ASSISTING ANOTHER TO RETAIN THE BENEFIT OF DRUG TRAFFICKING (Hansard, 2 July 1986)

§ Mr. Mellor
I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker
With this it will be convenient to take Lords amendments Nos. 106, 107, 109, 111 to 115 and 151.

§ Mr. Mellor
The amendments implement the recommendations of the Select Committee on Home Affairs. The new provisions will be of considerable assistance to the investigating authorities. I take the opportunity to thank the Select Committee for its detailed and useful reports, which have been invaluable in the development of the Bill.
The amendments provide also that the financial institution will be exempted from the laundering offence if it continues to handle the suspect's account after informing the police or Customs of its suspicions. Otherwise, the bank would have little option but to close the account, thus forewarning the client that he was under suspicion.
Another amendment arises out of a useful discussion in Committee about the constitution of the new offence. It was said that clause 17 as originally drafted could have had the effect of catching honest bank staff who might inadvertently handle the proceeds of drug trafficking. An amendment that was agreed in another place removes the objective test of having reasonable grounds to suspect. The prosecution will have to prove actual knowledge or suspicion on the part of the defendant that the person with whom he was dealing had been engaged in drug trafficking. I hope the amendments commend themselves to the House.

§ Mr. Corbett
May I join the Minister in half thanking myself for the advice of the Select Committee on Home Affairs?
The Minister referred to protecting bank staff who might inadvertently be caught up. The changes that have been proposed give the protection needed to those who work in banks and other financial institutions, although in no way debarring them from assisting us in the general purposes of the Bill.

§ Mr. Geoff Lawler (Bradford, North)
Amendment No. 111 took up a lot of debate in the other place. It is an innovative amendment and a great improvement on what was before the purely reactive role of financial institutions. Two points can be made. First, rightly, the Government have sought to reject any idea of compulsion along the lines that appertain in America. I hope that the Minister will assure us that that will continue to be the case. Certainly, it would prove to be unworkable.
Secondly, one of the noble Lords in the other place said that the amendment would have little effect because bank managers or managers of other financial institutions would not know what to look for. He asked how their suspicions would be aroused that money that was being laundered which originated from drug trafficking. We cannot expect all bank managers suddenly to be budding 1136 Maigrets, but even a budding Clouseau would know what to look for if properly alerted. Therefore, to make the amendment effective, may we have the assurance of my hon. Friend the Minister that bank managers will have some proper brief and traning in order that their suspicions might be aroused where appropriate?

§ Mr. Raffan
I welcome the amendment. We are bound to welcome any way in which the controls in the Bill on the laundering of money are strengthened and that lies at the core of it. I am not sure that I agree entirely with my hon. Friend the Member for Bradford, North (Mr. Lawler) with regard to further powers. I hope that my hon. Friend the Minister will be able to assure the House that he will keep a close eye on the effectiveness of this amendment and the way in which it is implemented to make sure that it works. If it does not we must consider taking further powers to require banks to disclose deposits and transactions above a certain amount. I am well aware of the burden that that would impose on British banks, compared with American banks, given the larger amount of cash transactions that take place in Britain compared with the United States, but, as I said on Second Reading and subsequently in Committee, anything that we can do to dramatically slow down this evil trade should be done.

§ Mr. Mellor
I am grateful to my hon. Friends the Members for Bradford, North (Mr. Lawler) and for Delyn (Mr. Raffan) and the hon. Member for Birmingham, Erdington, (Mr. Corbett). Yes, of course, as my hon. Friend the Member for Delyn says, we think that what we have done at the moment is adequate, but the matter will be kept under review, and, if necessary, further steps will certainly be taken. We are not attracted to the American disclosure arrangement which has been more honoured in the breach than anything else, and has caused enormous difficulties in the attempt to bring about compliance.
I can tell my hon. Friend the Member for Bradford, North that there is certainly no question of compelling a bank to disclose. Training must be a matter for the banks. Given the enthusiasm with which they have sought to facilitate the introduction of the legislation — I pay tribute to them for that — I should have thought that they would want to include in their staff training the clearest warnings to staff as to how to behave when confronted with the kind of situation that is envisaged in these arrangements.