Money Laundering: EC Directive (Hansard, 27 January 1992)

Lord Bruce of Donington
asked Her Majesty's Government:
What progress has been made in the United Kingdom towards the implementation of European Community Council Directive No. 91/308/EEC on the prevention of the use of the financial system for the purpose of money laundering and whether they are satisfied with the steps so far taken by other member states.

§ Lord Brabazon of Tara
My Lords, the implementation date of this directive is 1st January 1993. The Government will shortly be issuing a consultation paper on the implementation of the directive. We hope to introduce primary legislation and regulations under the European Communities Act 1972 to take this forward at the earliest possible opportunity. We are satisfied that other member state governments will take the necessary steps to implement the directive in their respective countries.

Lord Bruce of Donington
My Lords, I thank the noble Lord for that mildly encouraging reply. Will he give the House an undertaking that, as and when these measures are thoroughly formulated, they will be laid before the House? With regard to the other countries involved in the EC regulations, will he bear in mind that law enforcement in certain states of the EC is very difficult? Has he taken note, for example, of the remarks of the Italian prosecutor, which were made before the Italian Parliament, that whole provinces of Italy and Sicily are now beyond the law? If that be the case, what hope does the noble Lord have of the 1059 Community regulations being enforced in that country and indeed in some others where the situation is very similar?

§ Lord Brabazon of Tara
My Lords, I can give the noble Lord an assurance that any changes that are required to United Kingdom law and practice will be subject to parliamentary consideration. As I said in my original Answer, we intend to bring forward legislation and regulations. The noble Lord referred to the situation in other countries. I was not aware of the remarks made in Italy. It is of course disturbing if that is the case. We as a country set great store by practical and operational co-operation between enforcement authorities in this and other countries. We are an active participant in the financial action task force which covers most of the world's major financial centres. The task force is encouraging all countries to take measures to combat money laundering.

§ Lord Peston
My Lords, as I understand it, money laundering is to do with hiding the provenance of where the money originally came from and converting it from something transparently illegal into something that the people concerned hope will turn out to be legal. Is it not the case therefore that if ever there were an example of the EC needing to be strengthened, this is it? The essential point is that the Community countries should act together so that the money cannot be hidden rather than try to go it alone. Is that the Government's view? Is that the way they hope to proceed when they come to introduce primary legislation?

§ Lord Brabazon of Tara
Yes, my Lords, that is a fair summing up of the situation. It is a problem. We have already taken major steps to deal with it and therefore it will not require a great change in our law in order to bring in the directive. Other countries will need to do more. I have already referred to international co-operation in the matter as well.

§ Lord Peston
My Lords, perhaps I may follow that point with one additional question. Is it the case, as one has read occasionally in the more lurid parts of the press, that the IRA is very much into the business of money laundering? If that is the case, do we not then have a special responsibility, presumably under the leadership of the Bank of England, to deal with that matter? If the IRA cannot launder its money, its ability to spend it in areas which I need not specify will be very much weakened.

§ Lord Brabazon of Tara
My Lords, we intend to limit the coverage of the directive to drugs money. We already have legislation to take account of laundered money that is destined for terrorists. As I have said before, international co-operation also exists in this field as well.

§ Lord Molloy
My Lords, does the Minister agree that if this kind of thing goes on in certain countries that are members of the EC it could indirectly have a grievous effect on our own country? Would it not therefore be right and proper, as my noble friend Lord Bruce of Donington has said, to have the matter 1060 thoroughly examined so that no nation that is a member of the EC can shut its eyes to this form of criminal activity?

§ Lord Brabazon of Tara
My Lords, I suspect that that is the very reason we have this directive before us at the moment.

Lord Bruce of Donington
My Lords, will the noble Lord consider widening the whole business a little outside the EC itself? In view of the rather patchy enforcement of the law in certain parts of the EC, will the noble Lord consider the formation of an enforcement agency, possibly under the auspices of Interpol, which would specifically exclude some members of the EC that do not keep the law and include other countries outside the EC that have a good reputation for enforcing the law?

§ Lord Brabazon of Tara
My Lords, there is already a Council of Europe convention on laundering, search, seizure and confiscation of the proceeds from crime which was opened for signature in October 1990. I understand that it has been signed by 12 or 13 countries so far. That is a step in the right direction.