HL Deb 05 April 1990 vol 517 cc1528-37

12.7 p.m.

Earl Ferrers

My Lords, I beg to move that the Commons amendments be now considered.

Moved, That the Commons amendments be now considered.— (Earl Ferrers.)

On Question, Motion agreed to. COMMONS AMENDMENT [References are to Bill 74 as first printed for the Commons] Clause 4, page 4, line 32, at end insert— ' (2A) Where it appears to the Secretary of State or, as the case may be, the Lord Advocate that the request relates to a fiscal offence in respect of which proceedings have not yet been instituted he shall not exercise his powers under subsection (2) above unless—

  1. (a) the request is from a country or territory which is a member of the Commonwealth or is made pursuant to a treaty to which the United Kingdom is party; or
  2. (b) he is satisfied that the conduct constituting the offence would constitute an offence of the same or a similar nature if it had occurred in the United Kingdom.'.

Earl Ferrers

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.

Some degree of anxiety has been caused by Clause 4 of the Bill, in particular about the possibility that it might endanger the confidentiality of our banking system. The noble Lord, Lord Mishcon, twice moved amendments to this clause and my right honourable friend the Minister of State recently met representatives of the British Bankers' Association, the Law Society and the Confederation of British Industry to discuss their anxieties. Their fear was that the ability which was created by Clause 4 to offer assistance to any country could pose a threat to the high reputation for confidentiality which our banking system rightly enjoys. I know that the noble Lord, Lard Mishcon, is concerned about that. When replying to him, I said that we did not believe that those fears were justified.

Nevertheless, we appreciated the strength of the concerns which the noble Lord and the bankers expressed. Our aim in drawing up this amendment has therefore been to seek to allay the fears of the financial community without weakening our ability to co-operate with other countries in the real fight against international crime. The amendment therefore states that where the Secretary of State or, in Scotland, the Lord Advocate receives a request from an overseas country relating to the investigation of a fiscal offence, assistance can only be granted on certain conditions.

The first of those conditions is that the request for assistance must come from a country with which we have formal, mutual, legal assistance treaty arrangements, or a member of the Commonwealth.

Therefore we shall automatically be able to help all the other Council of Europe states which are signatories to the European Convention on Mutual Assistance and any countries with which we have a bilateral treaty of this kind. The Commonwealth scheme of mutual assistance, which is similar to the European convention, does not have the status of a formal treaty but we feel that it is right to be able to co-operate to the fullest possible measure with our Commonwealth partners.

Where there is a request from a country which is not in one of the categories that I have just described, it may still be possible to respond to it but only if there is dual criminality; that is to say, only if the conduct which constituted the offence would also constitute an offence of the same or similar nature if it had happened in the United Kingdom.

These conditions only apply to cases which are still under investigation. In cases where proceedings have actually been instituted we will always be able to provide assistance where we judge that it is right to do so.

I hope I have been able to show the House that this amendment both meets the concerns which the banks and the noble Lord, Lord Mishcon, expressed and preserves our ability to co-operate fully with our international partners. I hope, therefore, that this amendment will be welcomed by the House, and particularly the noble Lord, Lord Mishcon, whose views I always listen to with special care.

Moved, That the House do agree with the Commons in their Amendment No. 1.— (Earl Ferrers.)

Lord Mishcon

My Lords, I should like my immediate words to be words of gratitude to the noble Earl the Minister for the consideration that he gave to the arguments that were put forward in this House. I am sure that they were also considered in the other place when this amendment was made to the Bill. It is an important amendment.

I have only one question to put to the Minister. I hope that I do not take him by surprise. I should have given him warning of it. There is some anxiety, which I understand was expressed also in the other place, as to whether the words "fiscal offence" in fact cover an offence under the exchange control regulations of another country. I think I am right in saying that in the other place assurance was given that they would be so interpreted. However, to finish off the matter tidily in your Lordships' House, I wonder whether there could be confirmation of the fact that "fiscal offence" is deemed also to cover exchange control offences.

Because of the suddenness with which I have thrust this question upon the Minister, if he finds that he cannot answer me now I shall well understand it and await his reply. I know that the banks in fact regard this as a very important point.

Earl Ferrers

My Lords, the difficulty of defining the term "fiscal offence" was one of the factors which underlay the Government's reluctance earlier in the Bill's passage to accept a suggestion by the British Bankers Association which would have made the grant of assistance in all fiscal cases subject to a dual criminality test. I wrote to the noble and learned Lord about this. The comment that I then made was directed to a suggestion which would have left it to a court nominated by the Secretary of State to decide for itself whether the overseas offence was a fiscal one.

The government amendment that we have now tabled places a duty on the Secretary of State with regard to this question before nominating a court. In doing so the intention will be to apply the definition referred to in the Explanatory Report to the Additional Protocol to the European Convention on Mutual Assistance which states that fiscal offences are offences in connection with taxes, duties, Customs and exchange.

Since exchange control offences will therefore form part of the wider definition of the term "fiscal offence" which the Secretary of State will apply, I believe that there will be no need for them to be separately mentioned. I am sure that when the noble Lord absorbs this matter, as he always absorbs everything with astonishing rapidity, he will realise that his anxiety has been allayed.

Lord Mishcon

My Lords, I am deeply grateful.

On Question, Motion agreed to. COMMONS AMENDMENTS 2 Clause 7, page 7, line 36, after 'that' insert 'the conduct constituting' 3 Clause 8, page 8, leave out lines 42 and 43 and insert ' (b) that the conduct constituting that offence would constitute an offence punishable by imprisonment if it had occurred in Scotland, '

Earl Ferrers

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 and 3 en bloc.

I do not think I need detain the House long over these amendments. Their purpose is simple. They are designed to bring Clause 7 (2) and Clause 8 fully into line with the approach of Clause 7 (1). Clause 7 (1) provides for the exercise of powers of search and seizure on behalf of another country in cases which in the United Kingdom would involve serious arrestable offences. In deciding whether to issue a warrant authorising the use of such powers the court in this country has to consider not the precise formulation of the overseas offence but the conduct which constitutes it. If the conduct by the person concerned would have amounted to a serious arrestable offence, it is possible for the court to issue a warrant.

On the other hand, both Clause 7 (2) and Clause 8 as they stood when the Bill left your Lordships' House would have restricted the court in other circumstances such that search and seizure powers would only be used if the formulation of the overseas offence and the United Kingdom offence corresponded exactly.

The amendments, therefore, prescribe that in considering whether to issue warrants under Clause 7 (2) and Clause 8 the courts should, as with Clause 7 (1), consider the conduct constituting the offence overseas rather than the precise wording of the offence.

I hope that your Lordships will agree that these are sensible changes.

Moved, That the House do agree with the Commons in their Amendments Nos. 2 and 3 en bloc.— (Earl Ferrers.)

On Question, Motion agreed to.

12.15 p.m.

COMMONS AMENDMENT 4 After Clause 16, insert the following new clause: ("Increase in realisable property: Scotland
  1. '(1) This section has effect where by virtue of section l (l) (b) of the Criminal Justice (Scotland) Act 1987 (insufficient realisable property) the amount which a person is ordered to pay by a confiscation order is less than the amount assessed to be the value of his proceeds of drug trafficking.
  2. (2) If, on an application made in accordance with subsection (3) below the Court of Session is satisfied that the amount that might be realised in the case of the person in question is greater than the amount taken into account in making the confiscation order (whether it was greater than was thought when the order was made or has subsequently increased) the court shall issue a certificate to that effect, giving the court's reasons.
  3. (3) An application under subsection (2) above may be made either by the prosecutor or by an administrator appointed under section 13 (1) of the said Act of 1987 in relation to the realisable property of the person in question.
  4. (4) Where a certificate has been issued under subsection (2) above the prosecutor may apply to the High Court of Justiciary for an increase in the amount to be recovered under the confiscation order; and on that application the court may—
    1. (a) substitute for that amount (not exceeding the amount assessed as the value referred to in subsection (1) above) as appears to the court to be appropriate having regard to the amount now shown to be realisable; and
      2. 1532
    2. (b) increase the term of imprisonment or detention fixed in respect of the confiscation order under subsection (2) of section 396 of the Criminal Procedure (Scotland) Act 1975 (imprisonment in default of payment) if the effect of the substitution is to increase the maximum period applicable in relation to the order under subsection (1A) of section 407 of that Act.'.
Earl Ferrers

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4. This new clause does no more than bring the position in Scotland into line with the position in England and Wales as it will be following the passage of Clause 16 of the Bill.

Moved, That the House do agree with the Commons in their Amendment No. 4 .— (Earl Ferrers.)

On Question, Motion agreed to. COMMONS AMENDMENTS 5 After Clause 23, insert the following new clause: ("Part HA: seizure and detention of drug trafficking cash

  1. '(1) A customs officer or constable may seize and, in accordance with this section, detain any cash which is being imported into or exported from the United Kingdom if its amount is not less than the prescribed sum and he has reasonable grounds for suspecting that it directly or indirectly represents any person's proceeds of, or is intended by any person for use in, drug trafficking.
  2. (2) Cash seized by virtue of this section shall not be detained for more than forty-eight hours unless its continued detention is authorised by an order made by a justice of the peace or in Scotland the sheriff; and no such order shall be made unless the justice or, as the case may be, the sheriff is satisfied—
    1. (a) that there are reasonable grounds for the suspicion mentioned in subsection (1) above; and
    2. (b) that continued detention of the cash is justified while its origin or derivation is further investigated or consideration is given to the institution (whether in the United Kingdom or elsewhere) of criminal proceedings against any person for an offence with which the cash is connected.
  3. (3) Any order under subsection (2) above shall authorise the continued detention of the cash to which it relates for such period, not exceeding three months beginning with the date of the order, as may be specified in the order; and a magistrates' court or in Scotland the sheriff, if satisfied as to the matters mentioned in that subsection, may thereafter from time to time by order authorise the further detention of the cash but so that—
    1. (a) no period of detention specified in such an order shall exceed three months beginning with the date of the order; and
    2. (b) the total period of detention shall not exceed two years from the date of the order under subsection (2) above.
  4. (4) Any application for an order under subsection (2) or (3) above shall be made by the Commissioners of Customs and Excise or a constable if made to a justice or magistrates' court and by a procurator fiscal if made to the sheriff.
  5. (5) At any time while cash is detained by virtue of the foregoing provisions of this section—
    1. (a) a magistrates' court or in Scotland the sheriff may direct its release if satisfied—
      1. (i) on an application made by the person from whom it was seized or a person by or on whose behalf it was being imported or exported, that there are no, or are no longer, any such grounds for its detention as are mentioned in subsection (2) above; or
      2. (ii) on an application made by any other person, that detention of the cash is not for that or any other reason justified; and
    2. (b) a customs officer or constable, or in Scotland a procurator fiscal, may release the cash if satisfied that 1533 its detention is no longer justified but shall first notify the justice, magistrates' court or sheriff under whose order it is being detained.
  6. (6) If at a time when any cash is being detained by virtue of the foregoing provisions of this section—
    1. (a) an application for its forfeiture is made under section (Forefeiture) below; or
    2. (b) proceedings are instituted (whether in the United Kingdom or elsewhere) against any person for an offence with which the cash is connected, the cash shall not be released until any proceedings pursuant to the application or, as the case may be, the proceedings for that offence have been concluded.'.
6 After Clause 23, insert the following new clause: Forfeiture
  1. '(1) A magistrates' court or in Scotland the sheriff may order the forfeiture of any cash which has been seized under section (Part HA: seizure and detention of drug trafficking cash) above if satisfied, on an application made while the cash is detained under that section, that the cash directly or indirectly represents any person's proceeds of, or is intended by any person for use in, drug trafficking.
  2. (2) Any application under this section to a magistrates' court shall be made by the Commissioners of Customs and Excise or a constable and to the sheriff by a procurator fiscal.
  3. (3) The standard of proof in proceedings on an application under this section shall be that applicable to civil proceedings; and an order may be made under this section whether or not proceedings are brought against any person for an offence with which the cash in question is connected.'.
 7 After Clause 23, insert the following new clause: Interest '. Cash seized under this Part of this Act and detained for more than forty-eight hours shall, unless required as evidence of an offence, be held in an interest-bearing account and the interest accruing on any such cash shall be added to that cash on its forfeiture or release.'. 8 After Clause 23, insert the following new clause: Procedure '(1) An order under section (Part HA: seizure and detention of drug trafficking cash) (2) above shall provide for notice to be given to persons affected by the order. (2) Provision may be made by rules of court with respect to applications to any court under this Part of this Act, for the giving of notice of such applications to persons affected, for the joinder, or in Scotland sisting, of such persons as parties and generally with respect to the procedure under this Part of this Act before any court. (3) Subsection (2) above is without prejudice to the generality of any existing power to make rule.'. 9 After Clause 23, insert the following new clause: Interpretation of Part IIA ' (1) In this Part of this Act— cash" includes coins and notes in any currency; customs officer" means an officer commissioned by the Commissioners of Customs and Excise under section 6 (3) of the Customs and Excise Management Act 1979; drug trafficking" has the same meaning as in the Drug Trafficking Offences Act 1986 or, as respects Scotland, in Part I of the Criminal Justice (Scotland) Act 1987; exported", in relation to any cash, includes its being brought to any place in the United Kingdom for the purpose of being exported; the proceeds of drug trafficking" has the same meaning as in the said Acts of 1986 and 1987 respectively and includes proceeds received by any person before as well as after the coming into force of this Part of this Act. (2) In section (Part IIA: seizure and detention of drug trafficking cash) above "the prescribed sum" means such sum in sterling as may from time to time be prescribed for the purposes of that section by an order made by the Secretary of State by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament; and in determining under that section whether an amount of currency other than sterling is not less than the prescribed sum that amount shall be converted at the prevailing rate of exchange. (3) For the avoidance of doubt it is hereby declared that notwithstanding sections 8 and 9 of the Isle of Man Act 1979 references in this Part of this Act to importation into or export from the United Kingdom include references to importation into the United Kingdom from the Isle of Man and exportation from the United Kingdom to the Isle of Man.'. 10 Clause 24, page 17, line 43, at end insert: ' (2) Any money representing cash forfeited under Part IIA of this Act or accrued interest thereon shall be paid into the Consolidated Fund.'.

Earl Ferrers

My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendments Nos. 5 to 10 en bloc. I should like to speak at the same time to Commons Amendments Nos. 13 and 14. It may be for the convenience of noble Lords if I were to speak to all these amendments together as they form a consolidated package, as it were.

They will constitute a new part of the Bill and a significant extension of its effectiveness in countering drug trafficking. They were introduced in another place in the light of the report of the Home Affairs Committee and of the expression of concern at Second Reading in another place. They are designed to prevent the proceeds of drug trafficking, or money which is intended to be used for drug trafficking, to be imported to or exported from this country as cash. I hope, therefore, that the provisions will be also acceptable to your Lordships.

As your Lordships will be aware, the Drug Trafficking Offences Act 1986 gives our enforcement agencies and courts wide powers to trace, freeze and confiscate the proceeds of drug trafficking. An important consequence of that Act has been that banks and other financial institutions have introduced systematic reporting of suspicious transactions to the National Drugs Intelligence Unit. I am glad to say that banks and other financial institutions have co-operated very fully with the enforcement agencies, and their help has been immensely valuable and led to the detection of both drugs money and drug traffickers. These are effective provisions, and £ 16 million worth of assets have already been ordered to be confiscated as a result. This is a very considerable success in a fairly short while.

However, if we are aware of the success of this legislation, so are the drug traffickers. If they feel that it is no longer safe to use the financial institutions to launder the proceeds of their evil trade, they will look elsewhere. Equally, if they can no longer use the banking system to bring money into this country to finance their activities they will find another way to get the money here. All of this highlights what I am afraid is a loophole in our current legislation, and that is that we have no power to detain large sums of actual cash which is suspected of being drugs money from being brought across our borders.

Suitcases full of banknotes can be brought into or taken from this country with impunity.

That was one of the points which was highlighted by the Home Affairs Select Committee in another place in its recent report on drug trafficking and related serious crime. It proposed urgent measures which would, allow Customs officers to detain money entering or leaving the country which they know or suspect arises from the proceeds of such crime". We have therefore brought forward these amendments in order to close this loophole.

These new clauses seek to overcome the problem by enabling customs and police officers to detain money which is being imported or exported where there are reasonable grounds for suspecting that the money represents the proceeds of drug trafficking or is intended for use in drug trafficking. The power can be exercised only where the amount of cash in question is above a minimum figure which is to be prescribed by order. We have in mind that the first place to set that figure is £ 10, 000. Once the cash has been seized, its continued detention for up to three months may be authorised by a justice of the peace, and for three month periods thereafter, up to a minimum of two years, by a magistrates' court. During that period a magistrates' court may at any time order the release of the money if it is satisfied that its continued detention is no longer necessary; for example, if the person from whom it was seized is able to show that it was held legitimately. A magistrates' court, which is satisfied that on the balance of probabilities detained cash represents drugs money, may order for its permanent forfeiture. While the cash is being detained it will be held in an interest bearing account and interest earned will be added to the capital forfeited or returned, depending on the outcome of the case.

I know that it is unusual for the Government to seek to make quite such major additions to a Bill so late in its passage, especially when in order to do so makes it necessary to make changes to the scope of the Bill. Our view was that it was worth taking that step in order to get these important provisions on to the statute book. I am glad to say that we had support for this from all parts of the House in another place. I hope, therefore, that your Lordships will be equally good enough in your support for these measures which will form one more important weapon in our armoury against the international drugs trade.

Moved, That the House do agree with the Commons in their Amendments Nos. 5 to 10 en bloc.— (Earl Ferrers.)

Lord Mishcon

My Lords, from these Benches and from other parts of the House complaints are made when a whole host of government amendments are suddenly inserted into Bills. On this occasion there will be no complaint from these Benches. We welcome wholeheartedly the insertion of these clauses. We are extremely glad that the gap to which the noble Earl clearly referred has now been closed. If we have made it more difficult, even almost impossible, for the wretched drug traders to get hold of their ill-gotten gains the whole House will be delighted as will the country.

Lord Harris of Greenwich

My Lords, I agree with the noble Lord, Lord Mishcon. It is well known that a substantial number of money launderers, have brought into this country suitcases packed with high denomination bank notes. The noble Earl does not need to apologise to the House for introducing the amendments at this stage. They are highly desirable and in accord with provisions of the United States Bank Secrecy Act. I welcome the fact that we are moving in that direction. I give an unreserved welcome to the amendments.

Earl Ferrers

My Lords, I am grateful to both noble Lords. I had an idea that what is proposed would meet with the approval of the noble Lord, Lord Harris, because he has always been concerned about the matter. I also thought that the noble Lord, Lord Mishcon, would approve. Nevertheless, I anticipated being chivvied vigorously for introducing the matter so late in the day. Noble Lords have been kind enough to understand and appreciate the reasons. I hope that you will content yourselves with the thought that the Government always listen.

On Question, Motion agreed to.

COMMONS AMENDMENT 11 Clause 26, page 18, line 25, leave out subsection (5).
Earl Ferrers

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 11. It removes the privilege amendment.

Moved, That the House do agree with the Commons in their Amendment No. 11.— (Earl Ferrers.)

On Question, Motion agreed to. COMMONS AMENDMENT 12 Schedule 4, page 22, line 26, at end insert: 'The Misuse of Drugs Act 1971 In section 27 (1) after "1986" there shall be inserted the words "or an offence to which section 1 of the Criminal Justice (Scotland) Act 1987 relates".

Earl Ferrers

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 12. It is a technical Scottish amendment. Section 1 of the Criminal Justice (Scotland) Act 1987, to which the amendment refers, makes similar provision for Scotland to that which is made for England and Wales by Section 28 (1) of the Drug Trafficking Offences Act 1986 which defines the term "drug trafficking offence". The forfeiture provisions for the Misuse of Drugs Act 1971 were applied to drug trafficking offences in England and Wales by virtue of Section 70 of the Criminal Justice Act 1988. That provision did not apply to Scotland. Therefore the amendment achieves for Scotland what has already been achieved for England and Wales by Section 70 of the 1988 Act.

Moved, That the House do agree with the Commons in their Amendment No. 12.— (Earl Ferrers.)

On Question, Motion agreed to.

COMMONS AMENDMENTS 13 In the Title, line 2, leave out second 'and' and insert '; to enable the United Kingdom'. 14 Line 5, at end insert '; and to provide for the seizure, detention and forfeiture of drug trafficking money imported or exported in cash'.
Earl Ferrers

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 13 and 14 en bloc. I spoke to them when speaking to Amendment No. 5.

Moved, That the House do agree with the Commons in their Amendments Nos. 13 and 14 en bloc.— {Earl Ferrers.)

On Question, Motion agreed to.

An amendment (privilege) made.