Money Laundering (Hansard, 26 February 1990)

The Paymaster General (The Earl of Caithness)
My Lords, money laundering is an international problem from which the United Kingdom is not immune. However, the UK is well to the fore in measures to address this threat.

Lord Campbell of Croy
My Lords, I am grateful to my noble friend for that Answer. It seems that the strong action taken in the United States has caused drug dealers to turn their attention to the United Kingdom. Have all the relevant financial institutions in this country been directed to check the bona fides of clients lodging large sums of money with them? It is vital that everything possible should be done to support the international effort against illegal drug dealing.

The Earl of Caithness
My Lords, I am sure that the whole House concurs with the last statement of my noble friend. The Drug Trafficking Offences Act 1986 requires all financial institutions to report to the authorities details of any transactions—cash or otherwise—which they know or suspect to be linked to drug trafficking. I can tell my noble friend that in November 1989 the Bank of England wrote to all authorised banks reminding them of their responsibilities under the Act. The Building Societies Commission issued a prudential notice through building societies in July 1989 and drew attention to the relevant provisions of the Act.

Lord Bruce of Donington
My Lords, is the noble Earl aware that it is often difficult for banks and financial institutions to identify these transactions without further references? Can the noble Earl give the House an indication of the degree to which the Government themselves assist these financial institutions by providing them with the intelligence that the Government are able to obtain from the FBI in America, from Interpol and from their own resources within the DTI?

The Earl of Caithness
My Lords, the UK is participating fully in what is known as the Financial Action Task Force which the noble Lord will know resulted from the Paris economic summit last July. That force recommends improvements to measures 506 against money laundering. One of the matters under discussion is how best governments can help guide the banks.

§ Lord Hailsham of Saint Marylebone
My Lords, I notice that the Question is limited to the United Kingdom. Perhaps therefore it is not right to ask for an immediate answer. Has my noble friend noticed the allegation which has been made and which has been reported this morning about the use of Gibraltar for such purposes? Will he kindly look into that matter as well?

The Earl of Caithness
My Lords, I noticed the allegation in the newspaper today. As my noble and learned friend may know, my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs is in Spain at the moment engaged in negotiations in Madrid.

§ Lord Molloy
My Lords, is the Minister aware that many people in the know are of the opinion that there is not enough co-operation and exchange of intelligence on this subject? Do Her Majesty's Government feel that it might be possible to increase the degree of co-operation now lacking? That could make a big contribution to the fight against this venomous problem.

The Earl of Caithness
My Lords, I very much agree with what the noble Lord, Lord Molloy, said: that we need a constant exchange of information. This is improving year by year with the action task force. Under the arrangements that the Home Secretary has with Europe and other countries, and as the noble Lord will know from the Customs point of view, as a result of the latest agreements, we have been able to detect drugs coming even through places such as Russia.

§ Lord Mishcon
My Lords, is the Minister aware that we from these Benches supported to the full the 1986 legislation? We shall be more than happy to support any further legislation which the Government may see fit to bring forward in order to stop this evil trade. Is he further aware that it is not just the ordinary financial institutions that appear to be indulging—obviously quite innocently—in the laundering? It is mainly the building societies now. Is the noble Earl aware of the means that are being employed to see that those who manage building societies are apprised not only of the 1986 legislation but of the laundering that is taking place through their medium?

The Earl of Caithness
My Lords, I am grateful, as I am sure the whole House is, to hear what the noble Lord, Lord Mishcon, said in the first part of his question, and for his support for the action taken on that front. I refer the noble Lord to the reply that I gave to my noble friend Lord Campbell of Croy. I mentioned the Building Societies Commission issuing a notice. I can also tell the noble Lord that the Building Societies Association, as a result of that notice, subsequently circulated guidance to its members on the practical steps which building 507 societies should take to combat money laundering. However, if the noble Lord has any particular point, perhaps he will let me know and I shall pass it on.

§ Lord Harris of Greenwich
My Lords, is the noble Earl aware that one of the problems in London is the activities of foreign banks? Is he aware that that problem was referred to in this House during a debate on a recent piece of government legislation concerning this matter? Is the Minister further aware that his honourable friend the Economic Secretary to the Treasury told me that this was a matter exclusively for the Bank of England, notwithstanding the fact that one of the foreign banks has, through its subsidiaries, been convicted in the federal court in Florida of being involved in this unattractive form of business?

The Earl of Caithness
My Lords, I am aware of the points that the noble Lord raised in an earlier debate on the Criminal Justice (International Co-operation) Bill and of the reply that my honourable friend the Economic Secretary gave to the noble Lord. However, if I can help the noble Lord further perhaps he will let me know.

§ Lord Rodney
My Lords, is my noble friend aware that there is some concern among the police force that the recent Bill on the sequestration of assets is not being applied by the courts as effectively as it might be? Will the Minister assure the House that that is not the case, but if it is will he be kind enough to look into the matter?

The Earl of Caithness
My Lords, I am sorry to hear the allegation by my noble friend. I had thought that the Drug Trafficking Offences Act 1986 was an effective measure against money laundering. The National Drugs Intelligence Unit estimates that confiscation orders exceeding £16 million have been made against the assets of convicted drug traffickers during the three years that the Act has been in place. However, if my noble friend has a particular point on that perhaps he will let me know.

Lord Bruce of Donington
My Lords, does the Minister agree that it would be unfortunate if Gibraltar was singled out especially in connection with this matter? Will he also bear in mind that areas such as the Netherlands Antilles, Luxembourg, Liechtenstein, the Channel Islands, the Isle of Man and the Seychelles are not entirely above suspicion either?

The Earl of Caithness
My Lords, I agree with the noble Lord that it would be wrong to look at any one country in particular. As I said at the beginning, this is an international problem with which the whole world is involved. It is the responsibility of all governments to take action.

Lord Campbell of Croy
My Lords, as the EC Commission is preparing a draft directive which would make money laundering a criminal offence, will there be any difficulty about accommodating that in UK legislation in due course?

The Earl of Caithness
My Lords, that depends very much on what is in the draft directive, which we have not seen. However, as I am sure my noble friend will agree, the UK is very much to the fore with the legislation it has already enacted whereby money laundering is illegal.