basis for us to take the full set of steps outlined by the FATF. Furthermore, there is a limit to what can be properly provided for in such regulations. Provision of a power to impose a general requirement for systematic reporting or enhanced due diligence, for example, is a matter for primary legislation. Therefore, we could not simply amend the Money Laundering Regulations to deal with the situation.
At the same time, we considered that there was an urgent need to act in the light of the scale of the risks, as well as the likelihood that the FATF might call for further steps at its February meeting without formally invoking countermeasures. In those circumstances we tried to identify the legislative vehicles available and we considered this the most appropriate option, given the timing and other constraints.
As some noble Lords will be aware, the FATF countermeasures, if invoked, would apply only to risks for money-laundering and terrorist financing. However, another issue about which concern is growing internationally is proliferation financing. That has been recognised by the FATF, which agreed last year under the UK’s presidency to include a responsibility to address proliferation financing in its remit; the task force published a report on proliferation financing in June this year. The UN, the EU and the G7 have all expressed concern about financial systems being abused by proliferators. However, while the UN and the EU have provided some new powers at an international level to combat that, most specifically in relation to Iran, these are insufficient to deal with serious proliferation risks, as they do not enable us to act promptly to direct mandatory financial reporting or to direct the ceasing of transactions. The new powers that we are seeking would enable us to take such actions.
I hope that noble Lords will see why we have moved swiftly to address these issues and will agree that, although introducing such amendments on Report might not be the manner in which the Government would ordinarily seek to progress their legislative programme, in this instance it was a proportionate and appropriate response.
In sum, international pressure for action to counterterrorist financing, proliferation financing and money-laundering has been increasing in recent years. The UK has been, and will continue to be, at the forefront of the international call for action and efforts to protect the international system from these threats. However, we are currently constrained in our response by the combination of factors that I have outlined.
As I have said, several of our international partners already have, or are seeking, such powers. Switzerland is introducing a systematic reporting obligation on its banking sector in respect of transactions undertaken with Iran. The US, France and Germany also have, or are seeking, powers to enable them to act in the ways that we are seeking here. The Government therefore seek the powers in the amendments to enable an appropriate UK response to these internationally identified threats and to ensure that we can continue to protect the UK economy from potential abuse. The Government will continue to work through international bodies, such as the UN and the FATF, to achieve the widest possible consensus on necessary action, thereby increasing its effectiveness.
I shall now give the House a full explanation of the amendments that I have tabled to achieve that. Part 1 of the proposed new schedule sets out the conditions for the Treasury giving a direction that imposes countermeasures. The Treasury can issue a direction when any one of three conditions is met. The first condition is if the FATF has advised that measures should be taken in relation to a country because of the risk of money-laundering or terrorist financing being carried on in or by that country. The second condition is if the Treasury reasonably believes that there is a risk of terrorist financing or money-laundering being carried on in or by that country and this poses a significant risk to the national interests of the UK. The third condition is if the Treasury reasonably believes that a country is developing or facilitating the development of nuclear, radiological, biological or chemical weapons and this poses a significant risk to the national interests of the UK.
I underline that the Treasury can direct countermeasures when any one of those conditions is satisfied; they do not all need to be satisfied. It follows that the amendments allow for the Treasury to impose countermeasures for reasons other than terrorist financing, as the conditions also permit the Treasury to impose countermeasures to deal with significant money-laundering and proliferation financing risks where these pose a significant risk to the UK’s national interests.
We believe that it is right to deal with money-laundering and proliferation risks alongside terrorist financing risks. As noble Lords will be well aware, money-laundering and proliferation are serious threats that rely on raising or moving funds. There is a significant degree of commonality in the methods used by those concerned with money-laundering, terrorist financing and proliferation financing and the tools for addressing those risks. The financial countermeasures that we are proposing in these amendments can make a real difference in helping to combat these threats and in protecting UK financial institutions from abuse. Decisions on whether the threshold conditions for issuing directions are met will be taken on the basis of evidence. We will make as much of that evidence available to the House as we reasonably can in each case when making orders, consistent with national security concerns.
Part 2 of the proposed new schedule sets out who may be the subject of a Treasury direction. We have decided to limit these provisions to financial and credit institutions only, rather than applying them to the entire regulated sector for money-laundering, which includes, for example, estate agents, casinos and lawyers. We believe that this is a proportionate approach.
The whole regulated sector will remain subject to the existing Money Laundering Regulations and there will therefore be no diminution in the controls that it is required to exercise. However, we believe that the greatest threat of money-laundering, terrorist financing or proliferation activities coming from other countries falls on the financial or credit institution sectors, which are more at risk from cross-border flows of illicit finance. The definitions of financial and credit institutions reflect those currently in EC legislation. The amendments include a provision for the Treasury to amend by order the definitions of financial and credit institutions to ensure that we are able to keep pace with any changes in definitions that may occur in future at the EU or domestic level.
Part 3 of the new schedule sets out what requirements may be imposed on the financial sector by a Treasury direction. This provision allows for a range of potential countermeasures as follows: enhanced customer due diligence; enhanced ongoing monitoring of a business relationship; systematic reporting; and the limiting and ceasing of business. Directions can be imposed on all financial institutions, a sub-category of institutions or individual firms. The countermeasures proposed are those that can be recommended by the FATF. They allow for a graduated approach and we will deploy these measures, if needed, in a proportionate and risk-based way.
Part 4 of the new schedule sets out how the new powers will work and puts in place certain safeguards. The powers will be operated by means of a direction given by the Treasury. Paragraphs 14 to 16 set out the procedures for making directions. As noted earlier, a direction can be given to all firms operating in the financial sector, a particular class of business in the sector—for instance, banks or money service businesses—or a particular business in the sector. Where a direction is given to a particular business, the Treasury must give notice of the direction to that business. Where a direction is given to a class of business or generally, the direction must be contained in an order made by the Treasury and publicised appropriately—for example, by press statements, by use of our subscription e-mail services and by website alerts.
Orders are made subject to the negative resolution procedure unless they contain requirements to cease or limit business. In those cases, the affirmative resolution procedure will apply. The Treasury will endeavour to provide as much information to the House as possible on the reasons for making these orders at the time they are laid, consistent with the need to protect certain forms of intelligence. As a further safeguard, all directions cease to have effect one year after being made.
Finally, Part 4 also provides for a licensing regime where a direction is made to limit business. This is designed to allow certain transactions to be exempted from the requirements of the direction, if necessary, to enable the Treasury to minimise the impact on third parties. Licences can be issued at a general level to exempt all relevant persons from certain requirements, or more specifically in relation to a particular transaction involving a particular person.
Before turning to the issues of supervision and enforcement set out in Parts 5 to 8, I should also mention that Part 8 includes a requirement on the Treasury to report on its use of these powers on an annual basis. I know that noble Lords on the Liberal Democrat Benches are keen to specify the contents of this report and I look forward to debating their suggestions.
As noble Lords will be aware, Parts 5 to 8 of the new schedule set out the proposed supervisory and enforcement structures for the new powers. The Government’s intention is that these should mirror as closely as possible the structures set out in the Money Laundering Regulations 2007, which form the basis of the current anti-money-laundering and counterterrorist financing regimes. We intend to build on the existing structures and their supervisory and enforcement regimes by extending the powers of the supervisory bodies responsible for financial and credit institutions—namely, the Financial Services Authority, Her Majesty’s Revenue and Customs, the Office of Fair Trading and the Department of Enterprise, Trade and Investment in Northern Ireland. This will enable them to supervise compliance with any directions made by the Treasury under this order, as part of their wider role.
The powers of enforcement provided for in the new schedule include the right of the supervisory bodies to require the production of information or documents, to enter and inspect premises either with or without a warrant and to impose civil and criminal penalties as appropriate. I understand that noble Lords on the Liberal Democrat Benches have suggested amendments to some of the provisions in the new schedule. The Government believe that it is important to minimise regulatory burdens by ensuring consistency with the money-laundering regime and similar legislation as far as possible, but I look forward to hearing from noble Lords before commenting further on these points.
Overall, the Government believe that this regime will ensure an effective system of supervision and enforcement. The Treasury will, of course, continue to work closely with industry to develop guidance in the event of specific directions being given, to ensure that scope and applicability are clear.
As I have explained, there are real and pressing threats to be addressed and, without the powers that we seek to take, the UK financial system risks being exposed to those threats. I have explained why we need to make urgent amendments to this Bill. I thank noble Lords again for the constructive manner in which they have engaged in the discussions that we have held to date. I have also explained the decision to deal with money-laundering and proliferation risks alongside terrorist financing. The financial countermeasures that we propose in these amendments can make a real difference in helping to combat these threats and in protecting UK financial institutions and the economy from abuse. I have also explained the safeguards that we are putting in place.
In conclusion, I believe that these powers are necessary, important and proportionate and come with appropriate safeguards. I also believe that they will help to protect the UK from a number of real and present threats and keep the UK at the forefront of international action in dealing with those threats. I beg to move.
My Lords, I thank the Minister for his explanation of the amendments, which come rather late in the day. The House will rightly have concerns about rushed legislation and the risk that it can pose of powers being used inappropriately. That is not just a theoretical remark. We need only think back to the use of the counterterrorism legislation to freeze Landsbanki’s assets to see a case in point—and I share that kind of worry.
Nothing that I am about to say should be taken as condoning inappropriate use of power. That said, we entirely agree with the Government that there is a pressing need to address gaps in our ability to tackle terrorism financing, proliferation financing and money-laundering. It is a policy objective that we on these Benches entirely share with the Government. We are therefore supportive of the thrust of the amendments. It is indeed worrying that, for some time, the Treasury has not had the powers to allow the UK to apply the full range of financial restrictions and measures recommended by the Financial Action Task Force. That has been a matter of international embarrassment to us and it is right that we should close that gap. As the Minister said, we are not at present able to require business to be aware of risks, take extra diligence or supply systematic reporting when transacting with jurisdictions of concern. Those are things that we need to be able to do. We also need to be able to limit or cease transactions with countries of concern. That is obviously a considerable power and needs to be drafted with great care.
The Financial Action Task Force issued a call for member states to address the gaps in their domestic legislation in October. Certainly, my colleagues on the Front Bench who deal with foreign affairs may wish to see us able to take action to respond to that. Given its subject matter, I agree that, while the Bill is not necessarily the ideal vehicle, it is the best we have available to put these powers in place at this time, and we think it reasonable to do so. It is the only vehicle, it has to be said, that will allow us to get these powers on the face of primary legislation by February 2009, the date of the next meeting of the Financial Action Task Force.
Taking all that into account, as the Minister said, we have sought to work closely with the Treasury from these Benches to secure agreement on amendments over the past week or so. In doing that, we specified a number of safeguards that were not in the original draft of the amendment that we saw. In particular, we focused on the need for annual reports to Parliament on the use of the proposed new powers. I know that the noble Baroness, Lady Miller, has tabled a probing amendment and, like the Minister, I am interested to see what information she thinks should be included in the report.
We went into fairly detailed and specific points in the drafting, so that the amendment put forward here is thought through. I thank the Minister for the constructive way in which he and his officials engaged with us. Our joint work is reflected in the amendment before us and in the Explanatory Notes sent to your Lordships' House last week. I am sorry to say that something seems to have gone wrong with the circulation of the Explanatory Memorandum. I did find it, but it was in the Library rather than the Printed Paper Office, so I fear that a number of noble Lords may not have seen it. That is a great pity because it is very helpful. I commend sight of it because it is a helpful explanation of what the Government are trying to do. Given that, it is all the more important, if noble Lords will allow me, to raise a number of points and questions on the Floor and have various assurances and points on the record. The Minister has already seen these questions so they will not come as a surprise.
We tabled a number of amendments based on our work with the Treasury. One is probing and I hope that the Government are able to accept the other two. My first two questions are related. When would a failure to comply with a direction from the Treasury incur a civil penalty as opposed to constituting an offence? It is important to have clarity on that. Will the Minister give the House some indicative examples beyond those included in the Explanatory Notes of what “appropriate” action by an enforcement authority would be? “Appropriate” is defined as,
“effective, proportionate and dissuasive”.
That point about the action of enforcement authorities leads on to my next question. The amendment makes clear that the powers of enforcement authorities and their officers are not exercisable in relation to items subject to legal privilege. Can the Minister explain how an enforcement officer would distinguish between items that are not subject to legal privilege and those that are? This is obviously included in the PACE codes. What if an item is viewed or removed, and is later found to be subject to legal privilege? What would its fate be?
On a more specific point about Her Majesty’s Revenue and Customs as an enforcement authority, can the Minister say something about the forthcoming amendment to its review procedures? What is the projected timing of such a report, and can the Minister give some indication of its likely substance? It is important that the procedures put in place are not arbitrary and do not appear unreasonable. For instance, a system currently in operation whereby no further communication from HMRC constitutes a rejection of an appeal is not satisfactory. The appellant is entitled to be actively told if their appeal is to be rejected. Will the Minster undertake to write to the House on the timetable and the substance of the review?
When an appeal is lodged against an enforcement authority, can the Minister confirm why the Treasury would be able to make an order for the appeal not to be made to the first-tier tribunal? It would be helpful to have clarity on whether the regime outlined in the amendment is transitional, applicable only until the first-tier tribunal is operational, or something else. If this power is to remain permanently, what other purpose could it be put to?
Lastly, on a general point, can the Minister confirm that if these amendments are agreed to, the Government will review the various pieces of legislation providing for these powers to impose financial restrictions and consider the need to consolidate them? Part of the problem of legislation being brought forward in amendments to successive Bills is that we ultimately get—no doubt unintended—inconsistency, and duplication with minor variations of language. It becomes difficult for those who must obey the law. Consolidation would therefore be good for ease of reference and the avoidance of unintended inconsistency. It would also be helpful to know the timescale of any review.
Briefly, on our specific amendments, Amendment No. 61AB is a probing amendment. In what circumstances would compensation be most likely to apply? The categories in the legislation are not particularly easy to understand. Would the courts have discretion to award compensation in any circumstances that they regarded as appropriate? Are they bound to some extent by the categories, or are they free to apply their own judgment and discretion?
Amendments Nos. 61AA and 61BA reflect previous discussions and assurances from the Treasury. They are nevertheless important. Amendment No. 61AA would make clear that the Treasury may not impose onerous burdens on businesses unnecessarily, and that the new powers would not be applied in an indiscriminate manner on a wide scale that would have disproportionate operational impact on businesses, but be interpreted and applied in a specific way. In other words, “proportionate” has regard to the risk to the UK’s national interest and—this is the important addition—to the financial cost to businesses subject to a direction. Therefore, it is a matter of being proportionate in relation not simply to the Government and the national interest but to the financial cost of a direction to the business.
Amendment No. 61BA is about guidance on the implementation of Treasury directions. I hope that the Minister will explain the procedure for producing guidance. I understand that this is industry-led. We want to make sure that it is put in place so that directions can be complied with. I have refrained from tabling an amendment to the effect that the powers will not come into effect until the guidance is in place to avoid foot-dragging by industry. However, if I might say so, there is a balance to be struck here. Will the Treasury ensure that the necessary assistance is given to provide at least initial generic guidance; in other words, that the industry does not have to wait for a very long time before it understands how it is meant to comply with these amendments? We will be happy to look at their drafting and come back at Third Reading. Will the Minister confirm that the Government are willing to accept the inclusion of these two amendments in the proposed new schedule?
Finally, I am sure that other Members of your Lordships' House will have views on the amendments before them. We on these Benches support calls for the Government’s amendment to the Title to be more specific. “Certain other activities” would much better read “proliferation financing”. It is helpful for the scope of a Bill to be clear on its face.
The Delegated Powers and Regulatory Reform Committee has not yet had a chance to look at the amendments. I understand that it will report extremely early. I look forward to receiving that report. The committee produces very sensible and important recommendations that we on these Benches tend to support. We wish to help the Government get these amendments through and we would be very grateful to have clarification on the various points that I have raised.
My Lords, I wish to add to what the noble Baroness said about the Delegated Powers and Regulatory Reform Committee. Owing to the extremely short notice that was given to us to deal with a very substantial set of amendments, the committee has been unable to look at them so far but will consider them tomorrow. We may recommend that certain alterations should be considered, which would take the form of amendments to the provisions passed by your Lordships' House today. I cannot say what will happen until the committee has met, but I think that there may be one or two matters on which we will make recommendations.
My Lords, we on these Benches support the broad thrust of these amendments, which introduce important powers to help combat money-laundering and terrorist financing and proliferation by restricting financial interactions with the designated groups or individuals that the Minister talked about. We understand that this is a very important step which is in line with the recommendations of the FATF. Therefore, we are sympathetic to the introduction of the powers. However, we believe that it is necessary to introduce an amendment at least to seek some assurances from the Minister. These are very potent regulations with the ability to require, at the say-so of the Treasury, a business to completely cease trading with another business or with the whole of a Government. In fact, they constitute some of the widest powers on finance matters that I can remember coming through this House. As the Minister said, only any one of three conditions needs to be complied with. After the recent example, which the noble Baroness, Lady Neville-Jones, mentioned, of the Landsbanki Freezing Order, we really have to be very careful about hasty decision-making which can lead to problems later on.
Although I have heard the Minister’s explanation, I am surprised that the Government have introduced the amendments so late in the day. I emphasise that, and I would be grateful for the Minister’s comment on that. The FATF conducted its third mutual evaluation report of UK compliance and made its recommendations over a year ago, in June 2007, as I understand it. Why has the Treasury left it until now to introduce the amendments? Unless I have that date wrong, it has had more than a year to think about it. I would be grateful to understand why it has taken that length of time.
The difficulty created for Parliament by that lateness has been compounded by the fact that the Government have presented Members of this House with a moving target. I am very grateful to the Minister for giving us sight of the amendments in advance, and to members of his team, who went into considerable detail on questions that my researchers raised. However, the Government have changed the amendments over the past few days, so that it almost seems as if the Treasury is conducting an ad hoc consultation right up to the wire. Its willingness to discuss the amendments in depth with us has helped that, but it is certainly a very difficult situation to deal with.
My second point relates to the mutual evaluation report published by the FATF last year. Why has the Minister chosen to react to only a small selection of the FATF recommendations in bringing forward these recommendations? The UK has a comparatively good record on powers to combat money laundering and terrorist financing, and some of the suggestions made by the FATF have since been met in the third EU money laundering directive, but other FATF concerns still seem to be outstanding. For example, in 2007, its analysis of preventive measures in this country found the UK to be non-compliant on obligations for politically exposed persons and correspondent banking, and it had concerns about record keeping in shell banks. Will the Minister give the House an assurance on all the other recommendations made by the FATF in June 2007, including institutional concerns, for example, as to why the UK does not maintain comprehensive statistics on cross-border disclosures or the breakdown of offences and the number of requests granted for mutual legal aid assistance?
I tabled Amendment No. 61B to compensate for the scrutiny gap that comes with the speed with which these powers are being introduced. We are grateful that the Minister has decided to include the annual report to Parliament, which we considered to be the biggest gap in the amendments that were initially brought forward. My amendment is intended to probe what would be in that report. I would not want to see the amendment added to the Bill, because by specifying exactly what should be in the report, one is bound to overlook something. It would then be said, “That is not in the report because it was not specified”.
I would very much like the Minister to comment on the specific issues raised by my amendment. Of particular concern is the fact that under proposed new paragraph 3(1)(a), the Treasury can issue a direction to a particular person, which could be a financial institution, without any sort of parliamentary oversight. For directions that apply to a sector, on the other hand, an order would have to be laid before Parliament.
The Minister’s team tells me that the reason why individual firms could not enjoy the same parliamentary protection is that it would be resource-intensive and would waste time. However, they also told me that they do not imagine that the power would be used very often; but those arguments seem somewhat contradictory.
How often do the Government anticipate using these powers to issue directions to sectors and particular persons? I recognise that that might be a difficult question to answer, but there must be a little bit of history to rely on. The government briefing suggests that they are ready to use these powers in relation to Iran. Perhaps that provides some indication of the number of occasions on which they intend to use them, if they have carefully looked into this matter. Because of these concerns, my amendment requires the justification of the use of a direction against a person, rather than a sector.
My amendment then requires the Government to provide a breakdown of each of their three new powers and the countries to which they will apply. In addition, I specify that the Government should disclose the names of businesses affected and a summary of the intelligence that backs up the decisions, with a safeguard specified at the end of my amendment that national and commercial interests should be protected. That detail may be so redacted as to be somewhat worthless, but I have included it as a discussion point for the Minister. In a major piece of new legislation we need as much detail as possible on what will be in the report. I would be grateful for replies on those issues.
My Lords, like the noble Baronesses, Lady Neville-Jones and Lady Miller of Chilthorne Domer, I support the general thrust of this group of amendments, which are important in addressing a genuine and real problem. Like them, too, I have some concerns about the amount of time that noble Lords have had to consider the amendments, but I am particularly grateful to my noble friend Lord Myners for the considerable efforts that he has made in the past week or so to allow the fullest possible consideration of these detailed changes.
One of the problems with these provisions appearing in a counterterrorism Bill, as they have had to because of the timetable with which we are now faced, is that this will lead, when the powers are used, to the sort of comments that we have heard in your Lordships’ House today about the use of so-called counterterrorist powers in freezing the assets of Landsbanki. That is unfortunate because, as I understand the situation, the powers used in that case were not specifically counterterrorism powers but, as they resided in a Bill that was primarily about counterterrorism, the assumption was that they were. There is a danger that a similar situation will arise in respect of these provisions, which are, quite properly, much broader than counterterrorism, because they will reside in what will ultimately be an Act that relates to counterterrorism. That is a problem that we have to face and the greatest possible clarity must be given to explanations relating to this.
I have a specific question, which I hope that my noble friend can answer. He assured us that estate agents, casino owners and lawyers were not the subject of this Bill. We all acknowledge that they are popular categories of persons among some of your Lordships, but I wondered whether paragraph 8(1) of the new schedule would enable the Treasury to amend the paragraphs to which it refers to include other categories of persons. Perhaps we may have some clarity on that when my noble friend replies.
My general point is that, if a country’s arrangements are so weak that it is easy for people to engage in money-laundering activities, the financing of terrorist activities or the financing of weapons of mass destruction, it is imperative that as a nation we have put in place powers that mean that people in this country who are engaged in trade or financial transactions with those countries are subject to the widest possible warnings and the widest possible expectations of what they should do to safeguard the position. Without such powers, we may not know what people in this country are implicitly supporting in terms of money-laundering. These provisions are important for that reason.
My Lords, I underline what the noble Lord, Lord Goodhart, said as chairman of the Delegated Powers Committee. These are quite complex amendments; I find them extremely complex to read, as they relate to the area that I normally do not think about at all—finance. However, they are an important proposed addition to the Bill and no one is objecting to them.
The noble Lord, Lord Goodhart, pointed out that not only does the House have to consider the amendments at short notice but the Delegated Powers Committee has to, too; it is meeting tomorrow. Having been a member of that committee, I know that quite often there are emergency meetings—they have to happen—and that the committee attempts to respond to emergencies. However, from what we have been told, this is a somewhat unnecessary emergency. The Delegated Powers Committee could make a mistake because of speed. I do not suggest that it will—I am sure that it will not—but it could.
The Government should not move the amendments today but should wait until Third Reading so that the House can consider what the Delegated Powers Committee says. The order-making powers in the amendments are important and this simply must not be done wrong. That may sound a silly suggestion to the Minister but I do not think that it is; the Government would do well to wait and move the amendments at Third Reading, when the House could consider the whole thing properly.
My Lords, I endorse what has been said about the general thrust of the amendments, which I of course support, and what my noble friend Lady Carnegy said about complexity and the dangers that go with attempting to legislate at such speed, albeit in necessary circumstances.
I have one small point to raise, which I have not made the subject of an amendment. It is a faint point that I raise in the interests of consistency about the drafting in line 213 of government Amendment No. 61A, which is to be found on page 12 of the Marshalled List that was published on 7 November—I hope that there has not been a subsequent one. My point gives rise to the question whether there is any difference in meaning between undertaking enhanced customer due diligence measures and taking enhanced customer due diligence measures. This is very much a nit-picking point but nits, if left undealt with, can turn very toxic. It is a point for Committee, but there is no opportunity to take it elsewhere.
Paragraph 10(1) of the proposed new schedule, beginning on line 213, states:
“A direction may require a relevant person to undertake enhanced customer due diligence measures”.
Paragraph 10(2), states:
“The direction may do either or both of the following … impose a general obligation to take enhanced customer due diligence measures”,
and so on. Immediately after that, we read that the direction may,
“require a relevant person to undertake specific measures identified or described in the direction”.
I do not think that a technical distinction is intended between taking and undertaking enhanced customer due diligence measures. Paragraph 11(2) states:
“The direction may do either or both of the following … impose a general obligation to undertake enhanced ongoing monitoring”,
and so on. There is scope for tidying this up, in case leaving it at large gives rise, in some later litigation, to a quite unintended distinction and to difficulty.
My Lords, I shall speak to the amendments in my name. One problem with legislation being produced in this way at a very late stage in the consideration of a Bill is that it is impossible fully to understand its purpose. Consequently, my amendments are largely directed at clarification and are probing. I do not propose to refer to Amendment No. 61AC but, so far as concerns Amendment No. 61AD, I ask the Minister why offences of this nature require jurisdiction throughout the United Kingdom. Paragraph 34 of the new schedule proposed in Amendment No. 61A says:
“Where an offence under this Schedule is committed … proceedings for the offence may be taken at any place in the United Kingdom, and … the offence may for all incidental purposes be treated as having been committed at any such place”.
I follow the argument that it mirrors the provisions of Clause 29 in the Bill but I am not sure why it is applicable to offences of this type. I look forward to hearing the explanation.
My next amendments refer to the time limits of summary proceedings in paragraph 35 of the proposed new schedule. Normally magistrates’ courts have limited jurisdiction for six months and sometimes 12 months, but apparently jurisdiction may be claimed in a magistrates’ court,
“at any time within three years after the commission of the offence, and … within twelve months after the date on which evidence sufficient in the opinion of the prosecutor to justify the proceedings comes to the knowledge of the prosecutor”.
Why do we require the jurisdiction of magistrates to be extended in this way? Paragraph 35(4) states that,
“a certificate of the prosecutor … as to the date on which such evidence … came to their notice is conclusive evidence”.
In other words, the prosecutor can say, “Well, we didn’t think in this particular month that there was a case but we did in a later month, and that is conclusive. Our view is absolutely conclusive as to when the time runs”. That strikes me as an odd sort of provision, which goes against many of the principles relating to time limits in a magistrates’ court.
With regard to paragraph 36 and my remaining amendments, I question why an officer of a company or of a body corporate should be guilty of an offence not if he or the company does something with his connivance or consent but merely if he is neglectful. Why do criminal sanctions have to be applied and why is negligence brought into the criminal concept in this schedule? I should be grateful for explanations.
Had we had these provisions before us at the beginning of our consideration of the Bill, there would have been no need for these questions to be raised. However, they have been thrown at us at the very end, when we have only Report and Third Reading in which to take stock of what is being assessed. That makes it extremely difficult for us to pass legislation, particularly when it appears to be in breach of some of the principles of jurisdiction and of the time limits to which we have always adhered in this country.
My Lords, this has been an interesting, helpful and illuminating debate, and I thank all those who have participated in it. I also recognise that there is a great deal of good will in the House on this issue, for which I am very grateful, as I am for the constructive basis of the comments that have been made. I shall endeavour to cover the various comments and questions. If I fail to deal with any of them, I shall examine Hansard and communicate with an explanation with those who participated in the debate.
I start by thanking the noble Baroness, Lady Neville-Jones, for her helpful contribution and expression of support. I have apologised for the lateness with which this legislation has been brought to the House but have explained that we judge it to be a matter of urgency. The point about lateness was also made by a number of other Peers, including the noble Baroness, Lady Miller, my noble friend Lord Harris and the noble Lord, Lord Thomas. I apologise to them as well for the lateness. I also appreciate, however, that the noble Baroness, Lady Neville-Jones, said that she regards this Bill as in some ways the least-worst option as the carrier for this particular legislation. My noble friend Lord Harris made a point about the affirmative order on the Landsbanki freezing and was right to point out that the full wording of the Act was not limited to terrorism but had wider coverage. That is also the case with this Bill.
My Lords, I was going to come to that issue. I shall do so promptly. The first thing to note is that the UK’s record is among the most compliant in the world on FATF measures. No country is able to satisfy all the FATF conditions but we have a very strong record of achievement in that respect. We have taken action more recently to comply with further FATF requirements, including new money-laundering regulations in December 2007, and we have brought in regulations on politically exposed persons and shell banks. So we have taken action to address some of the areas where the FATF said that we could do better. We wish to be exemplary and lead others in the actions that we are taking.
The noble Baroness, Lady Neville-Jones, asked whether there would be a civil or criminal penalty. Each supervisory body has an established set of guidelines and precedents from the wider money-laundering regulations. They will adopt the same approach here as they are already using in the implementation of those regulations. In particular, they will take into account the nature, seriousness and impact of any non-compliance. Generally, I would expect civil penalties to be applied when a failure to comply is less serious in manner and consequence.
The noble Baroness, Lady Neville-Jones, also asked about the use of the term “appropriate”. This replicates a provision in the money-laundering regulations and will depend on the circumstances of the case. Circumstantial factors that will be taken into consideration include the deterrent effect and the size and capability of the financial resources of a firm that might be in receipt of a civil penalty.
The noble Baroness, Lady Neville-Jones, asked about legal privilege. The approach to legal privilege in the Bill and in this amendment will be carried over from existing money-laundering regulations. Supervisors are open about their policies on handling issues of legal privilege. For instance, the FSA has a number of guides on its website, such as the Decision Procedure and Penalties Manual and the Enforcement Guide Review 2008, which usefully highlight its approach to such issues. Furthermore, enforcement officers will have ready access to legal advice about privilege. The issues of legal privilege raised here are therefore very similar to those that already arise under existing legislation.
The noble Baroness, Lady Neville-Jones, also asked about HMRC and the amendment of its review procedures. HMRC has not yet finalised the order amending its review procedures, so I am unable to say exactly what final form they might take. The order will be an affirmative resolution order, so the House will have an opportunity appropriately to consider it.
I believe that the noble Baroness, Lady Neville-Jones, asked about the functions of the tribunals set out in proposed new paragraph 28(6). These have not yet been transferred to the first-tier or upper-tier tribunal. Until that happens, the Treasury will need to make an order providing for appeals to be made to the existing tribunals.
The noble Baroness, Lady Neville-Jones, raised two other issues on which I shall comment. She asked that we agree to review various pieces of legislation providing for powers to impose financial restrictions and consider the need to consolidate them. I fully agree with the request; it makes considerable sense, and we wish to avoid any situation where there are inconsistencies. We will do that as soon as we can in a manner consistent with doing the job thoroughly and professionally. Finally, she asked whether we wanted further to amend the Long Title of the Bill. I am very happy to give that further consideration.
I am grateful to the noble Lord, Lord Goodhart, for his comments and to the noble Baroness, Lady Carnegy, for her observations on the Delegated Powers and Regulatory Reform Committee. In my short time in Parliament I have come to appreciate the respect and authority which this committee commands among noble Lords. We look forward to seeing the outcome of its consideration of the Bill when it meets tomorrow, and noble Lords will have ample opportunity to take its comments into consideration when the Bill comes back to the House. I apologise to the committee again that it is being placed under time pressure, but I do so in the knowledge, based on everything that I have been told, that it will do a thoroughly professional piece of work despite the time pressure under which we have placed it.
I have already partly addressed the comments of the noble Baroness, Lady Miller. The UK is, as I say, largely compliant with a significant number of the FATF’s measures of effectiveness and among the best jurisdictions. On this basis, only the USA and Belgium scored higher than the UK. She asked why we are acting only now. That is an aspect of the lateness question. There has been a changing dynamic in the FATF. The way in which it is operating means that, among other things, we have concluded that we need the power to take unilateral decisions if necessary. I cited in particular the difficulty we had with using countermeasures and whether those were included in any statement made by the FATF. This problem became evident to us only at the October meeting of the FATF. We realised then that we had a problem of which we were not previously aware because the FATF was changing the way in which it was approaching issues and the language it was using in its recommendations.
The noble Baroness, Lady Miller, asked whether we will use the powers against Iran. The Prime Minister, in his powerful speech at the Guildhall last night, urged Iran to be part of a world that is addressing the issues of terrorism and to pull away from any actions designed to facilitate the proliferation of weapons of mass destruction. We want that to be the case and will use all our diplomatic resources to secure that objective. At the same time, we recognise that Iran may not choose to do that. If that is the case, the legislation will contain powers that we would be obliged to consider in certain circumstances if the evidence so justified.
I believe that I have dealt with the point raised by the noble Baroness, Lady Carnegy, about waiting for Third Reading. Obviously, we await the outcome of the Delegated Powers and Regulatory Reform Committee meeting under the chairmanship of the noble Lord, Lord Goodhart, tomorrow.
I shall now give the government view on some of the amendments. I thank the noble Baroness, Lady Neville-Jones, for raising the point about proportionality. Proportionality is a very important requirement for the operation of any administrative power of this type, and I can assure the House that it will be a key consideration in the exercise of these powers. In any use of these powers, Ministers will seek to balance the need to take effective action against the potential impact on UK business. That will require careful consideration of the money-laundering, terrorist-financing or proliferation risks, and of the burden of any requirements imposed on business. I am therefore happy to recognise the need for proportionality in the Treasury’s exercise of the powers. If the noble Baroness will be content, the Government will therefore table an amendment at Third Reading to include a provision that gives proper effect to that.
I understand the reasoning behind Amendment No. 61AB, but it would remove an important provision that it is necessary to retain. The Treasury needs the ability to act quickly, if necessary, to give effect to orders containing general restrictions, but these should be subject to ultimate parliamentary approval. Removing the provision could unnecessarily inhibit our ability to act. However, let me reassure the House again that we will be concerned that use of the powers does not impact unduly on business. To that end, I have given a commitment to establish a formal requirement for proportionality.
Nevertheless, there may well be circumstances where a direction will require businesses transacting with jurisdictions of high risk to limit or cease business. In some cases, that will require the cessation of current business, and it is important that we can implement that power quickly. It will, of course, be possible for any firm affected by a direction to apply for a licence to exempt transactions from its scope. That will be an important means in appropriate cases for firms to mitigate the effect of any direction.
Where an order is not approved by Parliament, I can assure the House that we would consider the circumstances carefully to see whether compensation is justified. Ultimately, the courts could in appropriate cases consider whether a firm was due any compensation as a result of actions taken to comply with a direction that subsequently ceased to have effect or as a result of an order failing to secure approval. I therefore cannot agree to the amendment, but I hope that the noble Baroness, Lady Neville-Jones, will be satisfied with that response.
I appreciate the points made in the tabling of Amendment No. 61AC, but it is important to retain that provision, which provides an appropriate sanction for people who attempt to obtain a licence by duplicity. We have made provision for a licensing regime to enable the Treasury to reduce any avoidable impacts on third parties from a direction requiring the limitation or cessation of business.
I understand the significant issues mentioned by noble Lords in respect of Amendment No. 61AD. The provision has a dual purpose: to give UK courts jurisdiction over offences committed outside the UK; and to provide for UK-wide jurisdiction for offences regardless of where the offence took place. I say to the noble Lord, Lord Thomas, that such provisions in respect of offences committed outside the UK exist in other legislation—for instance, in Section 17 of the Terrorism Act 2006. We consider that such provision is necessary, given that directions may apply to action outside the UK and that offences may be committed by action outside the UK.
The provision replicates Clause 29, which deals with specific terrorist offences. Given the nature of the offences that we are discussing in relation to these powers, namely the breaching of directions, I accept that they are of a different order to such terrorist offences, and that there is therefore less requirement for such provision in relation to offences committed in the UK. Therefore, although I cannot agree to the amendment, the Government are prepared to table an amendment at Third Reading so that the provision applies only to offences committed outside the UK.
Amendments Nos. 61AE to 61AK all concern the same principle of the appropriate time limits for summary proceedings across the three jurisdictions in which prosecutions might be commenced. I believe that it is necessary to provide for extensions of the standard time limits due to the nature of the offences concerned. In these circumstances, it is quite possible that an offence may not come to light for some time, and that the subsequent investigation into it may be a complicated process involving the analysis of large amounts of documentation and computer records concerning complex transactions.
Furthermore, it is not unusual to extend the time limits by this amount. I note it has been done, for instance, in the Terrorism (United Nations Measures) Order 2006; by Section 1128 of the Companies Act 2006; and by Section 431 of the Insolvency Act 1986. I hope that that will reassure the House that the provisions are useful and consistent with other legislation, and that noble Lords will understand why I cannot agree to the amendments.
I note the points made by the noble Lord, Lord Thomas, on Amendment No. 61AL, but this is not an unusual provision. It is simply designed to prevent unjustified delay to any proceedings resulting from argument over precise dates. Similar provisions exist in other legislation, including the legislation I just mentioned.
I shall deal with Amendments Nos. 61AM, 61AN and 61AP together, as they concern the same issue: that if an offence committed by a company is shown to be attributable to neglect of an officer of the company, the officer is guilty of an offence as well. Subsequent sub-paragraphs in the schedule replicate that provision in respect of partnerships and unincorporated associations.
I appreciate the concern of the noble Lord, Lord Thomas, that that makes individuals potentially liable for non-compliance with a direction. However, I think that that is justified. It is a standard provision in relation to criminal offences that may be committed by a company, and it replicates the existing situation under the money-laundering regulations. Similar provisions exist in a number of other pieces of legislation, including the Energy Act 2004, the Animal Welfare Act 2006 and Section 78 of the Anti-social Behaviour Act 2003.
An important point was raised in connection with Amendment No. 61B. We are keen to provide Parliament with appropriate information on the Treasury's use of the powers. Paragraph 38 of the schedule makes provision for the Treasury to submit an annual report to Parliament that sets out how it exercises those powers. The noble Baroness, Lady Miller, said that that was a probing amendment. She kindly said that it was in the nature of these things that whatever one listed, there would always be something that one forgot—rather like packing for a holiday—so it is probably not right to be prescriptive about the content. However, the general sense of the points that she made is well taken.
The Government feel that their approach is the right one from a legislative point of view. It would be unusual for specific details to be included in primary legislation. Given that much of this information would already be in the public domain as a result of the Treasury providing it to Parliament for the making of an order and/or subsequently publicising directions, it would be helpful to maintain some flexibility in the preparation of each report. I assure noble Lords that the Government intend the Treasury’s annual report to be helpful and informative.
On Amendment No. 61A, I should point out that guidance by industry bodies and supervisors has been of great assistance in enabling firms to implement the money-laundering regulations consistently and on a risk-sensitive basis. This guidance was developed by the supervisors and industry-led bodies, and was ultimately approved by the Treasury. The Treasury expects in this instance as well to help supervisors and others to develop guidance to ensure that any directions issued under the legislation can be implemented effectively and without undue burdens on business. We have begun initial discussions and engagement with the industry, including the British Bankers’ Association, to consider potential issues of implementation. Given this, I am ready to table an amendment at Third Reading to provide for such assistance to be given, although such a provision is not strictly necessary. We will consult noble Lords on the wording of that amendment.
I can best say to the noble and learned Lord, Lord Mayhew, that I undertake to consider the point that he made about drafting. We will bear in mind his careful and precise observations.
In conclusion, I thank all noble Lords for their constructive engagement. I hope that I have been able to respond fully to their questions about these important issues. If I have failed to do so, I apologise. I will be happy to answer any questions that I may have missed. Alternatively, I will write to noble Lords and to those who have participated in the debate. I very much hope that the House will support the amendment—again, I apologise for its late appearance—and that it will also support the other government amendments in this group.
My Lords, will the Minister clarify one point? When dealing with what the noble Baroness, Lady Carnegy, said, he used words that indicated that he might be proposing to accept what she suggested and to delay adopting these amendments until a later date. I should make it clear on behalf of the Delegated Powers and Regulatory Reform Committee that I did not and would not ask for that, because we can deal adequately with any necessary amendments by tabling them at Third Reading as amendments to the new schedule.
My Lords, I thank the noble Lord for giving me the opportunity to clarify anything that I misspoke, as Mrs Clinton would have said. He correctly summarised my intention, for which I thank him.
On Question, amendment agreed to.
Clause 62 [Application to set aside asset freezing decision]:
47B: Clause 62, page 46, line 11, at end insert “, or
( ) Schedule (Terrorist financing and money laundering) to this Act (terrorist financing, money laundering and certain other activities: financial restrictions).”
47C: Clause 62, page 46, line 23, at end insert “or
( ) to give a direction or make an order under Schedule (Terrorist financing and money laundering) to this Act,”
On Question, amendments agreed to.
Clause 64 [Asset freezing proceedings]:
47D: Clause 64, page 47, line 9, leave out “asset freezing” and insert “financial restrictions”.
On Question, amendment agreed to.
Clause 65 [General provisions about rules of court]:
47E: Clause 65, page 47, line 15, leave out “asset freezing” and insert “financial restrictions”
47F: Clause 65, page 47, line 16, leave out “asset freezing” and insert “financial restrictions”
On Question, amendments agreed to.
Clause 66 [Rules of court about disclosure]:
47G: Clause 66, page 48, line 5, leave out “asset freezing” and insert “financial restrictions”
47H: Clause 66, page 48, line 6, leave out “asset freezing” and insert “financial restrictions”
On Question, amendments agreed to.
Clause 67 [Appointment of special advocate]:
47J: Clause 67, page 49, line 10, leave out “asset freezing” and insert “financial restrictions”
47K: Clause 67, page 49, line 11, leave out “asset freezing” and insert “financial restrictions”
47L: Clause 67, page 49, line 19, leave out “asset freezing” and insert “financial restrictions”
47M: Clause 67, page 49, line 22, leave out “asset freezing” and insert “financial restrictions”
47N: Clause 67, page 49, line 25, leave out “asset freezing” and insert “financial restrictions”
On Question, amendments agreed to.
Clause 68 [Intercept evidence]:
47P: Clause 68, page 50, line 6, leave out “asset freezing” and insert “financial restrictions”
On Question, amendment agreed to.
Clause 70 [Allocation of proceedings to Queen’s Bench Division]:
47Q: Clause 70, page 50, line 29, leave out “asset freezing” and insert “financial restrictions”
On Question, amendment agreed to.
Clause 72 [Interpretation]:
47R: Clause 72, page 51, line 30, leave out “asset freezing” and insert “financial restrictions”
On Question, amendment agreed to.
48: After Clause 73, insert the following new Clause—
“Inquests: intercept evidence
(1) In section 18 of the Regulation of Investigatory Powers Act 2000 (c. 23) (exceptions to section 17), after subsection (7)(c) insert—
“(d) a disclosure to a coroner or to a person appointed as counsel to an inquest or to members of a jury or to any properly interested person where—(i) the coroner holding the inquest is a judge of the High Court; and (ii) the coroner has ordered the disclosure to be made to the coroner alone or (as the case may be) to the coroner and the person appointed as counsel to the inquest or to members of a jury or to any properly interested person.”(2) After subsection (8A) insert—
“(8B) A coroner shall not order a disclosure under subsection (7)(d) except where the coroner is satisfied that the exceptional circumstances of the case make the dislcosure essential to enable the matters that are required to be ascertained by the inquest to be ascertained.”
(3) After subsection (11) insert—
“(11A) References in this section to a coroner apply only where the coroner is a judge of the High Court.”
(4) This section has effect in relation to inquests that have begun, but have not been concluded, before the day on which it comes into force as well as to inquests beginning on or after that day.”
The noble Baroness said: My Lords, first, I should make it absolutely clear that I am not reopening our discussion in Committee on whether inquests should be held in secret or on any of the other proposals which the Government agreed to withdraw and bring back in a coroners Bill.
The amendment deals simply with an issue that was overlooked when the Regulation of Investigatory Powers Act went through in 2000. Although it is a small technical point, it has had huge ramifications first for one family, now for a second family, and for society as a whole. In what I imagine was a drafting error, a small lacuna was left in Section 18, which did not state that a High Court judge, who in all other circumstances listed in that section can see the material in question and come to a conclusion about it, can do so when sitting as a coroner. I will explain why that is such a difficulty.
All my amendment seeks to do is to include the ability of a judge to sit as a coroner at an inquest and to hear this evidence, as he does in all other instances when he sits as a judge. I shall briefly recap why this is necessary. If the Minister casts his mind back, he too will remember that, at the outset of the Bill, his colleagues in another place and subsequently here impressed on us all how urgent it was that the secret inquest could be dealt with, not as a general issue but to allow a particular inquest to proceed—the inquest into the death of Azelle Rodney, who was shot by the police on 5 May 2005. It was urgent, as the Government said themselves when they wrote to the Rodneys’ solicitors, Hickman & Rose, on 30 November 2007, promising that they would change the law so that the inquest into Azelle Rodney’s death could resume. When promising this, they stated that they were acutely aware of the urgent need to find a way forward—this was a year ago—because of the immense delay that had already occurred. That need for urgency arose not least because the state has a legal duty to ensure a prompt investigation into a death in such circumstances. This involves holding an inquest as soon as is practicable.
As I said in Committee, since that inquest, which has been delayed and delayed, there has been a second case—that of Terry Nicholas, who was shot in 2007. The inquest into that death is not being held for the same reason: that there was intercept evidence, which cannot be disclosed to a coroner or a jury but which is crucial to the case. My amendment would mean that the decision whether to disclose RIPA material at an inquest would be solely judicial. It would have no bearing on the release of any other sensitive material such as the sort that is usually covered in public interest immunity decisions at inquests, about which I know the Government were concerned; it would have a bearing only on RIPA-related material. That is all that would be necessary for this inquest to take place.
I turn now to some of the issues covered by the Minister in his reply in Committee. He made several assertions which I do not think are factually or legally correct. He claimed that the amendment would allow the wide disclosure of very sensitive material. I do not think that that is true, because it would allow the disclosure only of RIPA-related material and that would be only when a High Court judge was sitting as a coroner. That judge has to be satisfied that the material is essential in finding out how someone died. It would not necessarily mean that the material would be subject to public disclosure if it was deemed to be too sensitive. A whole series of options are available and are used in inquests, which could be decided by the coroner; for example, imposing reporting restrictions on proceedings, deciding that in the interests of national security certain sections of the proceedings take place in camera or properly interested persons agreeing to confidentiality undertakings.
The Minister went on to say that it is unclear how the new clause would work in practice in the absence of any legislative mechanism to ensure that a High Court judge is appointed to hold such an inquest. In fact, under Section 14 of the Coroners Act 1988, coroners can apply for the jurisdiction of an inquest to go to a circuit or a High Court judge. Quite recently, High Court judges have sat as coroners at inquests in two high profile death-in-custody cases, and at the ongoing inquest into the Jean Charles de Menezes case.
I agree with the noble Lord, Lord West, that it is absolutely necessary to balance the interests of the family and the public when discussing material that cannot be disclosed. We think that that balance is necessary and must be achieved, which is why I have brought forward this amendment. It is in the family’s interest, but much more crucially in the interest of wider society, that where the state has had a part in the death of someone—in this case, the police shot them—it is essential that such an inquest is heard promptly.
Finally, the noble Lord, Lord West, argued that this debate should take place within the proposed coroners Bill, but I must point out that that would result in the delay of this inquest taking place for probably a further year, if time is found in the Queen’s Speech and the subsequent programme for the coroners Bill to happen at all. The Government have said that it will, but at best it will not have Royal Assent for a considerable time. In any case, I still have not heard clearly from the Minister why it would not be a good idea to amend, as my amendment suggests, the Regulation of Investigatory Powers Act 2000 to enable a High Court judge to do as he does in all other facets of his work and be covered so that he can sit as a coroner to hear these urgent cases—particularly, the original one, but now also the second one—and allay any fears that people have that there is some sort of shoot-to-kill policy. It would be very unfortunate if that feeling in any way took legs. We want to avoid that situation. For that reason and for the reason of natural justice to the family, I hope that the Government will see fit to accept this very moderate amendment and move the matter forward. I beg to move.
My Lords, I am grateful to the noble Baroness, Lady Miller, for dealing with this matter in Committee and again today so very effectively. I have added my name to the amendment in order to support the noble Baroness. I have little to add, except to say that we now have two inquests pending. Two people have been killed in circumstances that require an inquest. Until the law is clarified it seems that these inquests will remain in limbo.
The Minister has encouraged us to look forward to the forthcoming coroners Bill. Even if that were to take place as we have been led to expect and the inquest was subsequently dealt with expeditiously, the family would have had to wait at least four years before there was a conclusion to the matter. If the forthcoming legislation does not come in as planned, it may be very much longer for the first case that we are discussing.
The obligation under Article 2 of the European Convention on Human Rights to have a prompt inquiry into a death at the hands of an agent of the state is a heavy one. It is a vital part of the state’s accountability to its citizens. At the moment, this cannot happen in those cases because of the anomaly that this amendment seeks to remove. As the noble Baroness, Lady Miller, has said, I, too, hope that the Minister has had second thoughts about his objections to this provision and will be able to support what is being proposed.
My Lords, I rise from the Opposition Benches to support the amendment tabled by the noble Baronesses, Lady Miller and Lady Stern.
Article 2 of the European Convention on Human Rights places a duty on the state to investigate any death in custody by means of an inquiry which is capable of enabling those responsible to be identified and, if necessary, punished. I trust that that is indisputable.
However, under existing English law, coroners are not permitted to see, let alone disclose to interested parties, any Regulation of Investigatory Powers Act 2005 material, even if such evidence is crucial in ascertaining how a person came to die. The consequence of that state of affairs is that our coronial law is not Article 2 compliant.
In Committee, the noble Lord, Lord West of Spithead, said that the amendment would allow,
“wide disclosure of very sensitive material”.—[Official Report, 21/10/08; col. 1063.]
On any objective assessment of the situation, this simply cannot be the case. The proposed change to the Bill would merely bring the treatment of such material into line with the way it is treated in criminal proceedings, generally.
For the terms of the amendment to be applicable in any given set of circumstances, the coroner would have to be a High Court judge, appointed under Section 14 of the Coroners Act 1988. The material in issue would be only RIPA-related material and the judge would have to be satisfied that it was essential to discovering how someone died before authorising its disclosure to the family of the deceased and to the jury. Reporting restrictions, in-camera hearings and confidentiality undertakings are all available to the judge to prevent matters receiving a wider audience.
My Lords, I was glad that the noble Baroness, Lady Miller, said that she did not intend opening the whole debate as regards moving details of coroners and inquests from this Bill. After very extensive consultation with noble Lords, we correctly decided that it was best to withdraw this aspect and that we would address it in the context of a much more detailed look at all aspects of coroners and inquests in future legislation.
There has been mention of ongoing cases. Clearly, I cannot touch on or talk about those in the Chamber. All I would say, even though I know that the noble Baroness, Lady Miller, did not mean to raise the issue in that way, is that we have to be very careful about raising issues such as “shoot-to-kill” as if it is something that is under way. It is very dangerous to mention that on the Floor of the House because there is no way that that is the case.
I shall address in detail some of the points made. It is worth saying again that, for a number of reasons, sensitive material cannot be publicly disclosed without harming the public interest. Such material can cause great damage to national security and police investigations of serious organised crime. Indeed, in terrorism cases we have seen how rapidly the people who wish to cause us harm pick up on the techniques we use. Even if they are mentioned only a little bit, those people react by not using certain equipment and so on. As has been said, Article 2 of the ECHR makes it obligatory to hold an investigation into deaths in certain circumstances; there is no discretion not to hold such an investigation. Accordingly, and unlike in the case of criminal prosecutions, the state cannot protect this sensitive material simply by discontinuing the investigation. A means must be found for bringing sensitive material before an independent fact finder while protecting the public interests involved.
In order to address this problem in relation to inquests, we intend to bring forward proposals in legislation regarding coroners. That would permit the Secretary of State to issue a certificate requiring an inquest to be held without a jury if, in the opinion of the Secretary of State, the inquest would involve the consideration of material that, in the public interest, should not be made public, including to a jury or interested persons. As a result of certification, the finder of fact would be a coroner rather than a jury, as already occurs in 98 per cent of inquests. The coroner, who would continue to be a fully independent judicial office holder, would be security cleared to receive all relevant material. Any parts of the inquest involving the consideration of material which should not be disclosed publicly would be held in private in the absence of the next of kin. Where necessary, the coroner would be able to appoint independent security-cleared counsel to the inquest to represent the interests of the next of kin and probe all the relevant material on their behalf, including the sensitive material, thereby ensuring that the interests of the family are properly protected. The inquest would, of course, continue to take place in public as far as possible and the next of kin would be able to attend all public sessions with their legal representatives where they have them. Taken together, these proposals will ensure that coroners’ inquests can always be compatible with Article 2 of the ECHR.
I have to disagree with the noble Baroness, Lady Miller, because I believe that Amendment No. 48 would allow for the wide disclosure of very sensitive intercept material not just to the coroner but also to juries and other interested parties such as bereaved families. This creates the potential for public disclosure of all intercept material regardless of sensitivity, thereby undermining the very real need in some circumstances to protect from public disclosure such material and the capabilities and techniques by which it was obtained. While Amendment No. 48 would, in principle, allow the finder of fact to have access to all the relevant material, it does so at the expense of preserving the “ring of secrecy” which is necessary to protect sensitive techniques, capabilities and sources. It cannot be overemphasised how valuable those capabilities are to the nation. Certainly for over 40 years in peace and war, I have made use of those capabilities; I know that they save lives and help us stop those who want to damage our nation.
Disclosure of intercept capabilities would have a real and damaging impact on our ability to gather the intelligence that is vital to our national security. The Chilcot review on intercept as evidence recognised this, and that is why we are taking forward a detailed programme of work to ensure that we can meet the tests set out in the review and allow intercept to be used safely, without putting national security at risk. This amendment affords no safeguards or protections. We recognise the importance of ensuring that bereaved relatives and other properly interested persons should be involved in as much of an inquest as possible. But it is necessary to strike a balance between the interests of the families and the public interest when there is material that is central to the inquest but which cannot be disclosed publicly. We are confident that the measures we intend to bring forward in coroners’ legislation, with the relevant safeguards, will strike the right balance of enabling the coroner to consider all the relevant material while protecting sensitive material from public disclosure contrary to the public interest.
I am aware of the delay—it is an unpleasant and unfortunate delay—but it is right that we should get this legislation correct because we are considering issues that are so important to the nation that we cannot afford to rush it. I know that two cases are outstanding, but this has to be right. The Government will therefore resist Amendments Nos. 48 and 62, which makes a consequential amendment to the Long Title adding a reference to inquests.
My Lords, the amendment is drafted entirely in relation to England and Wales, and the Minister’s reply is likewise drafted. Presumably future legislation in so far as it deals with matters related to terrorism, which are reserved under the Scotland Act, must be put right in relation to the whole of the United Kingdom. Will the future coroners’ legislation he referred to be balanced by Scots legislation that does the same thing?
My Lords, I am grateful to the noble Baroness, Lady Stern, and the noble Lord, Lord Kingsland, for their support. I am very disappointed with the Minister’s reply because it does not take us any further forward than his response in Committee. In my opinion he has not addressed the question of why a High Court judge can assess such material in criminal procedures of every other kind when coming to a judicial view as to what material should not be disclosed, but not in inquests. I do not feel that the Government’s position is logical.
The Minister took me to task by saying that it was dangerous to use a phrase like “shoot to kill policy”, and I agree that it is. I said in my introduction that we must avoid at all costs a view on why agents of the state act in this way. However, the only way to make such a judgment is through holding an inquest to discover what actually went on. In the absence of any further explanation than we had in Committee, I have no option but to test the opinion of the House.
Clause 74 [Amendment of definition of “terrorism” etc]:
48A: Clause 74, leave out Clause 74
The noble Baroness said: My Lords, this amendment concerns the definition of terrorism. We have tabled it once again. When we discussed the Government’s intention to amend the definition of terrorism in Committee, the overwhelming view was that it was unnecessary. That remains the view of these Benches. As I said then, the term “racial” is not substantive with regard to motivation or end, unlike the terms “political”, “religious” or “ideological”. That is the nub of this amendment. We cannot conceive of a circumstance in which a racial cause is not already encompassed in the phrase “political, religious or ideological”. The Minister failed in Committee to convince us of the need to amend the definition and I hope that he might now agree to remove the term. I beg to move.
My Lords, as I have said before, I intervene rarely in these debates as the independent reviewer of terrorism legislation, but I thought that I ought to intervene on this occasion because I think that I am largely responsible for the idea that the term “racial” should be inserted into the definition. I shall explain why.
I was asked to carry out a review of the definition of terrorism in UK law and did so. In carrying out that review, I issued a call, which was advertised publicly, for papers and for views. I received a great many written views in formal documents, by e-mail and in other ways. I also took a roving seminar out to five major cities. I was assisted in inviting to those seminars members of the public, members of the academic community and members of community groups. The attendance at the seminars was variable but overall they were well attended.
One of the messages that came across from the representations that I received was that black and minority ethnic communities felt that the inclusion of a term such as “racial” in the definition would make it clear that activities such as those of, for example, the white supremacist movements that have arisen in certain parts of the United States could, in certain circumstances, be regarded as terrorist activities. It seemed important that, if we could do so without damaging the definition in any way, we should meet those concerns, so I recommended that the term “racial” should be added, or something along those lines.
I am not sure, if I may say so with respect, that it is helpful to parse the words and their many possible meanings on the Floor of either House of Parliament. I think that I could argue the case for “racial” being distinct from the other words that are included, “political, religious or ideological”. That does not mean that every racial cause would be treated as terrorist. Every ideological cause is not treated as terrorist; for example, it has become the practice to deal with animal rights terrorism not using terrorist provisions—at least, wherever possible—but under criminal law without giving the protagonists the cachet of regarding themselves, or being regarded, as terrorists. The same could apply to racial causes.
I say to your Lordships, without delaying the House further, that the term is included to meet a perception that is potentially damaging to the reputation of the law and which can be met without doing any damage to the integrity of the law.
My Lords, as has been said, this amendment to the definition follows recommendations by the noble Lord, Lord Carlile. We accepted this recommendation in our response to his report on 7 June 2007. The change in the definition of terrorism is an opportunity to make it clear that terrorism includes acts and threats done for the purpose of advancing a racial cause.
I do not deny that acts of terrorism motivated by a racial cause are already covered by the definition, since such acts are also likely to be political or ideological. However, the same could also be said of acts of terrorism motivated by a religious cause, but Parliament chose to include religiously motivated terrorism in the definition of terrorism. The position that I have elaborated on makes it important that we now include racially motivated terrorism in the definition. The reason is that, with the exclusion from the definition of racially motivated terrorism and the inclusion of religiously motivated terrorism, there is potential for an argument to be made that racially motivated terrorism has been specifically excluded. More important, there is an opportunity for perceptions to be formed about that. As the noble Lord mentioned, this came out strongly in all his regional visits and the various seminars that he held.
That argument can be developed, too, as religious and racial motivation are so often intertwined in other pieces of legislation—for example, in racial and religious hatred and racially and religiously aggravated offences. Racial motivation is also referred to alongside other motivations, such as religion and politics, in the definitions of terrorism used by the United Nations in Resolution 1566 and by the Council of Europe Convention on the Prevention of Terrorism. As I said, perception is important and we should be clear that those who commit acts of terrorism with a racial motivation are covered by our legislation.
We are making this change to the definition of terrorism following a long and detailed study on the issue by the noble Lord, Lord Carlile, who has just made the case for it far more eloquently than I could. We believe that the change will help to clarify our legislation. As I made clear on the first day of Report, I have made every effort to take the Bill forward on a consensual basis. Where possible, we should all try to reach agreement on measures that are relatively uncontentious and relatively minor in their effect. This is such a measure and I have heard nothing said today that would suggest that retaining this clause in the Bill would cause any problems. It therefore seems odd that this is something on which the House could possibly divide. Where there are major differences in this House we should of course put the issue to the vote; I would expect that to be the case. This does not seem to be such an issue, however, and I ask the noble Baroness to withdraw the amendment.
moved Amendment No. 48B:
48B: After Clause 80, insert the following new Clause—
“Control orders: pre-conditions
(1) Section 2 to the Prevention of Terrorism Act 2005 (c. 2) (making of non-derogating control orders) is amended as follows.
(2) After subsection (1)(b) at the end insert “; and
(c) unless section 3(1)(b) below applies, the DPP has certified that there is no reasonable prospect of successfully prosecuting the subject of the order for a terrorism-related offence.”.”
The noble Lord said: My Lords, I understand that the Government share our view that, where possible, potential controlees should be prosecuted rather than made subject to control orders. Such an approach not only accords with principles of justice—restraint should be imposed on individuals as a consequence of what they have done in the past, not as a result of an assessment of the risk that they might do something in the future—but is also important because, as experience has shown, prison affords better protection to the general public than the combination of curfew and surveillance.
As I indicated in Committee, the principle has been well articulated by the noble and learned Baroness, Lady Hale, in the recent case of R v E, heard in the Appellate Committee of your Lordships’ House. The speech that she made particularly addressed this issue. Although I quoted from it in Committee, it is worth doing so again on Report. The noble and learned Baroness said,
“a control order must always be seen as ‘second best’. From the point of view of the authorities, it leaves at liberty a person whom they reasonably believe to be involved in terrorism and consider a risk for the future. The public is far better protected, even while criminal proceedings are pending, let alone if they result in a conviction. From the point of view of a controlled person, serious restrictions are imposed upon his freedom of action on the basis of mere suspicion rather than actual guilt. From both points of view, prosecution should be the preferred course”.
During the passage, in the early months of 2005, of what was to become the Prevention of Terrorism Act, we fought strenuously from these Benches to enshrine in the original legislation the terms of the two amendments before your Lordships’ House today. The first requires that the Director of Public Prosecutions decide whether prosecution is the appropriate course of action to take in respect of each potential controlee. The Act currently places that responsibility on the police. In our view, that approach exhibits a fundamental constitutional misunderstanding. It is the Crown Prosecution Service, not the police, which decides whether an individual should be prosecuted, based on the twin considerations of the cogency of the evidence and the public interest. Why should potential controlees alone be exempted from the application of this principle?
The second amendment would ensure that the prospect of prosecution, if legitimately considered and properly rejected at the outset, should nevertheless be kept under regular review. In Committee, I drew your Lordships’ attention to the strong endorsement given to this matter by the Appellate Committee of your Lordships’ House, again in the case of R v E. It endorsed the view of the Court of Appeal, expressed at an earlier stage in the case, that it is implied in the scheme of the Prevention of Terrorism Act that the Secretary of State is under a duty to keep the possibility of prosecution under continuing review.
I can do no better than conclude with the words of the Joint Committee on Human Rights, expressed at paragraph 79 of its 20th report of the 2007-08 Session. It says:
“In the E case the Secretary of State’s argument was that all that s. 8 PTA 2005 required was that she consult the chief of police at the outset and then make periodic inquiry as to whether the prospect of prosecution had increased. The courts rejected that argument, holding that there is an implied continuing duty to review, and that it is implicit in that duty that the Secretary of State must do what she reasonably can to ensure that the continuing review is meaningful, by providing the police with relevant material. As we observed in our report on this year’s annual renewal of the control orders legislation, we are not at all confident that the police see very much of the material on the basis of which the Home Secretary imposes control orders on individuals. It remains our view that the policy of giving priority to prosecution would be better served if these implied duties recognised by the courts, in the face of the Government’s argument to the contrary, were turned into express duties spelled out clearly on the face of the legislation”.
I beg to move.
My Lords, what I have to say is not about the merits or otherwise of control orders, which is subject to another debate. In my experience, prosecution is always preferred as the answer to dealing with some of these problems. Control orders came into being for those cases where the evidence was insufficient or did not exist sufficiently because it was based on intelligence. People from my service and the police always prefer prosecution if that is feasible.
Secondly, from my experience, and perhaps without the formality of the second amendment, the case for prosecution was regularly reviewed, much more frequently than every three months. It was far preferable to go down that route if at any stage it was possible. The case for prosecution was constantly and regularly considered.
As to whether the Secretary of State has available to her material that is not available to the police, I find that really strange. The intelligence that my service and others produced was shared with the police and summarised for the Secretary of State or given to her in its entirety if she so wished. I am mystified by the suggestion that the police would not have access to that material, because that is certainly not my experience. I am not taking a view on the amendment as such, but that is the background from my experience of how these cases are handled.
My Lords, the Minister will know that we on these Benches have always had worries about control orders and their continued use. The words of the noble Baroness, Lady Manningham-Buller, provide some reassurance but we support the added reassurance contained in the amendments.
My Lords, with this and a subsequent group of amendments, we are returning to control orders. I am grateful that noble Lords listened to the explanation in Committee of the Government’s position on the JCHR amendments on control orders, to the extent that not all those amendments have been retabled on Report. I note, however, that these amendments are essentially the same as those debated in Committee. Unfortunately, no account appears to have been taken of the Government’s concerns on the amendments, and I hope that I can convince noble Lords that our concerns are serious enough to ensure that this amendment is withdrawn.
The amendments deal with points relating to the prosecution of controlled individuals. As I explained in Committee, and as has been supported by noble Lords, the Government’s preferred approach, when dealing with suspected terrorists, is prosecution. That is absolutely clear. So there is no disagreement between the Government and noble Lords on the principle to be followed; our disagreement concerns what is needed to achieve the desired results.
Amendments Nos. 48B and 48C are not necessary to ensure that prosecution is always considered and kept under careful review. There are a number of robust safeguards already in place—some touched on by the noble Baroness, Lady Manningham-Buller—in the current legislative requirements to ensure that whenever possible, suspected terrorists are prosecuted rather than made subject to a control order.
First, there is consideration of the prospects of prosecution before a control order is imposed. Under the 2005 Act, the Secretary of State must consult the police regarding the prospects of prosecution for a terrorism-related offence before making or applying for permission to make a control order. The police must then consult the Crown Prosecution Service. This consultation process already goes beyond what is expected in many investigations where the police decide whether or when it is necessary to consult the Crown Prosecution Service. The position is set out in a letter from the police to the Home Office and laid before the High Court as part of the court’s review of each order. This information is available to the controlee.
The second key safeguard concerns the ongoing consideration of prosecution, where the 2005 Act rightly lays the duty of keeping the prospect of prosecution under review on the chief officer of the police force, who must consult the CPS as appropriate.
The third key safeguard is fulfilled by the control order review group. During its quarterly meetings, the Home Office seeks the views of law enforcement agencies on the prospects of prosecution of controlees. As the noble Baroness, Lady Manningham-Buller, said, this is done almost continuously, because that is what we would like to achieve.
The fourth key safeguard is the judicial review of each control order. If the public interest was demonstrably better served by prosecution of an individual against whom there was a sufficient evidence to prosecute, the order would be extremely likely to fail the test of necessity and so would be quashed by the High Court. This, as I outlined in Committee, was reflected in the court judgments in the case of E. It is interesting how that case seems to be quoted by those on both sides of the argument—but it seems to support what I am saying.
These four key safeguards have been subject to extensive scrutiny by the courts. The current legislative provision and procedures have been accepted by the courts as adequate, including by the House of Lords in the E judgment, and ensure that, whenever possible, individuals who are or may become subject to control orders are prosecuted for terrorism-related offences. No changes to the legislation were required by the Lords. So that is the context in which we are considering these amendments.
The absence of prosecutions of controlled individuals for terrorism-related offences, other than breaches of their control order, is not an indication that the current provisions have not been applied diligently. Rather, it demonstrates that at the time when the control order was made there was, and continues to be, no realistic prospect of prosecution. Moreover, since control orders are designed to prevent, restrict or disrupt individuals’ involvement in terrorism-related activity, it also arguably indicates that the control order against them has been successful in disrupting their terrorism-related activity.
Amendment No. 48B proposes that non-urgent control orders can be imposed only if the Director of Public Prosecutions has certified that there is no reasonable prospect of successful prosecution. I want to start, as I did in Committee, by querying the basis on which the amendment is proposed. Successful conviction and imprisonment offers the best outcome for the protection of the public. For that reason, the strong preference of the Government, law enforcement agencies and the CPS is to prosecute suspected terrorists. This amendment rather supposes that the Government and law enforcement agencies would rather put suspected terrorists on control orders than prosecute them. There is no logical reason for that assumption; indeed, it is counterintuitive. That in itself should lead noble Lords to question the necessity of this amendment.
As noble Lords who attended the debate in Committee will know, there are a number of reasons why the Government oppose this amendment. I remind noble Lords that this amendment was effectively explicitly argued for by a controlled individual in the case of E, where it was said that the lack of a reasonable prospect of prosecution was a condition precedent, or in other words a pre-condition, to making a control order. The Law Lords scrutinised this matter at length and explicitly rejected it. They concluded that no changes to Section 8 of the Prevention of Terrorism Act were required. Indeed, they considered that there were “strong practical reasons” for the current approach, and that changes would have the,
“potential to emasculate what is clearly intended to be an effective procedure”.
As I have explained, the Secretary of State is already statutorily obliged to consult the police on the prospects of prosecution before an order is made or applied for. The police are obliged to consult the CPS even where it is clear to them that there is not sufficient evidence to prosecute. However, this consultation, still less the results of that consultation, are rightly not a condition precedent of making an order. There are good reasons for this: providing certification by the DPP may not be practicable before the making of an order.
Amendment No. 48B makes an exception for urgent control orders to try to address the urgency point highlighted by the Law Lords. None the less, it is not appropriate to include certification on the prospects of prosecution as a condition precedent. There are both principled and practical reasons for this, in addition to the issue of urgency. I set these out to the Committee, but I believe that it is worth reiterating those reasons.
First, the amendment would undermine the constitutional position, effectively giving the DPP a veto over the Secretary of State’s decision to impose a control order. In other words, she would not be able to impose a control order even if she thought it necessary to do so to protect the public from a risk of terrorism, if the DPP said there was a reasonable prospect of prosecuting that individual. This is clearly inappropriate, as such decisions are properly a national security matter. I am sure that all noble Lords appreciate the potential dangers of interfering with proper constitutional arrangements.
Secondly, and related to the first point, it could expose the public to an unnecessary risk from terrorism by leaving a public protection gap. It is not therefore just a dry constitutional matter. A control order may be necessary to protect the public from a risk of terrorism posed by an individual, even though prosecution of that individual is possible. For example, an individual may be on bail pending trial for a relatively minor offence and so the risk posed by the individual is much greater than the bail conditions that a judge would lawfully be able to impose on the individual. In those circumstances, a control order might be required in the interim to manage that risk.
Thirdly, it could damage other investigations, other prosecutions, or otherwise damage the public interest. To reiterate the examples I gave in Committee, in rare circumstances the CPS may decide that a prosecution is not in the public interest, even if there is evidence available that may be sufficient to prosecute, perhaps because a prosecution could bring into the public domain a valuable intelligence-gathering technique, reducing its future efficacy, or the prosecution of a particular individual for a particular offence might damage a more complex, ongoing investigation of that individual and a wider group of individuals. This is not an issue limited to control orders or terrorism. In every case that goes to the CPS, even if the CPS concludes that the evidential threshold is met, it must separately assess whether a prosecution is in the public interest. This amendment covers only the first element.
Fourthly, it would likely have the presumably unintended effect of reducing the initial judicial scrutiny of control orders. The operational reality is that providing an answer to whether an individual can be prosecuted is a much longer and more complex and resource-intensive task than simply beginning the process by consulting on the prospects of prosecution. Consequently, the amendment might well force the Government to use the urgency procedure more, when the national security case meant that a certificate could not be waited for any longer. This would mean that the normal requirement for the Secretary of State to seek permission to make the control order from the High Court would not apply. As a result, a valuable initial judicial oversight mechanism will not apply in a much greater number of cases, as it will simply not be possible to obtain the necessary response from the DPP prior to the need to make and serve a control order in the interests of national security.
Fifthly, and on a point of detail, specifying the DPP personally rather than the relevant prosecuting authority is inappropriate. It is unusual to do so, places an unnecessary resource burden on that post and creates an unnecessary potential bottleneck. Nor would specifying the DPP cover control orders in Scotland and Northern Ireland.
In summary, therefore, this amendment undermines current constitutional arrangements, potentially exposes the public to an unnecessary risk of terrorism and damages other national security investigations or the public interest, would likely reduce the initial judicial scrutiny of control orders, and inappropriately singles out the DPP. I hope that noble Lords will understand that whatever the intention behind the amendment, the effect is none the less damaging to the public interest.
Amendment No. 48C deals with the ongoing review of the prospects of prosecution. This amendment contains a combination of inappropriate and unnecessary elements. Proposed new subsection (6A)(a) in the amendment proposes that the Secretary of State ensures that the prospects of prosecution are reviewed every quarter. This is an inappropriate interference in the current constitutional position. The CPS, not the Secretary of State, is responsible for considering whether a person should be charged with a criminal offence. Any shift in this responsibility could undermine the independent role of the CPS and the police. It is therefore inappropriate to require the Secretary of State to “ensure” the actions of a department not under her supervision or control. The CPS is independent of the Secretary of State. Nor does it make organisational or business sense to do so, as it cannot be sensible to task someone in relation to an organisation for which she is not responsible. It is perhaps worth reminding noble Lords of a passage from the House of Lords judgment in E, on the respective constitutional roles of the Secretary of State, the police and the CPS. It states that,
“the Secretary of State does not control the prosecution process. The police investigate and the Crown Prosecution Service decide whether or not to prosecute. There are very good reasons for this division of responsibility: it injects an important element of independence and objectivity into the decision to prosecute”.
The 2005 Act reflects this constitutional and organisational position. It already contains a statutory obligation on the chief officer of police to keep the possibility of prosecution under review throughout the period that the control order is in force. As the noble Baroness, Lady Manningham-Buller, already mentioned, that is done regularly. The CPS is also consulted as appropriate.
As with the previous amendment, I am sure that noble Lords do not wish to undermine the accepted constitutional roles of the Secretary of State, the police and the CPS. Indeed, I have no doubt that noble Lords would express extremely grave concern about any government proposal that the Secretary of State should have a role in deciding whether an individual should be prosecuted.
Proposed new subsection (6A)(a) is also unnecessary, as is proposed new subsection (6A)(b) and (c). The statutory obligations of the Act, combined with court judgments, already deliver the intention behind the amendment. The Secretary of State has a duty to keep the necessity of a control order under review. That means there is an implicit ongoing duty that the prospects of prosecution are kept under review. The critical point is that the duty to review those prospects does not fall on the Secretary of State, but on the police and CPS. The Secretary of State cannot “ensure” that it happens—that is not within her gift. What the courts have confirmed that the Secretary of State must do is periodically consult the police on the prospects of prosecution and do what she can to ensure that the police’s consideration is meaningful, by providing any relevant information available to her to the police. As the Court of Appeal put it:
“The duty does not, however, extend to the Secretary of State becoming the prosecuting authority. The decision whether to prosecute lies elsewhere”.
That may sound like a fine distinction, but noble Lords will appreciate that it is an important one.
It has been argued that, without an amendment to the Act, the current legal position is unclear. There is no factual basis for that assertion. As I made clear in Committee, we operate under a common-law system and it is widely accepted that public authorities—among others—are bound not just by statute, but by case law. Case law can and does provide sufficient precision and clarity to comply with the important concept of legal certainty just as much as statute can. The Government are clear that there is no need to legislate on these latter points to reflect the principles formulated in case law as currently interpreted by the courts. Indeed, it is considered bad practice to legislate unnecessarily. Moreover, the Home Office formally checks the position in relation to prosecution at the quarterly CORG meetings. Amendment No. 48C is therefore neither necessary nor desirable. The courts, including the House of Lords, have considered this point at length. They confirmed the extent of the Secretary of State’s responsibilities on this matter and that no changes to this section of the Act were required. The amendment combines elements that would undermine the constitutional position with others that would have no beneficial practical impact as they are already provided for by the statutory obligations contained in the Act combined with existing case law.
In short, robust safeguards are already in place to ensure that the prospects of prosecution for current or prospective controlees are kept under regular, rigorous review, with appropriate consultation. The reasons for each decision are laid before the court and are available to the controlled individual. The amendments are therefore either unnecessary, as the proposals are already in place, or damaging, as they would undermine the independent role of the police and CPS. None of the amendments is required by the House of Lords judgment in the case of E. If our roles were reversed, and the Government were suggesting that the Secretary of State should have a role in deciding whether to prosecute any individual, I am sure that there would, rightly, be a chorus of condemnation from noble Lords across the House. I therefore fail to understand why noble Lords opposite are so keen on the amendments. For their part, the Government remain firmly against them. I hope that the noble Lord will not press them.
My Lords, I am most grateful to the Minister for giving such detailed consideration to the two amendments that we tabled. I am somewhat puzzled that he thinks that our drafts are in some way inconsistent with the judgment of the case of R v E. I have just glanced at paragraph 69 of the 10th report of the Joint Committee on Human Rights for the Session 2007-08. It states:
“The Secretary of State argued in the Court of Appeal in E that, having consulted the chief of police at the outset, she need do no more thereafter than make periodic inquiry whether the prospect of prosecution had increased. The Court of Appeal rejected that argument and held that more was called for from the Secretary of State”.
The Court of Appeal stated:
“Once it is accepted that there is a continuing duty to review … it is implicit in that duty that the Secretary of State must do what he reasonably can to ensure that the continuing review is meaningful … it was incumbent upon him to provide the police with material in his possession which was or might be relevant to any reconsideration of prosecution”.
Paragraph 70 of the Joint Committee’s report states:
“The House of Lords in E endorsed the Court of Appeal's approach”.
I cannot understand what is inconsistent in our Amendment No. 48C with that conclusion of the Appellate Committee of your Lordships' House. It sets out as accurately as possible the nature of the appropriate relationship between the Secretary of State and the police stipulated by the Appellate Committee.
I was pleased to hear from the noble Baroness, Lady Manningham-Buller, that co-operation in the post-control order process between the Secretary of State and the police was as good as it possibly could be in the circumstances of the raw material with which they had to deal. If that is so, what possible harm could the amendment do the Government or the public interest? The great good that it does the rule of law is to make the statement explicit in legislation rather than leave it implied in a case which is, anyway, binding on the Government.
The principles set out in Amendment No. 48C are principles that the Government are obliged to accept as a result of the law of the land determined by its highest court. Why are the Government frightened of having it set out in legislation? Perhaps it is because they have further thoughts about how they might resile from the court's judgment. That could well be implied from what the Minister said.
As far as Amendment No. 48B is concerned, particularly in the latter part of his speech, the Minister went out of his way to emphasise the importance of the CPS as an independent body; but that importance is nowhere emphasised in the Prevention of Terrorism Act 2005 itself. The main purpose of Amendment No. 48B is to state, in terms, in the Bill that prosecutorial decisions are taken not by the police but by the CPS.
The Minister then drew my attention to the way in which the amendment might damage the public interest; but as far as prosecutorial decisions are concerned it is the DPP who is constitutionally responsible for determining where the public interest lies before he decides that a prosecution should go forward. He will undoubtedly consult on this matter. He will consult in many directions and if necessary take the view of the Attorney-General. If he does, the Attorney-General is almost certain to approach the Home Secretary before she makes her mind up as to what advice to give to the DPP about where the public interest lies. It is through that process that the public interest under our constitution is defined. It is not defined by the Secretary of State, the police or the security services. It is defined by the DPP, if necessary on advice of the Attorney-General.
There is nothing inconsistent with those constitutional principles in our Amendment No. 48B. I am grateful to the Minister for setting out his views in such detail but, in the circumstances, I wish to test the opinion of the House.
[Amendment No. 48C not moved.]
moved Amendment No. 48D:
48D: After Clause 80, insert the following new Clause—
“Control orders: right to fair hearing
(1) The Prevention of Terrorism Act 2005 (c. 2) is amended as follows.
(2) At the end of section 3(13) (supervision by court of making of non-derogating control orders) insert “except where to do so would be incompatible with the right of the controlled person to a fair hearing”.
(3) In the Schedule (control order proceedings etc.), at the end of paragraph 4(2)(a) insert “except where to do so would be incompatible with the right of the controlled person to a fair hearing”.
(4) At the end of paragraph 4(3)(d) insert “except where to do so would be incompatible with the right of the controlled person to a fair hearing”.
(5) After paragraph 4(5) insert—
“(6) Nothing in this paragraph, or in rules of court made under it, is to be read as requiring the court to act in a manner inconsistent with the right to a fair hearing guaranteed under Article 6 of the European Convention on Human Rights.”.”
The noble Lord said: My Lords, I now turn to the question of whether the terms of Section 3 of the Prevention of Terrorism Act 2005, its Schedule and the rules of court made under them are sufficient to provide a potential controlee with a fair hearing before an order is made, as required by Article 6(1) of the European Convention on Human Rights.
The Appellate Committee of your Lordships' House decided, in the case of R v MB, that they were not, and they could become Article 6(1)-compliant only if certain convention protections were read into the statutory provisions by the court. It is our view that these convention protections should now become express stipulations on the face of the Prevention of Terrorism Act, not least because it would afford a degree of certainty in an area of law which engages the fundamentals of liberty. However, if their previous reaction to the proposals in this amendment is anything to go by, the last thing the Government seem to want is greater clarity.
The issue that lies behind our amendment is whether the procedures provided by Section 3 of and the Schedule to the Prevention of Terrorism Act 2005 and the rules of court made in pursuit of it are compatible with Article 6 of the ECHR, in circumstances where the case made out against the potential controlee is, in essence, entirely undisclosed to him. We readily accept, of course, that, in a democratic society governed subject to the rule of law, there will always be difficulties in reconciling the individual’s right to a fair trial, on the one hand, with the preservation of secrecy in the interests of national security, on the other. The question is, in the context of our amendment, are there, or should there be, circumstances in which one of these two considerations—the national security consideration—trumps the other so as to permit the imposition of a control order without disclosing to the potential controllee the basis upon which it is sought?
In R v MB, the potential controlee was confronted by a bare, unsubstantiated assertion which he could do no more than deny. In an ordinary case, by contrast, a client instructs his advocate on what his defence is to the charges made against him, briefs him on the weaknesses and vulnerabilities of the other side’s witnesses and indicates what evidence is available by way of rebuttal. In this case, none of these courses was open to MB. Moreover, the special advocate appointed to represent MB’s interests did not challenge the Secretary of State’s application to withhold the closed material from him and accepted that it would not be possible to serve a summary of evidence which would not contain information or material the disclosure of which would be contrary to the public interest. The noble and learned Lord, Lord Bingham, concluded that he had difficulty in accepting that,
“the very essence of the right to a fair hearing had not been impaired”.
In the light of this, the noble and learned Baroness, Lady Hale, one of the five Law Lords sitting in this case, asked herself whether the use of the special advocate system can resolve the problem in circumstances where the Secretary of State wishes to withhold from the controlled person the material upon which he wishes to rely in order to establish his case. She concluded that:
“I do not think we can be confident that Strasbourg would hold that every control order hearing in which the special advocate procedure had been used as contemplated by the 2005 Act and Part 76 of the Civil Procedure Rules would be sufficient to comply with Article 6”.
The difficulty for the judiciary in these circumstances, as analysed by the noble and learned Baroness in her speech, is as follows. Paragraph 4(2)(a) of the Schedule to the 2005 Act provides that rules of court may,
“make provision enabling control order proceedings or relevant appeal proceedings to take place without full particulars of the reasons for decisions to which the proceedings relate being given to a relevant party to the proceedings or his legal representative (if he has one)”.
Paragraph 4(3)(d), moreover, provides that the rules of court must be,
“required to give permission for material not to be disclosed where it considers that the disclosure of the material would be contrary to the public interest”.
These provisions are carried through and fleshed out in the civil procedure rules. Thus, the judge, in any one of these cases, is precluded from ordering disclosure to the potential controllee even when he considers this essential in order to give the controlled person a fair hearing. This would not matter so much if the judge was then entitled to refuse to uphold the control order. However, Sections 3(12) and 3(13) of the Act allow him to quash an order only in very strictly defined circumstances which, on the face of it, do not include the requirements of a fair hearing.
However, the judge is also a public authority for the purposes of the Human Rights Act and therefore under a duty to act in conformity with convention rights. If, therefore, a judge concludes that a hearing cannot be fair unless more material is disclosed, the relevant convention provisions require him to be placed in a position under domestic law where he can quash the order. Accordingly, the noble and learned Baroness, Lady Hale, concluded that Section 3(13) and paragraphs 4(3)(d) and 4(2)(a) of the Prevention of Terrorism Act 2005 were required to be modified by the expression “except where to do so would be incompatible with the right of the controlled person to a fair hearing”.
All our amendment seeks to do is to place that expression, which the Appellate Committee of your Lordships' House implied into certain provisions of the Prevention of Terrorism Act to make them compatible with our ECHR obligations, on the face of the Act. The words of our amendment are the words of the noble and learned Baroness, Lady Hale, in R v MB. I beg to move.
My Lords, before I speak to the amendment, I shall take the opportunity to mention one issue related to control orders that is not directly related to the amendment. In Committee, the noble Baroness, Lady Miller of Chilthorne Domer, moved her probing amendment to what is now Clause 77. The clause provides the police with powers of entry and search in specified circumstances. The noble Baroness expressed concern about whether the clause was sufficiently tightly worded, while acknowledging that it did not seem likely that the police would undertake any inappropriate search.
In responding to the noble Baroness, I indicated that I would ask officials to take another look to see whether the drafting of the relevant powers could be improved to ensure the desired clarity in the Bill. I am pleased to say that we have now identified a form of words that will preserve the power of the police to search appropriate premises but that will also make clear that the right to search previous properties must be based on there being a current or recent connection between the controlled individual and the property. I propose to table an amendment to that effect at Third Reading.
Amendment No. 48D is one of a group of amendments previously tabled by Members who sit on the JCHR and debated in Committee. All of them were concerned with ensuring that a controlee has the right to a fair trial accorded to him under Article 6 of the European Convention on Human Rights. As I explained in Committee, this issue has been considered at length, including extensively by the courts. One of the House of Lords judgments of October 2007, MB, dealt explicitly with the right to a fair trial in the context of control orders, as mentioned by the noble Lord.
In MB, the Law Lords did not say that any control order case before them had breached the right to a fair trial, but the majority view was that, in rare cases, the provisions in the 2005 Act might lead to a breach of Article 6. The Law Lords therefore applied Section 3 of the Human Rights Act, to make the 2005 Act compatible with Article 6 in all cases. The Law Lords also concluded that the High Court should consider compatibility with Article 6 on a case-by-case basis. The cases before the Lords on this issue were referred back to the High Court.
As a result of the MB judgment, the Prevention of Terrorism Act 2005 is fully compatible with the European Convention on Human Rights. No further changes were required by the Law Lords. The amendment seeks to amend the 2005 Act to reflect the read-down by the Law Lords in MB, but it also adds some additional wording that was not part of the read- down. I am afraid that the arguments put forward in Committee and again today that the amendment is necessary to provide legal certainty and fairness are simply wrong. The Government are clear that there is no need to legislate to reflect the principles formulated in case law as currently interpreted by the courts. As I explained to noble Lords in relation to the previous group, that is because we operate under a common law system. It is widely accepted that public authorities, among others, are bound not just by statute, but by case law. Case law can and does provide sufficient precision and clarity to comply with the important concept of legal certainty, just as much as statute can.
It has been argued that without an amendment to the Act the position as a result of the Lords judgment is unclear and controlees are not guaranteed fairness. That assertion has no basis in fact. The proposed changes would be of no practical benefit to controlees. At the risk of repetition, as noble Lords know, both statute and case law are sources of legal authority. The courts interpret, and are bound by, both. Transposing identical wording from one source of authority to another—that is, from case law to statute—will not make any difference. It is also considered bad practice to legislate unnecessarily.
For those reasons, proposed new subsections (3) and (4) in the amendment, which add in the exact words already effectively added to the Act by the MB judgment, are redundant. Proposed new subsection (5) makes a further amendment to paragraph 4 of the schedule to the 2005 Act. It is also unnecessary, for related but not identical reasons. It reflects the wording included in the asset freezing provisions in Clause 66(6). The provision in Clause 66(6) is included in the asset freezing clauses, instead of the words of the MB read-down, to give effect to the MB judgment in legislation to which the judgment did not directly apply but which makes provision for a comparable situation. There is no need to include the wording of Clause 66(6) in the 2005 Act, because the MB read-down already makes things clear for the 2005 Act. It would involve unnecessary duplication. The bottom line is that neither of the approaches is necessary, given the MB read-down.
Proposed new subsection (2) is unnecessary for different reasons; those reasons mean that the subsection is also potentially damaging to the public interest. It amends Section 3(13) of the 2005 Act. Section 3(13) can only be understood in conjunction with Section 3(12). They read as follows:
“If the court determines, on a hearing in pursuance of directions under subsection (2)(c) or (6)(b) or (c), that a decision of the Secretary of State was flawed, its only powers are … power to quash the order … power to quash one or more obligations imposed by the order; and … power to give directions to the Secretary of State for the revocation of the order or for the modification of the obligations it imposes … In every other case the court must decide that the control order is to continue in force”.
Proposed new subsection (2) adds to the end of Section 3(13) the words,
“except where to do so would be incompatible with the right of the controlled person to a fair hearing”,
That was not part of the read-down by the House of Lords, because the read-down means that it is not a possible outcome of a control order hearing. If the court considers that disclosure of material would be contrary to the public interest, but that such material must in any event be disclosed for the controlee to have a sufficient measure of procedural protection, the Secretary of State will be put to her election. That means that the Secretary of State is then given a choice whether to disclose the information or withdraw it from the case. If the latter, the case then proceeds without that material included. Either way, the case continues in a manner compliant with Article 6. That means that a judge will never be put in a position where he has to uphold a control order where the proceedings have not been compatible with Article 6. There is thus no need for the qualification to Section 13(3) provided by proposed new subsection (2) in the amendment.
If proposed new subsection (2) could be interpreted as going beyond the scope of the read-down, meaning that it was the court’s job to quash the order without first putting the Secretary of State to her election, it is also damaging to the public interest, because it would potentially expose the public to an unnecessary risk of terrorism.
In summary, no element of the amendment is necessary or has any practical benefit. The amendment as a whole is not just unnecessary, it is also undesirable and potentially damaging to the public interest. First, it undermines the purpose of Section 3 of the Human Rights Act. As noble Lords will know, Section 3 states:
“So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights”.
That is in contrast to Section 4 of the Human Rights Act, which provides courts with the power to declare primary legislation incompatible with convention rights.
By including Section 3 in the Human Rights Act 1998, it was clearly Parliament’s intention to give the courts the power to alter legislation where they felt that it was necessary and appropriate to do so in order to guarantee convention rights. No further corrective action is required by Parliament. Legislation that simply repeats a Section 3 read-down therefore has the potential to undermine the clear purpose behind Section 3 and is wholly unnecessary.
I emphasise that the Government’s general policy is that we do not legislate to reflect read-downs by the courts on any issue where the read-down is sufficiently clear and precise. There is no need to take a different approach in this case. The read-down in MB is sufficiently clear and precise, and noble Lords opposite clearly accept that, because their amendment tries to replicate it. That brings me back to my previous point. What is the purpose of the amendment? A shift of wording from case law to statute serves no beneficial purpose.
Secondly, the timing of the amendment is deeply unfortunate. There is ongoing litigation on whether controlled individuals have received a fair trial. The right to a fair trial is an autonomous concept in the European Convention on Human Rights, as is deprivation of liberty. It is subject to continued interpretation by the courts, and the concept goes far wider than simply control orders. Following the House of Lords judgment in MB, there has been ongoing litigation in the High Court and the Court of Appeal about how the court should assess compliance with the right to a fair trial in a number of different cases. The majority view in the Court of Appeal essentially supported the Government’s position.
As noble Lords will know, that judgment will be considered by the Law Lords, and the House of Lords has agreed to expedite those cases. I suggest that in these circumstances, it would be presumptuous and an unwarranted interference with the judicial process for Parliament to legislate further on the point at this time. Nor will domestic litigation be the end of the matter. One of the controlled persons involved in the control order cases covered by the House of Lords judgments of October 2007 has lodged proceedings in the European Court of Human Rights on both the Article 5 and Article 6 issues raised by him before the Lords last year.
In conclusion, the Government do not agree that this amendment is necessary. It does not provide any greater legal certainty than is already provided by the 2005 Act and case law. It will not provide any practical benefit to controlees and has the potential to be damaging to the public interest. It is also badly timed, given the ongoing litigation on what constitutes a fair trial. I ask the noble Lord opposite to withdraw the amendment, and if he will not, I urge all noble Lords to reject it.
My Lords, I thank the Minister once again for his very careful and thorough reply. I do not really understand his point as to its timing being unhelpful. The principle of a fair hearing has been established in R v MB. What a fair hearing is in the circumstances of any particular case is a matter for other courts to decide. The amendment does not seek to stipulate, in any particular circumstances, what a fair hearing is or is not. It simply reiterates the principle established by the Appellate Committee of your Lordships’ House. So, with respect to the Minister, the timing of the amendment cannot be in any way unfortunate.
The Minister seemed to say towards the end of his response that the amendment was an accurate reflection of what the Appellate Committee decided. All that the amendment seeks to do is to obtain clarity by enshrining the decision in the Bill. Since the law is as it is as a result of the case, the principle should not be hidden in the complexities of the judgment. I remind the noble Lord that there were five separate speeches. If the noble Lord is clear that the content of the amendment is an accurate reflection of what the Appellate Committee decided, surely, in the interests of legal certainty, it is desirable that the amendment should appear in the legislation. Once again, I wish to test the opinion of the House.
48E: After Clause 89, insert the following new Clause—
(1) The Secretary of State shall, within 3 months of Royal Assent, report on the progress of the implementation committee set up following the Privy Council Review of intercept as evidence.
(2) The Secretary of State shall, within 6 months of the report of the implementation committee, bring forward legislation to implement the recommendations of the Privy Council Review of intercept as evidence.”
The noble Baroness said: My Lords, this amendment is about intercept evidence and the Chilcot report. This morning, the Minister placed in the Library of the House—literally at the 11th hour—a copy of the work programme that we had requested on the work of the implementation team that has followed the Chilcot review. The Minister gave an undertaking in Committee to do that. I think that it is fair to say that we presupposed from that undertaking that it would be done in useful time. I do not think that 11 o’clock today is in useful time.
Because the document has come so late, we have not had a chance to study it properly, let alone develop any very detailed view on it. However, a perusal of it shows that we need to be rather more specific in requests that we make in future. The Government have interpreted the words “work programme” extraordinarily loosely. They have put forward a list of tasks; there is no assessment in that list of tasks of how the Government or those who are charged with studying implementation are getting on and there is no timetable for completion. When one reads that list of tasks, it is evident that allowing the use of intercept evidence does not appear to have any priority for the Government. There is no sense of urgency in the document. One is left with the impression, as one turns over the pages, that implementation study could go on for a very long time; indeed, I do not have confidence that there might ever be implementation.
I remind the House that the Chilcot report recommended in favour of the use of intercept as evidence and gave the Government the template of PII Plus. On the fourth day in Committee, I asked the Minister to confirm that there was a willingness and desire across government to use intercept as evidence. The Minister did not really respond to the point; instead, he made quite a lot of the difficulties.
I remind the House of the nature of this amendment. It asks two simple things: that the Government should report on progress within three months of Royal Assent, which is not a very onerous task, and that, within six months, they should “bring forward legislation”. I do not think that it is unreasonable to expect that, 18 months after the Chilcot committee reported, the implementation committee should have been able to complete its work so that legislation could be brought forward.
I have two points. First, I am not reassured by the document that we have been given that work is progressing. We have not been told that it is progressing; as I said, we have been given a list—quite a long list—of tasks. Secondly, time is going on and my amendment would be very unconstraining on the Government—it is very reasonable. I very much hope that the Government will feel able to accept it. I beg to move.
My Lords, we on these Benches support this moderate amendment. In view of how little time we had to peruse the document that the Minister’s department sent through this morning, it would be helpful if the Minister could assure us that he will take the amendment away and consider returning to it at Third Reading if he is not able to agree to it today. In the document, there was not so much a list of tasks as a list of possible tasks. It was one of the vaguer documents that I have read. I would not have called it, even on an initial reading, an implementation document; it was more an aspirational document of where this might go. Given the importance that everybody around the House has attached to the use of intercept evidence, it is important that we get this right.
My Lords, it is clear from what the noble Baroness, Lady Neville-Jones, said that she feels that the Government are not intent on meeting our commitment to push ahead with the Chilcot process. However, that is just not so. We are absolutely doing that. I am sure that if the noble Baroness talks to members of the Advisory Group of Privy Councillors—for example, the right honourable Michael Howard—she will find that that is the case and that we are pulling ahead and moving forward with this.
I reiterate my comment of 21 October that it remains very much our intention to update both Houses on progress against the first, design phase of the implementation work programme agreed by the AGPC, well within three months of Royal Assent. Indeed, we would hope to do so before the Christmas Recess because that would fit in with the programme agreed by the AGPC.
Equally, as I also made clear, the update report cannot form the basis of a final decision to proceed because of the further phases of work, as agreed by the Advisory Group of Privy Councillors, required to build and test the model prior to any implementation. However, the noble Baroness seems to be saying that, even if the Chilcot tests are not met, we should proceed with this. I absolutely disagree. I hope that she is not saying that, because we would be taking some very real risks. Clearly, we have to build and test, and that comes after the first phase.
The noble Baroness mentioned the intercept as evidence work programme, a copy of which I have put in the House Library. I apologise for its not having been there earlier but, as I am sure the House is aware, these things are highly complex; we had to be careful that we did not include anything in it which should not be seen but which would have been available for public view.
Turning to the second part of the proposed new clause, I strongly reiterate my previous comments. Most important, as was made clear in the cross-party Chilcot report, hasty or ill considered legislation could do real damage to our national security. There have been seven attempts to introduce this over the past few years and it is interesting to note that, whichever party has been in power, it has found it extremely difficult to do so. It is not easy or straightforward. We have to ensure that the tests are met.
However, it is fair to say that my right honourable friend, the then Minister with responsibility for counterterrorism, Tony McNulty, said before the Counter-Terrorism Bill Committee on 15 May that we would hope, subject to the necessary issues having been resolved—that is, the tests having been done—to legislate for this in 2009-10. That is still our intention if we can meet those tests. If we do not meet the tests, it will be a different matter, but we have to go through the necessary steps.
We believe that the amendment represents pre-emptive legislation that risks doing real damage to the confidence of the communication service providers—the CSPs—and of our international partners. The Chilcot report underlines the importance of CSPs to our strategic intelligence capability and ability to combat serious crime and terrorism. It also points out how any increased risk of disclosure could harm our international relationships. These issues are highly complex. That is why the matter has been looked at so many times and is so difficult. It is what lies behind the strong emphasis in the Chilcot report of the need to create, and not undermine, that confidence. Therefore, the Government remain unable to accept the amendment.
I hope that the House will continue to back the implementation process recommended by the Chilcot report, which is working forward steadily. We are committed to fulfilling it so that our intelligence capability and public protection are safeguarded and so that, if we are able to do so, we can use intercept as evidence, but we have to have those safeguards in place. This process is underpinned by the cross-party Advisory Group of Privy Councillors, which is ensuring that it is moving forward correctly. On that basis, I ask the noble Baroness to withdraw her amendment.
My Lords, I wish that I felt happier with the answer that the House has had from the Minister. Once again, he has emphasised the difficulties rather than the will of the Government to find a way to implement the report’s recommendation, which is that a way should be found to move forward with this on the basis of PII Plus. It is already between nine and 10 months since the committee reported and I confess that it would have been reassuring if, in the report that the Minister put before the House, he had given an assessment of where the committee had got to. That would have been a fair interpretation of what these Benches have been asking for.
I consider our amendment to be extremely reasonable. It is not constraining and is in the spirit of the Government’s undertaking to find a way through with this legislation. Had there been time, I might have strengthened the amendment; as it is, I am minded to test the opinion of the House.
[Amendment No. 49 not moved.]
Clause 98 [Commencement]:
49A: Clause 98, page 64, line 1, leave out from beginning to “into” and insert “Section (Terrorist financing and money laundering) and Schedule (Terrorist financing and money laundering) (terrorist financing and money laundering) and Part 5 (financial restrictions proceedings) come”
On Question, amendment agreed to.
Schedule 4 [Notification orders]:
50: Schedule 4, page 72, line 35, at end insert—
“( ) This condition is not met if there was a flagrant denial of the person’s right to a fair trial.”
The noble Lord said: My Lords, I shall speak to Amendments Nos. 50, 51, 52, 53 and 54. These amendments seek to address the concern raised by the noble Baronesses, Lady Falkner and Lady Miller, during the previous stage of the Bill in respect of notification orders. The concern was that a court would be required to make a notification order even if the overseas conviction on which the police based their application for an order was based on torture evidence. I indicated in Committee that I was sympathetic to that concern and that we were considering how best to deal with it.
We have therefore now tabled these amendments which mean that a notification order could not be made if the court considering the application for the order was satisfied on the balance of probabilities that the foreign conviction, which is the basis for the application, was obtained as a result of a flagrant denial of the person’s right to a fair trial. The term “flagrant” is not the usual kind of language found in a UK Act of Parliament. The concept of a flagrant denial of the right to a fair trial derives from case law of the European Court of Human Rights in Strasbourg and is to be read in these amendments as having the same meaning that it is given by that jurisprudence. In other words, it is a legal term of art, which is to be read as having a technical legal meaning, rather than being construed by reference to the dictionary.
We have decided upon this flagrant denial test, which originates from the Strasbourg court, because we believe it to be likely that a court applying the test will find that it captures not only cases where torture evidence extracted from the defendant was central to his conviction by the foreign court, which was the concern highlighted by the noble Baronesses in Committee, but also other cases where the defendant has in effect been completely denied the right to a fair trial in the foreign state. However, equally, this test will not cover every breach of what we recognise as constituting a right to a fair trial in this country. We cannot seek to impose our precise standards of justice on every other state in the world. So where, for example, hearsay evidence, which would not be admissible in a criminal trial in England, has been part of the foreign trial, or even where the defendant was not given such unfettered access to his lawyer as he would have been given in this country, that alone will not be sufficient to prevent a notification order being made.
It will be for the court in each case to decide on the particular facts whether the denial of a fair trial was a flagrant one. But rightly, as I have just said, not every breach of the Article 6 right to a fair trial will meet this test. As has been recognised in Strasbourg, the European Convention on Human Rights does not undertake to guarantee to people throughout the world the rights enshrined in that instrument. What is at issue here is what scrutiny of the foreign conviction it is appropriate for a UK court to undertake before it may act in reliance on that conviction to impose the notification requirements.
The correct test for such scrutiny is that which has been set down in ECHR case law as the “flagrant denial” test. That is the test that is applied in the context of states which are party to the convention wishing to deport or extradite persons to non-contracting states, or wishing to take action on the basis of decisions by courts in non-contracting states where it is alleged that the person faces or suffered an unfair hearing there.
The European Court of Human Rights has established the test that such action is prohibited where the person has suffered or risks suffering in the non-ECHR state a flagrant denial of the right to a fair trial. For example, in the case of Saccoccia v Austria 2007, Austria had sought to enforce a forfeiture order made by a foreign court, but the applicant complained that the foreign court had acted in breach of his Article 6 rights in imposing that order. The European Court of Human Rights confirmed that in such cases, the duty of the state which is party to the convention does not consist in examining whether the proceedings before the foreign court complied with Article 6 of the convention, but whether the Austrian courts, before authorising the enforcement of the forfeiture order, duly satisfied themselves that the decision at issue was not the result of a flagrant denial of justice.
As I mentioned previously, it will quite properly be the responsibility of the court to decide what constitutes a flagrant denial on the facts of each case, as is the case in deportation and other relevant contexts. However, case law already exists both in the United Kingdom and in Strasbourg which will guide the courts considering those issues. We think it likely that the flagrant denial test will ensure that a court would not make a notification order where an overseas conviction was secured on the basis of a confession by the defendant extracted under torture.
On the burden of proof for this test, it will be for the person to raise the issue that they suffered a flagrant denial of their right to a fair trial in the foreign state. They will have to produce sufficient evidence to raise that issue; it cannot be a totally unfounded allegation. Once the issue has been raised, however, it will be for the court to be satisfied on the balance of probabilities that the foreign trial did not constitute a flagrant denial of the right to a fair trial before it may impose a notification order, provided that the other conditions are met.
The amendments we are bringing forward will also mean that the High Court, or the Court of Session in Scotland, will hear the notification order proceedings, rather than a magistrate’s court, as provided for at present. That is because we consider that the High Court is better placed to deal with the consideration of whether there has been a flagrant denial of a person’s right to a fair trial abroad in cases where that issue is raised. I beg to move.
My Lords, I am extremely grateful to the Minister for tabling the amendments, which so much meet the concerns that we expressed in Committee, and for fashioning them so that they are based around case law, which will be very helpful. I am further grateful to him for giving such a full explanation, which will be very helpful to everyone interested in this extremely important issue.
On Question, amendment agreed to.
51: Schedule 4, page 73, line 13, leave out from “made” to end of line 14 and insert “to the High Court”
52: Schedule 4, page 73, line 21, leave out from “made” to end of line 31 and insert “to the Court of Session”
53: Schedule 4, page 73, line 39, leave out from “made” to end of line 41 and insert “to the High Court”
54: Schedule 4, page 74, line 1, leave out paragraphs 7 to 9
On Question, amendments agreed to.
Schedule 6 [Notification requirements: application to service offences]:
55: Schedule 6, page 80, line 34, at end insert—
“Service offences: persons to whom notification requirements apply3A The notification requirements apply to a person who—
(a) is aged 16 or over at the time of being dealt with for a service offence to which this Part applies, and(b) is made subject in respect of the offence to a sentence or order within paragraph 4 (sentences or orders triggering notification requirements).”
56: Schedule 6, page 80, line 39, after “imprisonment” insert “or custody”
57: Schedule 6, page 80, line 40, after “imprisonment” insert “or custodial order”
58: Schedule 6, page 80, line 41, after “imprisonment” insert “or detention in a young offender institution”
59: Schedule 6, page 81, line 1, at end insert “section 71A(4) of the Army Act 1955 or the Air Force Act 1955, section 43A(4) of the Naval Discipline Act 1957 or”
60: Schedule 6, page 81, line 17, leave out sub-paragraph (2)
61: Schedule 6, page 82, line 4, leave out sub-paragraphs (1) to (3) and insert—
“(1) The period for which the notification requirements apply is—
(a) 30 years in the case of a person who—(i) is aged 18 or over at the time of conviction for the service offence, and(ii) receives in respect of the offence a sentence within sub-paragraph (2);(b) 15 years in the case of a person who—(i) is aged 18 or over at the time of conviction for the service offence, and(ii) receives in respect of the offence a sentence within sub-paragraph (3);(c) 10 years in any other case.(2) The sentences where a 30 year period applies are—
(a) imprisonment or custody for life,(b) imprisonment or a custodial order for a term of 10 years or more,(c) imprisonment or detention in a young offender institution for public protection under section 225 of the Criminal Justice Act 2003 (c. 44),(d) detention during Her Majesty’s pleasure.(3) The sentences where a 15 year period applies are imprisonment or a custodial order for a term of 5 years or more but less than 10 years.”
On Question, amendments agreed to.
61A: After Schedule 6, insert the following new Schedule—
“Terrorist financing and money launderingPart 1Conditions for giving a directionConditions for giving a direction1 (1) The Treasury may give a direction under this Schedule if one or more of the following conditions is met in relation to a country.
(2) The first condition is that the Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering activities being carried on—
(a) in the country,(b) by the government of the country, or(c) by persons resident or incorporated in the country.(3) The second condition is that the Treasury reasonably believe that there is a risk that terrorist financing or money laundering activities are being carried on—
(a) in the country,(b) by the government of the country, or(c) by persons resident or incorporated in the country,and that this poses a significant risk to the national interests of the United Kingdom.(4) The third condition is that the Treasury reasonably believe that—
(a) the development or production of nuclear, radiological, biological or chemical weapons in the country, or(b) the doing in the country of anything that facilitates the development or production of any such weapons,poses a significant risk to the national interests of the United Kingdom.(5) The power to give a direction is not exercisable in relation to an EEA state.
Main definitions2 (1) “Terrorist financing” means—
(a) the use of funds, or the making available of funds, for the purposes of terrorism, or(b) the acquisition, possession, concealment, conversion or transfer of funds that are (directly or indirectly) to be used or made available for those purposes.(2) “Money laundering” means an act which falls within section 340(11) of the Proceeds of Crime Act 2002 (c. 29).
(3) “Nuclear weapon” includes a nuclear explosive device that is not intended for use as a weapon.
(4) “Radiological weapon” means a device designed to cause destruction, damage or injury by means of the radiation produced by the decay of radioactive material.
(5) “Chemical weapon” means a chemical weapon as defined by section 1(1) of the Chemical Weapons Act 1996 (c. 6), other than one whose intended use is only for permitted purposes (as defined by section 1(3) of that Act).
(6) “Biological weapon” means anything within section 1(1)(a) or (b) of the Biological Weapons Act 1974 (c. 6).
Part 2Persons to whom a direction may be givenPersons to whom a direction may be given3 (1) A direction under this Schedule may be given to—
(a) a particular person operating in the financial sector,(b) any description of persons operating in that sector, or(c) all persons operating in that sector.(2) In this Schedule “relevant person”, in relation to a direction, means any of the persons to whom the direction is given.
(3) A direction may make different provision in relation to different descriptions of relevant person.
Persons operating in the financial sector4 (1) Any reference in this Schedule to a person operating in the financial sector is to a credit or financial institution that—
(a) is a United Kingdom person, or(b) is acting in the course of a business carried on by it in the United Kingdom.(2) This is subject to the exceptions in paragraph 6.
Meaning of “credit institution” and “financial institution”5 (1) “Credit institution” means—
(a) a credit institution as defined in Article 4(1)(a) of the banking consolidation directive, or(b) a branch (within the meaning of Article 4(3) of that directive) located in an EEA state of—(i) an institution within sub-paragraph (a), or(ii) an equivalent institution whose head office is located in a non-EEA state,when it accepts deposits or other repayable funds from the public or grants credits for its own account (within the meaning of the banking consolidation directive).(2) “Financial institution” means—
(a) an undertaking, including a money service business, when it carries out one or more of the activities listed in points 2 to 12 and 14 of Annex 1 to the banking consolidation directive, other than—(i) a credit institution;(ii) an undertaking whose only listed activity is trading for own account in one or more of the products listed in point 7 of Annex 1 to the banking consolidation directive where the undertaking does not have a customer,and for this purpose “customer” means a person who is not a member of the same group as the undertaking;(b) an insurance company duly authorised in accordance with the life assurance consolidation directive, when it carries out activities covered by that directive;(c) a person whose regular occupation or business is the provision to other persons of an investment service or the performance of an investment activity on a professional basis, when providing or performing investment services or activities (within the meaning of the markets in financial instruments directive), other than a person falling within Article 2 of that directive;(d) a collective investment undertaking, when marketing or otherwise offering its units or shares;(e) an insurance intermediary as defined in Article 2(5) of Directive 2002/92/EC of the European Parliament and of the Council of 9th December 2002 on insurance mediation (other than a tied insurance intermediary as mentioned in Article 2(7) of that Directive), when it acts in respect of contracts of long-term insurance within the meaning given by article 3(1) of, and Part II of Schedule 1 to, the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);(f) a branch located in an EEA state of—(i) a person referred to in any of paragraphs (a) to (e), or(ii) a person equivalent to a person within any of those paragraphs whose head office is located in a non-EEA state,when carrying out any activity mentioned in that paragraph;(g) an insurance company (as defined by section 1165(3) of the Companies Act 2006 (c. 46));(h) the National Savings Bank;(i) the Director of Savings, when money is raised under the auspices of the Director under the National Loans Act 1968 (c. 13).Exceptions6 (1) For the purposes of this Schedule the following are not regarded as persons operating in the financial sector when carrying out any of the following activities—
(a) a society registered under the Industrial and Provident Societies Act 1965 (c. 12), when it— (i) issues withdrawable share capital within the limit set by section 6 of that Act (maximum shareholding in society); or(ii) accepts deposits from the public within the limit set by section 7(3) of that Act (carrying on of banking by societies);(b) a society registered under the Industrial and Provident Societies Act (Northern Ireland) 1969, when it—(i) issues withdrawable share capital within the limit set by section 6 of that Act (maximum shareholding in society); or(ii) accepts deposits from the public within the limit set by section 7(3) of that Act (carrying on of banking by societies);(c) a person within any of paragraphs 1 to 23 or 25 to 51 of the Schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001 (S.I. 2001/1201), when carrying out an activity in respect of which the person is exempt;(d) a person who was an exempted person for the purposes of section 45 of the Financial Services Act 1986 (c. 60) (miscellaneous exemptions) immediately before its repeal, when exercising the functions specified in that section.(2) A person who falls within the definition of “credit institution” or “financial institution” solely as a result of engaging in financial activity on an occasional or very limited basis is not regarded for the purposes of this Schedule as operating in the financial sector.
(3) For the purposes of sub-paragraph (2) a person is regarded as engaging in a financial activity on an occasional or very limited basis if—
(a) the person's total annual turnover in respect of the financial activity does not exceed £64,000,(b) the financial activity is limited in relation to any customer to no more than one transaction exceeding 1,000 euro (whether the transaction is carried out in a single operation or a series of operations which appear to be linked),(c) the financial activity does not exceed 5% of the person's total annual turnover,(d) the financial activity is ancillary and directly related to the person's main activity,(e) the financial activity is not the transmission or remittance of money (or any representation of monetary value) by any means,(f) the person's main activity is not that of a credit or financial institution, and(g) the financial activity is provided only to customers of the person's main activity.Interpretation of this Part7 In this Part of this Schedule—
“the banking consolidation directive” means Directive 2006/48/EC of the European Parliament and of the Council of 14th June 2006 relating to the taking up and pursuit of the business of credit institutions;
“the life assurance consolidation directive” means Directive 2002/83/EC of the European Parliament and of the Council of 5th November 2002 concerning life assurance;
“the markets in financial instruments directive” means Directive 2004/39/EC of the European Parliament and of the Council of 12th April 2004 on markets in financial instruments.
Power to amend8 (1) The Treasury may by order amend paragraphs 4 to 7.
(2) Any such order is subject to negative resolution procedure.
Part 3Requirements that may be imposed by a directionRequirements that may be imposed by a direction9 (1) A direction under this Schedule may impose requirements in relation to transactions or business relationships with—
(a) a person carrying on business in the country;(b) the government of the country;(c) a person resident or incorporated in the country.(2) The direction may impose requirements in relation to—
(a) a particular person within sub-paragraph (1),(b) any description of persons within that sub-paragraph, or(c) all persons within that sub-paragraph.(3) In this Schedule “designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given.
(4) The kinds of requirement that may be imposed by a direction under this Schedule are specified in—
paragraph 10 (customer due diligence);
paragraph 11 (ongoing monitoring);
paragraph 12 (systematic reporting);
paragraph 13 (limiting or ceasing business).
(5) A direction may make different provision—
(a) in relation to different descriptions of designated person, and(b) in relation to different descriptions of transaction or business relationship.Customer due diligence10 (1) A direction may require a relevant person to undertake enhanced customer due diligence measures—
(a) before entering into a transaction or business relationship with a designated person, and(b) during a business relationship with such a person.(2) The direction may do either or both of the following—
(a) impose a general obligation to take enhanced customer due diligence measures;(b) require a relevant person to undertake specific measures identified or described in the direction.(3) “Customer due diligence measures” means measures to—
(a) establish the identity of the designated person,(b) obtain information about—(i) the designated person and their business, and(ii) the source of their funds, and(c) assess the risk of the designated person being involved in relevant activities.(4) In sub-paragraph (3)(c) “relevant activities” means—
(a) terrorist financing;(b) money laundering; or(c) the development or production of nuclear, radiological, biological or chemical weapons or the facilitation of that development or production.(5) A direction may not impose requirements of a kind mentioned in this paragraph on a person who is regarded as operating in the financial sector by virtue only of paragraph 5(2)(g) (certain insurance companies).
Ongoing monitoring11 (1) A direction may require a relevant person to undertake enhanced ongoing monitoring of any business relationship with a designated person.
(2) The direction may do either or both of the following—
(a) impose a general obligation to undertake enhanced ongoing monitoring;(b) require a relevant person to undertake specific measures identified or described in the direction.(3) “Ongoing monitoring” of a business relationship means—
(a) keeping up to date information and documents obtained for the purposes of customer due diligence measures, and (b) scrutinising transactions undertaken during the course of the relationship (and, where appropriate, the source of funds for those transactions) to ascertain whether the transactions are consistent with the relevant person’s knowledge of the designated person and their business.(4) A direction may not impose requirements of a kind mentioned in this paragraph on a person who is regarded as operating in the financial sector by virtue only of paragraph 5(2)(g) (certain insurance companies).
Systematic reporting12 (1) A direction may require a relevant person to provide such information and documents as may be specified in the direction relating to transactions and business relationships with designated persons.
(2) A direction imposing such a requirement must specify how the direction is to be complied with, including—
(a) the person to whom the information and documents are to be provided, and(b) the period within which, or intervals at which, information and documents are to be provided.(3) The power conferred by this paragraph is not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.
(4) The exercise of the power conferred by this paragraph and the provision of information under it is not otherwise subject to any restriction on the disclosure of information, whether imposed by statute or otherwise.
Limiting or ceasing business13 A direction may require a relevant person not to enter into or continue to participate in—
(a) a specified transaction or business relationship with a designated person,(b) a specified description of transactions or business relationships with a designated person, or(c) any transaction or business relationship with a designated person.Part 4Procedural provisions and licensingGeneral directions to be given by order14 (1) A direction given to—
(a) a description of persons operating in the financial sector, or(b) all persons operating in that sector,must be contained in an order made by the Treasury.(2) If the order contains requirements of a kind mentioned in paragraph 13 (limiting or ceasing business)—
(a) it must be laid before Parliament after being made, and(b) if not approved by a resolution of each House of Parliament before the end of 28 days beginning with the day on which it is made, it ceases to have effect at the end of that period.In calculating the period of 28 days, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.(3) An order’s ceasing to have effect in accordance with sub-paragraph (2) does not affect anything done under the order.
(4) An order to which sub-paragraph (2) does not apply is subject to negative resolution procedure.
(5) If apart from this sub-paragraph an order under this paragraph would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.
Specific directions: notification and duration of directions15 (1) This paragraph applies in relation to a direction given to a particular person.
(2) The Treasury must give notice of the direction to the person.
(3) The direction (if not previously revoked and whether or not varied) ceases to have effect at the end of the period of one year beginning with the day on which the direction is given.
This is without prejudice to the giving of a further direction.(4) The Treasury may vary or revoke the direction at any time.
(5) Where the direction is varied or ceases to have effect (whether on revocation or otherwise), the Treasury must give notice of that fact to the person.
General directions: publication and duration of directions16 (1) This paragraph applies to an order containing directions under paragraph 14 (general directions given by order).
(2) The Treasury must take such steps as they consider appropriate to publicise the making of the order.
(3) An order—
(a) revoking the order, or(b) varying the order so as to make its provisions less onerous,is subject to negative resolution procedure.(4) The order (if not previously revoked and whether or not varied) ceases to have effect at the end of the period of one year beginning with the day on which it was made.
This is without prejudice to the making of a further order.(5) Where the order is varied or ceases to have effect (whether on revocation or otherwise), the Treasury must take such steps as they consider appropriate to publicise that fact.
Directions limiting or ceasing business: exemption by licence17 (1) The following provisions apply where a direction contains requirements of a kind mentioned in paragraph 13 (limiting or ceasing business).
(2) The Treasury may grant a licence to exempt acts specified in the licence from those requirements.
(3) A licence may be—
(a) general or granted to a description of persons or to a particular person;(b) subject to conditions;(c) of indefinite duration or subject to an expiry date.(4) The Treasury may vary or revoke a licence at any time.
(5) On the grant, variation or revocation of a licence, the Treasury must—
(a) in the case of a licence granted to a particular person, give notice of the grant, variation or revocation to that person;(b) in the case of a general licence or a licence granted to a description of persons, take such steps as the Treasury consider appropriate to publicise the grant, variation or revocation of the licence.Part 5Enforcement: information powersEnforcement authorities and officers18 (1) In this Schedule “enforcement authority” means—
(a) the Financial Services Authority (“the FSA”),(b) the Commissioners for Her Majesty’s Revenue and Customs (“HMRC”),(c) the Office of Fair Trading (“the OFT”), or(d) in relation to credit unions in Northern Ireland, the Department of Enterprise, Trade and Investment in Northern Ireland (“DETINI”).(2) In this Part of this Schedule “enforcement officer” means—
(a) an officer of the FSA, including a member of the staff or an agent of the FSA, (b) an officer of Revenue and Customs,(c) an officer of the OFT,(d) an officer of DETINI acting for the purposes of its functions under this Schedule in relation to credit unions in Northern Ireland, or(e) a local enforcement officer.(3) A “local enforcement officer” means—
(a) in Great Britain, an officer of a local weights and measures authority;(b) in Northern Ireland, an officer of DETINI acting pursuant to arrangements made with the OFT for the purposes of this Schedule.Power to require information or documents19 (1) An enforcement officer may by notice to a relevant person require the person—
(a) to provide such information as may be specified in the notice, or(b) to produce such documents as may be so specified.(2) An officer may exercise powers under this paragraph only if the information or documents sought to be obtained as a result are reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule.
(3) Where an officer requires information to be provided or documents produced under this paragraph—
(a) the notice must set out the reasons why the officer requires the information to be provided or the documents produced, and(b) the information must be provided or the documents produced—(i) before the end of such reasonable period as may be specified in the notice; and(ii) at such place as may be so specified.(4) In relation to a document in electronic form the power to require production of it includes a power to require the production of a copy of it in legible form or in a form from which it can readily be produced in visible and legible form.
(5) An enforcement officer may take copies of, or make extracts from, any document produced under this paragraph.
(6) The production of a document does not affect any lien which a person has on the document.
Entry, inspection without a warrant etc20 (1) Where an enforcement officer has reasonable cause to believe that any premises are being used by a relevant person in connection with the person’s business activities, the officer may on producing evidence of authority at any reasonable time—
(a) enter the premises;(b) inspect the premises;(c) observe the carrying on of business activities by the relevant person;(d) inspect any document found on the premises;(e) require any person on the premises to provide an explanation of any document or to state where it may be found.(2) An enforcement officer may take copies of, or make extracts from, any document found under sub-paragraph (1).
(3) An officer may exercise powers under this paragraph only if the information or document sought to be obtained as a result is reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule.
(4) In this paragraph “premises” means any premises other than premises used only as a dwelling.
Entry to premises under warrant21 (1) A justice may issue a warrant under this paragraph if satisfied on information on oath given by an enforcement officer that there are reasonable grounds for believing that the first, second or third set of conditions is satisfied.
(2) The first set of conditions is—
(a) that there is on the premises specified in the warrant a document in relation to which a requirement could be imposed under paragraph 19(1)(b), and(b) that if such a requirement were to be imposed—(i) it would not be complied with, or(ii) the document to which it relates would be removed, tampered with or destroyed.(3) The second set of conditions is—
(a) that a person on whom a requirement has been imposed under paragraph 19(1)(b) has failed (wholly or in part) to comply with it, and(b) that there is on the premises specified in the warrant a document that has been required to be produced.(4) The third set of conditions is—
(a) that an enforcement officer has been obstructed in the exercise of a power under paragraph 20, and(b) that there is on the premises specified in the warrant a document that could be inspected under paragraph 20(1)(d).(5) A justice may issue a warrant under this paragraph if satisfied on information on oath given by an officer that there are reasonable grounds for suspecting that—
(a) an offence under this Schedule has been, is being or is about to be committed by a relevant person, and(b) there is on the premises specified in the warrant a document relevant to whether that offence has been, or is being or is about to be committed.(6) A warrant issued under this paragraph shall authorise an enforcement officer—
(a) to enter the premises specified in the warrant;(b) to search the premises and take possession of anything appearing to be a document specified in the warrant or to take, in relation to any such document, any other steps which may appear to be necessary for preserving it or preventing interference with it;(c) to take copies of, or extracts from, any document specified in the warrant;(d) to require any person on the premises to provide an explanation of any document appearing to be of the kind specified in the warrant or to state where it may be found;(e) to use such force as may reasonably be necessary.(7) Where a warrant is issued by a justice under sub-paragraph (1) or (5) on the basis of information on oath given by an officer of the FSA, for “an enforcement officer” in sub-paragraph (6) substitute “a constable”.
(8) In sub-paragraphs (1), (5) and (7), “justice” means—
(a) in relation to England and Wales, a justice of the peace;(b) in relation to Scotland, a justice within the meaning of section 307 of the Criminal Procedure (Scotland) Act 1995 (interpretation);(c) in relation to Northern Ireland, a lay magistrate.(9) In the application of this regulation to Scotland, the references in sub-paragraphs (1), (5) and (7) to information on oath are to be read as references to evidence on oath.
Restrictions on powers22 (1) This paragraph applies in relation to the powers conferred by—
(a) paragraph 19 (power to require information or documents),(b) paragraph 20 (entry, inspection without warrant etc), or(c) paragraph 21 (entry to premises under warrant). (2) Those powers are not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.
(3) The exercise of those powers and the provision of information or production of documents under them is not otherwise subject to any restriction on the disclosure of information, whether imposed by statute or otherwise.
Failure to comply with information requirement23 (1) If on an application made by—
(a) an enforcement authority, or(b) a local weights and measures authority or DETINI pursuant to arrangements made with the OFT—(i) by or on behalf of the authority; or(ii) by DETINI,it appears to the court that a person (the “information defaulter”) has failed to do something that they were required to do under paragraph 19(1), the court may make an order under this paragraph.(2) An order under this paragraph may require the information defaulter—
(a) to do the thing that they failed to do within such period as may be specified in the order;(b) otherwise to take such steps to remedy the consequences of the failure as may be so specified.(3) If the information defaulter is a body corporate, a partnership or an unincorporated body of persons that is not a partnership, the order may require any officer of the body corporate, partnership or body, who is (wholly or partly) responsible for the failure to meet such costs of the application as are specified in the order.
(4) In this paragraph “the court” means—
(a) in England and Wales and Northern Ireland, the High Court or the county court;(b) in Scotland, the Court of Session or the sheriff court.Powers of local enforcement officers24 (1) A local enforcement officer may only exercise powers under this Part of this Schedule pursuant to arrangements made with the OFT—
(a) by or on behalf of the relevant local weights and measures authority, or(b) by DETINI.(2) Anything done or omitted to be done by, or in relation to, a local enforcement officer in the exercise or purported exercise of a power in this Part of this Schedule is treated for all purposes as if done or omitted to be done by, or in relation to, an officer of the OFT.
(3) Sub-paragraph (2) does not apply for the purposes of criminal proceedings brought against the local enforcement officer, the relevant local weights and measures authority, DETINI or the OFT, in respect of anything done or omitted to be done by the officer.
(4) A local enforcement officer must not disclose to any person other than the OFT and the relevant local weights and measures authority or, as the case may be, DETINI information obtained by the officer in the exercise of powers under this Part of this Schedule unless—
(a) the officer has the approval of the OFT to do so, or(b) the officer is under a duty to make the disclosure.(5) In this paragraph “the relevant local weights and measures authority”, in relation to a local enforcement officer, means the authority of which the officer is an officer.
Part 6Enforcement: civil penaltiesPower to impose civil penalties25 (1) An enforcement authority may impose a penalty of such amount as it considers appropriate on a person who fails to comply with a requirement imposed—
(a) by a direction under this Schedule, or (b) by a condition of a licence under paragraph 17.For this purpose “appropriate” means effective, proportionate and dissuasive.(2) No such penalty is to be imposed if the authority is satisfied that the person took all reasonable steps and exercised all due diligence to ensure that the requirement would be complied with.
(3) In deciding whether to impose a penalty for failure to comply with a requirement, an enforcement authority must consider whether the person followed any relevant guidance which was at the time—
(a) issued by a supervisory authority or any other appropriate body,(b) approved by the Treasury, and(c) published in a manner approved by the Treasury as suitable in their opinion to bring the guidance to the attention of persons likely to be affected by it.(4) In sub-paragraph (3) “appropriate body” means a body which regulates or is representative of any trade, profession, business or employment carried on by the person.
(5) A person on whom a penalty is imposed under this paragraph is not liable to be proceeded against for an offence under paragraph 30 in respect of the same failure.
Imposition of penalty by HMRC: procedure and reviews26 (1) This paragraph applies where HMRC decide to impose a penalty under paragraph 25 on a person.
(2) HMRC must give the person notice of—
(a) their decision to impose the penalty and its amount,(b) the reasons for imposing the penalty,(c) the right to a review under this paragraph, and(d) the right to appeal under paragraph 28.(3) The person may by notice to HMRC require them to review their decision.
(4) A notice requiring a review may not be given after the end of the period of 45 days beginning with the day on which HMRC first gave the person notice under sub-paragraph (2).
(5) On a review under this paragraph, HMRC must either—
(a) confirm the decision, or(b) withdraw or vary the decision and take such further steps (if any) in consequence of the withdrawal or variation as they consider appropriate.(6) Where HMRC do not, within the period of 45 days beginning with the day the notice under sub-paragraph (3) was given, give notice to the person of their determination of the review, they are to be taken to have confirmed their decision.
Imposition of penalty by other enforcement authority: procedure27 (1) This paragraph applies if the FSA, the OFT or DETINI (“the authority”) proposes to impose a penalty under paragraph 25 on a person.
(2) The authority must give the person notice of—
(a) the proposal to impose the penalty and the proposed amount,(b) the reasons for imposing the penalty, and(c) the right to make representations to the authority within a specified period (which may not be less than 28 days).(3) The authority must then decide, within a reasonable period, whether to impose a penalty under paragraph 25 and must give the person notice—
(a) if it decides not to impose a penalty, of that decision;(b) if it decides to impose a penalty, of the following matters—(i) the decision to impose a penalty and the amount,(ii) the reasons for the decision, and(iii) the right to appeal under paragraph 28. Appeal against imposition of civil penalty28 (1) A person may appeal to the tribunal against—
(a) a decision of HMRC on a review under paragraph 26;(b) a decision of the FSA or the OFT under paragraph 27.(2) A person may appeal to the High Court in Northern Ireland against a decision of DETINI under paragraph 27.
(3) On the appeal the tribunal or court may—
(a) set aside the decision appealed against, and(b) impose any penalty that could have been imposed by the body whose decision is appealed or remit the matter to that body.(4) An appeal against a decision of HMRC may not be made after the end of the period of 30 days beginning with—
(a) the date of the document notifying the person of the decision, or(b) if paragraph 26(6) (deemed confirmation of decision) applies, the day after the end of the period mentioned there.(5) In this section “the tribunal” means the First-tier Tribunal or, where so provided by or determined under Tribunal Procedure Rules, the Upper Tribunal.
(6) The Treasury may by order provide that, until a time specified in the order, appeals under sub-paragraph (1) are to be made—
(a) in the case of a decision of HMRC, to a VAT and duties tribunal;(b) in the case of a decision of the FSA, to the Financial Services and Markets Tribunal;(c) in the case of a decision of the OFT, to the Consumer Credit Appeals Tribunal;(rather than to the tribunal).(7) An order under sub-paragraph (6) may provide that any enactment applies (with or without modifications) in relation to an appeal to a tribunal mentioned in paragraph (a), (b) or (c) of that sub-paragraph.
(8) Such an order is subject to negative resolution procedure.
Payment and recovery of civil penalties29 (1) A penalty imposed under paragraph 25 is payable to the enforcement authority that imposed it.
(2) Any such penalty is a debt due to the authority and is recoverable accordingly.
Part 7Enforcement: offencesOffences: failure to comply with requirement imposed by direction30 (1) A person who fails to comply with a requirement imposed by a direction under this Schedule commits an offence, subject to the following provisions.
(2) No offence is committed if the person took all reasonable steps and exercised all due diligence to ensure that the requirement would be complied with.
(3) In deciding whether a person has committed an offence under this paragraph the court must consider whether the person followed any relevant guidance that was at the time—
(a) issued by a supervisory authority or any other appropriate body,(b) approved by the Treasury, and(c) published in a manner approved by the Treasury as suitable in their opinion to bring the guidance to the attention of persons likely to be affected by it.(4) In sub-paragraph (3) “appropriate body” means a body that regulates or is representative of any trade, profession, business or employment carried on by the alleged offender.
(5) A person guilty of an offence under this paragraph is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum; (b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both.(6) A person who is convicted of an offence under this paragraph is not liable to a penalty under paragraph 25 in respect of the same failure.
Offences in connection with licences31 (1) A person commits an offence who for the purpose of obtaining a licence under paragraph 17—
(a) provides information that is false in a material respect or a document that is not what it purports to be, and(b) knows that, or is reckless as to whether, the information is false or the document is not what it purports to be.(2) A person guilty of an offence under this paragraph is liable on conviction on indictment to imprisonment for a term not exceeding two years or a fine or both.
Extra-territorial application of offences32 (1) An offence under this Schedule may be committed by a United Kingdom person by conduct wholly or partly outside the United Kingdom.
(2) Nothing in this paragraph affects any criminal liability arising otherwise than under this paragraph.
Prosecution of offences33 (1) Proceedings for an offence under this Schedule may be instituted in England and Wales only by—
(a) the FSA;(b) the Director of Revenue and Customs Prosecutions;(c) the OFT;(d) a local weights and measures authority; or(e) the Director of Public Prosecutions.(2) Proceedings for an offence under this Schedule may be instituted in Northern Ireland only by—
(a) the FSA;(b) HMRC;(c) the OFT;(d) DETINI; or(e) the Director of Public Prosecutions for Northern Ireland.(3) In section 168(4) of the Financial Services and Markets Act 2000 (appointment by FSA of persons to carry out investigation), after paragraph (b) insert—
“(ba) a person may be guilty of an offence under Schedule (Terrorist financing and money laundering) to the Counter-Terrorism Act 2008 (terrorist financing or money laundering);”.(4) In section 402(1) of that Act (power of FSA to institute proceedings), omit the “or” before paragraph (b) and after that paragraph insert—
“or(c) Schedule (Terrorist financing and money laundering) to the Counter-Terrorism Act 2008 (terrorist financing or money laundering).”.(5) after “money laundering” insert “or Schedule (Terrorist financing and money laundering) to the Counter-Terrorism Act 2008 (terrorist financing or money laundering)”.
(6) HMRC may conduct a criminal investigation into any offence under this Schedule.
(7) In sub-paragraph (5) “criminal investigation” has the meaning given by section 35(5)(b) of the Commissioners for Revenue and Customs Act 2005 (c. 11).
Jurisdiction to try offences34 (1) Where an offence under this Schedule is committed (whether committed in the United Kingdom or elsewhere)—
(a) proceedings for the offence may be taken at any place in the United Kingdom, and(b) the offence may for all incidental purposes be treated as having been committed at any such place. (2) Section 1(6A) of the Justice and Security (Northern Ireland) Act 2007 (c. 6) (restriction on issue of certificate for trial without jury) applies to proceedings taken in Northern Ireland by virtue only of this paragraph as it applies to proceedings so taken by virtue only of section 29 of this Act.
Time limit for summary proceedings35 (1) An information relating to an offence under this Schedule that is triable by a magistrates' court in England and Wales may be so tried if it is laid—
(a) at any time within three years after the commission of the offence, and(b) within twelve months after the date on which evidence sufficient in the opinion of the prosecutor to justify the proceedings comes to the knowledge of the prosecutor.(2) Summary proceedings in Scotland for an offence under this Schedule—
(a) must not be commenced after the expiration of three years from the commission of the offence;(b) subject to that, may be commenced at any time within twelve months after the date on which evidence sufficient in the Lord Advocate's opinion to justify the proceedings came to the knowledge of the Lord Advocate.Section 136(3) of the Criminal Procedure (Scotland) Act 1995 (c. 46) (date when proceedings deemed to be commenced) applies for the purposes of this sub-paragraph as for the purposes of that section.(3) A magistrates' court in Northern Ireland has jurisdiction to hear and determine a complaint charging the commission of a summary offence under this Schedule provided that the complaint is made—
(a) within three years from the time when the offence was committed, and(b) within twelve months from the date on which evidence sufficient in the opinion of the prosecutor to justify the proceedings comes to the knowledge of the prosecutor.(4) For the purposes of this paragraph a certificate of the prosecutor (or, in Scotland, the Lord Advocate) as to the date on which such evidence as is referred to above came to their notice is conclusive evidence.
Liability of officers of bodies corporate etc36 (1) If an offence under this Schedule committed by a body corporate is shown—
(a) to have been committed with the consent or the connivance of an officer of the body corporate, or(b) to be attributable to any neglect on the part of any such officer,the officer as well as the body corporate is guilty of an offence and liable to be proceeded against and punished accordingly.(2) If an offence under this Schedule committed by a partnership is shown—
(a) to have been committed with the consent or the connivance of a partner, or(b) to be attributable to any neglect on the part of a partner,the partner as well as the partnership is guilty of an offence and liable to be proceeded against and punished accordingly.(3) If an offence under this Schedule committed by an unincorporated association (other than a partnership) is shown—
(a) to have been committed with the consent or the connivance of an officer of the association, or(b) to be attributable to any neglect on the part of any such officer,the officer as well as the association is guilty of an offence and liable to be proceeded against and punished accordingly. (4) If the affairs of a body corporate are managed by its members, sub-paragraph (1) applies in relation to the acts and defaults of a member in connection with the member’s functions of management as if the member were a director of the body.
(5) In this paragraph—
“officer”—(a) in relation to a body corporate, means a director, manager, secretary, chief executive, member of the committee of management, or a person purporting to act in such a capacity, and(b) in relation to an unincorporated association, means any officer of the association or any member of its governing body, or a person purporting to act in such capacity;“partner” includes a person purporting to act as a partner.Proceedings against unincorporated bodies37 (1) Proceedings for an offence under this Schedule alleged to have been committed by a partnership or an unincorporated association must be brought in the name of the partnership or association (and not in that of its members).
(2) In proceedings for such an offence brought against a partnership or unincorporated association—
(a) section 33 of the Criminal Justice Act 1925 (c. 86) (procedure on charge of offence against corporation) and Schedule 3 to the Magistrates' Courts Act 1980 (corporations) apply as they do in relation to a body corporate;(b) section 70 of the Criminal Procedure (Scotland) Act 1995 (proceedings against bodies corporate) applies as it does in relation to a body corporate;(c) section 18 of the Criminal Justice (Northern Ireland) Act 1945 (procedure on charge) and Schedule 4 to the Magistrates' Courts (Northern Ireland) Order 1981 (corporations) apply as they do in relation to a body corporate.(3) Rules of court relating to the service of documents have effect in relation to proceedings for an offence under this Schedule as if the partnership or association were a body corporate.
(4) A fine imposed on the partnership or association on its conviction of such an offence is to be paid out of the funds of the partnership or association.
Part 8Supplementary and generalReport to Parliament38 (1) As soon as reasonably practicable after the end of each calendar year, the Treasury must—
(a) prepare a report about their exercise during that year of their functions under this Schedule, and(b) lay a copy of the report before Parliament.(2) Sub-paragraph (1) does not apply in relation to a year if no direction under this Schedule is in force at any time in that year.
Supervision by supervisory authority39 (1) A supervisory authority must take appropriate measures to monitor persons operating in the financial sector for whom it is the supervisory authority for the purpose of securing compliance by those persons with the requirements of any directions under this Schedule.
(2) For the purposes of this Schedule—
(a) the FSA is the supervisory authority for—(i) credit institutions that are authorised persons;(ii) financial institutions (except money service businesses that are not authorised persons and consumer credit financial institutions);(b) the OFT is the supervisory authority for consumer credit financial institutions;(c) HMRC are the supervisory authority for money service businesses that are not authorised persons; (d) DETINI is the supervisory authority for credit unions in Northern Ireland.(3) Where under sub-paragraph (2) there is more than one supervisory authority for a person, the authorities may agree that one of them will act as the supervisory authority for that person for the purposes of this Schedule.
(4) Where an agreement has been made under sub-paragraph (3), the authority that has agreed to act as the supervisory authority must—
(a) where directions under this Schedule have been given to specified persons operating in the financial sector, notify those persons;(b) where such directions have been given to all persons operating in the financial sector or to a description of such persons, publish the agreement in such way as it considers appropriate.(5) Where no agreement has been made under sub-paragraph (3), the supervisory authorities for a person must co-operate in the performance of their functions under this paragraph.
Functions of Financial Services Authority40 The functions of the FSA under this Schedule shall be treated for the purposes of Parts 1, 2 and 4 of Schedule 1 to the Financial Services and Markets Act 2000 (c. 8) (general provisions relating to the Authority) as if they were functions conferred on the FSA under that Act.
Notices41 (1) A notice under this Schedule may be given to a person—
(a) by posting it to the person’s last known address, or(b) where the person is a body corporate, partnership or unincorporated association, by posting it to the registered or principal office of the body, partnership or association.(2) Where the Treasury are under a duty to give a notice to a person but do not have an address for them, they must make arrangements for the notice to be given to the person at the first available opportunity.
Crown application42 (1) This Schedule binds the Crown, subject as follows.
(2) No contravention by the Crown of a provision of this Schedule makes the Crown criminally liable.
(3) The following courts may, on the application of a person appearing to the court to have an interest, declare unlawful any act or omission of the Crown that constitutes such a contravention—
(a) the High Court in England and Wales;(b) the Court of Session;(c) the High Court in Northern Ireland.(4) Nothing in this section affects Her Majesty in her private capacity.
This is to be construed as if section 38(3) of the Crown Proceedings Act 1947 (c. 44) (meaning of Her Majesty in her private capacity) were contained in this Schedule.Meaning of “United Kingdom person”43 (1) In this Schedule “United Kingdom person” means a United Kingdom national or a body incorporated or constituted under the law of any part of the United Kingdom.
(2) For this purpose a United Kingdom national is an individual who is—
(a) a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen;(b) a person who under the British Nationality Act 1981 is a British subject; or(c) a British protected person within the meaning of that Act.(3) Her Majesty may by Order in Council extend the definition in sub-paragraph (1) so as to apply to bodies incorporated or constituted under the law of any of the Channel Islands, the Isle of Man or any British overseas territory.
Interpretation44 (1) In this Schedule—
“authorised person” means a person who is authorised for the purposes of the Financial Services and Markets Act 2000 (c. 8);
“business relationship” means a business, professional or commercial relationship between a relevant person and a customer, which is expected by the relevant person, at the time when contact is established, to have an element of duration;
“conduct” includes acts and omissions;
“consumer credit financial institution” means a financial institution that under section 21 of the Consumer Credit Act 1974 (c. 39) requires a licence to carry on a consumer credit business, other than—
(a) a person covered by a group licence issued by the Office of Fair Trading under section 22 of that Act,(b) a money service business, or(c) an authorised person;“country” includes territory;
“document” means information recorded in any form;
“money service business” means an undertaking which by way of business operates a currency exchange office, transmits money (or any representations of monetary value) by any means or cashes cheques which are made payable to customers;
“notice” means a notice in writing.
(2) In this Schedule any reference to an amount in one currency includes the equivalent amount in any other currency.
(3) Unless otherwise defined, expressions used in this Schedule and in—
(a) Directive 2005/60/EC of the European Parliament and of the Council of 26th October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, or(b) Commission Directive 2006/70/EC of 1st August 2006 laying down implementing measures for that directive,have the same meaning as in the relevant directive.Index of defined expressions45 In this Schedule the following expressions are defined or otherwise explained by the provisions indicated—
authorised person paragraph 44(1) the banking consolidation directive (in Part 2 of this Schedule) paragraph 7 biological weapon paragraph 2(6) business relationship paragraph 44(1) chemical weapon paragraph 2(5) conduct paragraph 44(1) consumer credit financial institution paragraph 44(1) country paragraph 44(1) credit institution paragraph 5(1) customer due diligence measures paragraph 10(3) designated person, in relation to a direction paragraph 9(3) DETINI paragraph 18(1)(d) document paragraph 44(1) enforcement authority paragraph 18(1) enforcement officer (in Part 5 of this Schedule) paragraph 18(2) financial institution paragraph 5(2) the FSA paragraph 18(1)(a) HMRC paragraph 18(1)(b) the life assurance consolidation directive (in Part 2 of this Schedule) paragraph 7 local enforcement officer (in Part 5 of this Schedule) paragraph 18(3) the markets in financial instruments directive (in Part 2 of this Schedule) paragraph 7 money laundering paragraph 2(2) money service business paragraph 44(1) notice paragraph 44(1) nuclear weapon paragraph 2(3) the OFT paragraph 18(1)(c) persons operating in the financial sector paragraph 4 radiological weapon paragraph 2(4) relevant person, in relation to a direction paragraph 3(2) supervisory authority paragraph 39(2) terrorist financing paragraph 2(1) United Kingdom person paragraph 43”
the banking consolidation directive (in Part 2 of this Schedule)
consumer credit financial institution
customer due diligence measures
designated person, in relation to a direction
enforcement officer (in Part 5 of this Schedule)
the life assurance consolidation directive (in Part 2 of this Schedule)
local enforcement officer (in Part 5 of this Schedule)
the markets in financial instruments directive (in Part 2 of this Schedule)
money service business
persons operating in the financial sector
relevant person, in relation to a direction
United Kingdom person
On Question, amendment agreed to.
[Amendments Nos. 61AA to 61BA not moved.]
61C: In the Title, line 5, leave out from “offences;” to third “to” and insert “to confer further powers to act against terrorist financing, money laundering and certain other activities; to provide for review of certain Treasury decisions and about evidence in, and other matters connected with, review proceedings;”
On Question, amendment agreed to.
62: In the Title, line 6, after “inquiries” insert “and inquests”
On Question, amendment agreed to.
House adjourned at 8.24 pm.