POWER TO EXTEND CERTAIN OFFENCES TO CROWN SERVANTS AND TO EXEMPT REGULATORS ETC. (Hansard, 29 June 1993)

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

§ Madam Deputy Speaker (Dame Janet Fookes)
With this it will be convenient also to discuss the following Government amendments: Nos. 20 to 24, No. 38, No. 26 and No. 27.

§ Mr. Maclean
The new clause and schedule give the Secretary of State the power to make regulations to extend money laundering offences to Crown servants, and to exempt certain persons who are employed by supervising bodies from the failure to report offences under clauses, 18, 19, 47 and 50.
The power to extend the offences to cover Crown servants is necessary, because some Crown servants—I am thinking in particular of employees of the Department of National Savings—carry out duties and tasks that, in many respects, do not differ from those carried out by employees of banking and financial institutions in the private sector. The latter are, of course, covered by defences. The former, however, might not be, by virtue of Crown immunity.
We do not think that that difference in treatment can be justified. In any case, we are required by the EC directive to apply the offences and, in particular, the failure to report offences to all credit and financial institutions. The Department of National Savings undoubtedly falls into 844 that category, despite its Crown status, and it is right that the offences should in due course be extended by regulations to cover such employees.
The power does not put the general concept of Crown immunity into jeopardy. It is limited to specified money laundering offences—the acquisition offence, the offence of assisting another, the failure to report an offence, the tipping-off offence and the offence of prejudicing an investigation.
The exemption for supervisors from the suspicious reporting offence is necessary to enable us to combat money laundering through the regulatory system rather than at the expense of that system. We do not want to place on the supervisors a burden so onerous that it interferes with the performancce of their regulatory duties. We are obliged, under the directive, to impose on supervisors an express obligation to report suspicions of money laundering. This we shall do by regulations under the European Communities Act 1972.
With such an obligation in place, there is no need for the criminal offences to apply in addition. Indeed, if they were to do so, it might seriously harm the ability to exercise supervisory functions properly, as detecting suspicious transactions is a task for which regulators could easily be held responsible because of their special access to company accounts. We have therefore sought the right level at which to require supervisors to report their suspicions, without making them so anxious about the consequences of not doing so that they neglect their regulatory functions.
It is much better that the prime responsibility for reporting signs of money laundering or suspicious transactions should be given to the institution handling the money, and that the supervisors should be left with responsibility for ensuring that proper systems and practices are in place.
We have found a solution that fulfils all the requirements of the directive without undermining the integrity of the regulatory system.
Amendments Nos. 20, 21 and 22 make consequential changes to clause 77. The provisions in subsection (2) of that clause relating to schedules 4 and 5 is being removed and replaced by the provisions of amendments No. 23 and 24. The other two amendments to schedule 4 will ensure that it takes full account of the new sections being put into the Criminal Justice Act 1988 and the Northern Ireland (Emergency Provisions) Act 1991 by the new schedule.
I recommend the new clause and the amendments to the House.

§ Mr. Robert Maclennan (Caithness and Sutherland)
When and how did the need for this provision come to light? Who recommended the change?

§ Mr. Maclean
The need for the new provision came to my attention within the last two weeks. I am not sure when it came to official attention. The advice of officials was that this was the best and most appropriate way of making the changes. If I had more information, I should happily give it to the hon. Gentleman.

§ Mr. Maclennan
If the hon. Gentleman thinks that it is appropriate that a matter of such complexity should be brought before the House in this manner, I disagree. This is not a suitable way to legislate. We have had too many experiences of bad legislation in this field being passed without proper consultation or publication of the 845 Government's intentions. On the face of it, what the Minister has said seems reasonable, but it is quite clear that he has no idea of the background to this proposal. Perhaps the Members of another place will want to look at the matter more closely.

§ Mr. Maclean
The amendment does not make any great or fundamental change. We already have complex law dealing with the reporting obligations of all those employed in the field of financial services. Here, we are applying the law to Crown servants, and making the necessary changes with regard to supervisory organisations.
I spoke in greater detail than usual because I wanted the House to be fully informed of the provision's effects. The fact that I spoke in such detail does not necessarily mean that this is a whole new area of law, or that we are introducing a new concept that was not considered by the Standing Committee in the context of other aspects of the Bill or, previously, by the House.

§ Mr. Michael
The Minister ought not to be too defensive about these issues. He will recall that the Standing Committee dealt with a number of similar points. These are not matters in respect of which the parties divide, so we had a sensible discussion. I agree that it is necessary to get the law right and to ensure that it works. In that sense, if the Minister is responding to comments that have been made, we are reassured to some extent.
However, we need to ensure that we do not create another complication and other problems. For instance, later amendments take up points that I made in Committee. I refer to the need to ensure that legal advisers working in other capacities are not exempt when they act in their non-legal capacity. I am glad that the Minister has responded by introducing amendments with which we shall deal later. I hope that he does not feel that he must defend every line of late amendments. He ought to ensure that the short time available to both Houses is used to secure practicality and to make things absolutely right.

§ Mr. Maclean
I am very grateful to the hon. Gentleman for his kind remarks. During my time in Parliament, I have never before been accused of being too defensive, but I am grateful to him for defending me for the second time, the first being in Committee. Clearly, he cannot drop his past profession; he has defended me without my even requesting a legal aid solicitor.