HL Deb 08 May 2001 vol 625 cc977-82

8.37 p.m.

The Minister of State, Cabinet Office (Lord Falconer of Thoroton) rose to move, That the draft order laid before the House on 23rd April be approved [14th Report from the Joint Committee].

The noble and learned Lord said: My Lords, the troubles have left Northern Ireland a sad legacy of organised criminality. As the Prime Minister has said, everyone in Northern Ireland deserves to share in the benefits of peace. Organised crime is a threat to the fabric of society; it thrives on extortion, fear and violence. The draft legislation before us today is an important measure in the Government's strategy to meet the threat from organised and serious crime.

The police and other agencies involved in law enforcement have done a great deal to tackle organised crime during the past 12 months. There have been notable police successes against counterfeit goods and illegal drugs, as well as action against fuel and tobacco smuggling by Customs and Excise. In Northern Ireland the problem is exacerbated because of the links between organised crime and paramilitary groups. Just over half of organised criminal groups known to the police are either associated with, or controlled by, loyalist or republican paramilitaries.

Last September the Government established the Organised Crime Task Force in Northern Ireland. The task force recently published a threat assessment which makes it clear that fighting organised crime will be a long struggle and demand constant innovation and development by the law enforcement agencies and government. The task force recognises that organised crime is a multi-faceted problem which demands different answers from different agencies working closely together. Criminals look for new ways to prey on society, avoid detection and conceal their illegal gains.

The strategic priorities for the Organised Crime Task Force in this year include targeting money-laundering activities and seizing the proceeds of crime. The measure before us today is another element of the Government's strategy to pursue the proceeds of crime and is an example of our flexible response to an ever-changing criminal threat. By preventing criminals profiting from crime and removing the profits of those who have committed crime in the past, not only do we create a powerful deterrent to criminality but we make it harder for organised criminals to commit further crime and sustain themselves through financing new initiatives. Equally, by recovering the proceeds of crime we provide reassurance to ordinary people who no longer see criminals flaunting their ill-gotten wealth. The money recovered can be used for the benefit of the whole community.

Noble Lords will be aware that currently public consultation is being conducted on the draft Proceeds of Crime Bill published in March. The draft Bill, which extends to the whole of the United Kingdom, contains measures to improve the recovery of illegally obtained assets. The structures envisaged in the Bill take special account of the needs of Northern Ireland.

Another element in our strategy to pursue the proceeds of crime in Northern Ireland is the draft Financial Investigations (NI) Order that is now being considered. That amends the main legislation for tackling criminal finance in Northern Ireland—the Proceeds of Crime (Northern Ireland) Order of 1996. A key provision of the 1996 order was the introduction of powers for the appointment of a financial investigator to assist the police in carrying out investigations into the proceeds of crime. The very extensive powers of financial investigators are set out in Schedule 2 to that order. Among them is the power to issue a general bank circular for the purpose of identifying accounts held by named individuals.

The powers in the 1996 order are in addition to the normal powers of investigation available to the police. They are used only in selected cases, and only following a determination of a county court judge that the appointment of a financial investigator could substantially enhance the investigation.

Experience of operating the legislation has shown that it works well. Between August 1996 and December 2000, financial investigators were appointed in 28 cases. During that period, 23 general bank circulars were issued, resulting in the identification of over 1,200 previously unknown accounts in Northern Ireland connected with people under investigation.

However, experience has also shown that there are parts of the 1996 order that need to be adjusted and strengthened. The draft order before us contains a number of practical proposals for improvement which have resulted from discussions with and between law enforcement agencies in Northern Ireland. There are five main provisions to the order. First, Article 3 enables Customs and Excise officers to apply for the appointment of a financial investigator to assist them with investigations into the proceeds of crime. That power is currently available only to the police. The article also permits court-authorised customs officers, like their police counterparts, to issue general circulars to financial institutions and solicitors.

Secondly, Article 4 provides financial investigators with the same powers of access to material under a production order as are currently available to the police. It also provides that any application for disclosure of documents relevant to a response to a general solicitor's circular will be on notice to the relevant solicitor, thereby ensuring that any issues of legal privilege can be determined by the judiciary.

Thirdly, Article 5 effectively extends the range of financial institutions to which a general bank circular may be issued. At present, a general bank circular can require those institutions involved in "banking" in the narrow sense—that is, banks and building societies—to identify accounts held by a named person. However, we recognise that there is a trend in money laundering away from using banks and building societies towards greater use of securities, futures, options and insurance markets. Article 5 therefore provides that in future such circulars may be issued to institutions providing a much wider range of financial and insurance services—effectively services subject to the 1993 Money Laundering Regulations. These include investment firms, insurance companies and other institutions in the regulated financial sector.

Fourthly, Article 6 creates the power to issue a general solicitor circular. In future, investigators will be able to issue a circular to all or any firms of solicitors asking them to indicate whether they have acted for a named client in respect of certain matters, relating mostly to property and assets. That is an entirely new means of helping investigators in Northern Ireland to establish the beginnings of an audit trail in search of the proceeds of crime. But it reflects similar powers in other jurisdictions. Where a specified person is identified as a client, as well as providing the name and address, which is the limit of the current obligation imposed by the 1996 order, the solicitor will also be obliged to provide limited information about the client which is in his possession. That will essentially involve identifying the nature of the transaction; that is, whether the transaction involved land, a business and so on.

That power will be particularly helpful in tracing land transactions in the unique circumstances of Northern Ireland. Not only are there two systems for the registration of land in Northern Ireland, but the registration of title is not at present generally compulsory. Moreover, any records regarding ownership of land are kept by reference to the property rather than the owner.

Fifthly, Article 7 introduces an exception to the standard period within which a prosecution of a summary offence should be brought. At present it is six months after the offence was committed. The exception is in relation to summary proceedings for an offence of failing to provide information or of falsifying it. For such proceedings, the time limit for prosecutions will be three months from the date on which sufficient evidence to prosecute becomes available or 12 months from the commission of the offence, whichever is the later. That additional latitude may be needed in cases where a person has purported to comply with a requirement of a financial investigator but it is later discovered that the compliance was deliberately inadequate.

Perhaps I may say a few words about the consultations the Government have conducted on their proposal for the draft order. The proposal was laid before Parliament on the 21st November 2000. We invited the Northern Ireland Assembly to consider it. We took the opportunity to copy it for comment to organisations with an interest in the policy area. The Northern Ireland Grand Committee debated the proposal on 22nd March. A statement summarising the responses to the proposal, and a further statement of the change made as a result of these, has been laid before Parliament along with the draft order.

The proposal was received with broad approval. A majority of the Northern Ireland Assembly supported it. However, a number of concerns have been expressed. Questions have arisen about the civil liberties of people who might be affected by the new powers, whether innocently or otherwise. Others had concerns about the potential implications of the order for the confidentiality of the solicitor/client relationship and for legal professional privilege.

I confirm that, in the context of the European Convention on Human Rights, it is the Government's view that the provisions included in the draft order are compatible with the convention rights. The Government acknowledge that the powers available to the authorities to pursue the proceeds of crime are already far-reaching. The draft order augments these powers. So we must take care to ensure that these new measures are necessary, but no more than necessary, to meet the challenge posed by serious criminals.

Although we recognise the importance of the principles of solicitor/client confidentiality and legal professional privilege, the rules on client confidentiality and privilege do not extend to protect items held with the intention of furthering a criminal purpose. The duty of confidentiality is not absolute. Solicitors throughout the UK are already obliged to report suspicious transactions to the police or the National Criminal Intelligence Service.

In accordance with law, and as necessary in a democratic society for the prevention of disorder or crime, public authorities can make incursions into many of the rights protected by the European Convention on Human Rights. The rights of individuals have to be balanced against the needs and the rights of society in general. That is why we made sure that appropriate safeguards were in place to protect individuals.

Perhaps I may give a number of examples: first, the powers will continue to apply only to investigations into the proceeds of serious crime; secondly, the police, and in future Customs and Excise, will have to be able to persuade a county court judge that the use of these special investigatory powers is justified in each case; and, thirdly, the information which may be sought under a general solicitor circular is limited only to what is necessary to establish an audit trail. If the investigator requires more detailed information he must apply to the court, which can determine any issues of legal professional privilege. The value of these safeguards should not be underestimated.

In addition, we will bring forward a revised code of practice under the order. In doing so, we shall consult fully with the Law Society, and indeed with all interested parties, to ensure that the revised code reflects their experience and expertise in the implementation of the new procedures that the draft order will require.

I believe that the draft order will provide the police and Customs in Northern Ireland with the new powers they need to make essential inroads into the confiscation of the proceeds of crime. The draft order is a tough but measured response to a very real threat to our society. I commend it to the House. I beg to move.

Moved, that the draft order laid before the House on 23rd April be approved [14th Report from the Joint Committee].—(Lord Falconer of Thoroton.)

8.49 p.m.

Lord Glentoran

My Lords, I thank the noble and learned Lord for the full and clear way in which he has presented the order to the House. He covered two key matters referred to by my honourable friend, John M Taylor, on 30th April 2001 in the Fifth Standing Committee on Delegated Legislation in the other place. There my honourable friend referred to solicitor/client confidentiality, to which we clearly are a little sensitive. The noble and learned Lord has assured us that the Government have taken notice of that issue.

My honourable friend was also concerned about the legality of the proposed legislation in the light of the European Convention on Human Rights. From the noble and learned Lord's words today I assume that the Government have had another look at the matter, taken fresh advice and confirmed that this is safe in the light of the human rights legislation.

The Law Society of Northern Ireland supports the order. As the noble and learned Lord said, the level of crime in Northern Ireland is serious and is getting worse. New actions and new ideas are needed. I sincerely hope that the order will move the position forward. I am sorry that we have to go on having special legislation of this kind for Northern Ireland. The Law Society of Northern Ireland hoped that this would soon become United Kingdom law as opposed to Northern Ireland law. We started the ball rolling in 1996 with our order. It has clearly been successful. I am delighted that the present Government are expanding it. I hope that the order before the House will be even more successful. We support the order.

Lord Smith of Clifton

My Lords, one can hardly say that one welcomes the order as it is a rather sad comment on the state of affairs in Northern Ireland. However, one appreciates the need for it. Like the noble Lord, Lord Glentoran, I shall refer to Article 6. As many noble Lords will know, solicitor/client relationships in Northern Ireland can sometimes be problematic in a particular way that is not normally common in the rest of the United Kingdom. I therefore particularly welcomed the noble and learned Lord's statement that there would be further consultations with the Law Society of Northern Ireland in establishing the code of practice. That is a delicate area which needs to be sensitively probed with those who are experienced in the ways of the law and in professional relationships. That apart, we accept the need for the order to pass.

On Question, Motion agreed to.