Counter-Terrorism Bill

My Lords, I was going to come to that issue. I shall do so promptly. The first thing to note is that the UK’s record is among the most compliant in the world on FATF measures. No country is able to satisfy all the FATF conditions but we have a very strong record of achievement in that respect. We have taken action more recently to comply with further FATF requirements, including new money-laundering regulations in December 2007, and we have brought in regulations on politically exposed persons and shell banks. So we have taken action to address some of the areas where the FATF said that we could do better. We wish to be exemplary and lead others in the actions that we are taking. The noble Baroness, Lady Neville-Jones, asked whether there would be a civil or criminal penalty. Each supervisory body has an established set of guidelines and precedents from the wider money-laundering regulations. They will adopt the same approach here as they are already using in the implementation of those regulations. In particular, they will take into account the nature, seriousness and impact of any non-compliance. Generally, I would expect civil penalties to be applied when a failure to comply is less serious in manner and consequence. The noble Baroness, Lady Neville-Jones, also asked about the use of the term ““appropriate””. This replicates a provision in the money-laundering regulations and will depend on the circumstances of the case. Circumstantial factors that will be taken into consideration include the deterrent effect and the size and capability of the financial resources of a firm that might be in receipt of a civil penalty. The noble Baroness, Lady Neville-Jones, asked about legal privilege. The approach to legal privilege in the Bill and in this amendment will be carried over from existing money-laundering regulations. Supervisors are open about their policies on handling issues of legal privilege. For instance, the FSA has a number of guides on its website, such as the Decision Procedure and Penalties Manual and the Enforcement Guide Review 2008, which usefully highlight its approach to such issues. Furthermore, enforcement officers will have ready access to legal advice about privilege. The issues of legal privilege raised here are therefore very similar to those that already arise under existing legislation. The noble Baroness, Lady Neville-Jones, also asked about HMRC and the amendment of its review procedures. HMRC has not yet finalised the order amending its review procedures, so I am unable to say exactly what final form they might take. The order will be an affirmative resolution order, so the House will have an opportunity appropriately to consider it. I believe that the noble Baroness, Lady Neville-Jones, asked about the functions of the tribunals set out in proposed new paragraph 28(6). These have not yet been transferred to the first-tier or upper-tier tribunal. Until that happens, the Treasury will need to make an order providing for appeals to be made to the existing tribunals. The noble Baroness, Lady Neville-Jones, raised two other issues on which I shall comment. She asked that we agree to review various pieces of legislation providing for powers to impose financial restrictions and consider the need to consolidate them. I fully agree with the request; it makes considerable sense, and we wish to avoid any situation where there are inconsistencies. We will do that as soon as we can in a manner consistent with doing the job thoroughly and professionally. Finally, she asked whether we wanted further to amend the Long Title of the Bill. I am very happy to give that further consideration. I am grateful to the noble Lord, Lord Goodhart, for his comments and to the noble Baroness, Lady Carnegy, for her observations on the Delegated Powers and Regulatory Reform Committee. In my short time in Parliament I have come to appreciate the respect and authority which this committee commands among noble Lords. We look forward to seeing the outcome of its consideration of the Bill when it meets tomorrow, and noble Lords will have ample opportunity to take its comments into consideration when the Bill comes back to the House. I apologise to the committee again that it is being placed under time pressure, but I do so in the knowledge, based on everything that I have been told, that it will do a thoroughly professional piece of work despite the time pressure under which we have placed it. I have already partly addressed the comments of the noble Baroness, Lady Miller. The UK is, as I say, largely compliant with a significant number of the FATF’s measures of effectiveness and among the best jurisdictions. On this basis, only the USA and Belgium scored higher than the UK. She asked why we are acting only now. That is an aspect of the lateness question. There has been a changing dynamic in the FATF. The way in which it is operating means that, among other things, we have concluded that we need the power to take unilateral decisions if necessary. I cited in particular the difficulty we had with using countermeasures and whether those were included in any statement made by the FATF. This problem became evident to us only at the October meeting of the FATF. We realised then that we had a problem of which we were not previously aware because the FATF was changing the way in which it was approaching issues and the language it was using in its recommendations. The noble Baroness, Lady Miller, asked whether we will use the powers against Iran. The Prime Minister, in his powerful speech at the Guildhall last night, urged Iran to be part of a world that is addressing the issues of terrorism and to pull away from any actions designed to facilitate the proliferation of weapons of mass destruction. We want that to be the case and will use all our diplomatic resources to secure that objective. At the same time, we recognise that Iran may not choose to do that. If that is the case, the legislation will contain powers that we would be obliged to consider in certain circumstances if the evidence so justified. I believe that I have dealt with the point raised by the noble Baroness, Lady Carnegy, about waiting for Third Reading. Obviously, we await the outcome of the Delegated Powers and Regulatory Reform Committee meeting under the chairmanship of the noble Lord, Lord Goodhart, tomorrow. I shall now give the government view on some of the amendments. I thank the noble Baroness, Lady Neville-Jones, for raising the point about proportionality. Proportionality is a very important requirement for the operation of any administrative power of this type, and I can assure the House that it will be a key consideration in the exercise of these powers. In any use of these powers, Ministers will seek to balance the need to take effective action against the potential impact on UK business. That will require careful consideration of the money-laundering, terrorist-financing or proliferation risks, and of the burden of any requirements imposed on business. I am therefore happy to recognise the need for proportionality in the Treasury’s exercise of the powers. If the noble Baroness will be content, the Government will therefore table an amendment at Third Reading to include a provision that gives proper effect to that. I understand the reasoning behind Amendment No. 61AB, but it would remove an important provision that it is necessary to retain. The Treasury needs the ability to act quickly, if necessary, to give effect to orders containing general restrictions, but these should be subject to ultimate parliamentary approval. Removing the provision could unnecessarily inhibit our ability to act. However, let me reassure the House again that we will be concerned that use of the powers does not impact unduly on business. To that end, I have given a commitment to establish a formal requirement for proportionality. Nevertheless, there may well be circumstances where a direction will require businesses transacting with jurisdictions of high risk to limit or cease business. In some cases, that will require the cessation of current business, and it is important that we can implement that power quickly. It will, of course, be possible for any firm affected by a direction to apply for a licence to exempt transactions from its scope. That will be an important means in appropriate cases for firms to mitigate the effect of any direction. Where an order is not approved by Parliament, I can assure the House that we would consider the circumstances carefully to see whether compensation is justified. Ultimately, the courts could in appropriate cases consider whether a firm was due any compensation as a result of actions taken to comply with a direction that subsequently ceased to have effect or as a result of an order failing to secure approval. I therefore cannot agree to the amendment, but I hope that the noble Baroness, Lady Neville-Jones, will be satisfied with that response. I appreciate the points made in the tabling of Amendment No. 61AC, but it is important to retain that provision, which provides an appropriate sanction for people who attempt to obtain a licence by duplicity. We have made provision for a licensing regime to enable the Treasury to reduce any avoidable impacts on third parties from a direction requiring the limitation or cessation of business. I understand the significant issues mentioned by noble Lords in respect of Amendment No. 61AD. The provision has a dual purpose: to give UK courts jurisdiction over offences committed outside the UK; and to provide for UK-wide jurisdiction for offences regardless of where the offence took place. I say to the noble Lord, Lord Thomas, that such provisions in respect of offences committed outside the UK exist in other legislation—for instance, in Section 17 of the Terrorism Act 2006. We consider that such provision is necessary, given that directions may apply to action outside the UK and that offences may be committed by action outside the UK. The provision replicates Clause 29, which deals with specific terrorist offences. Given the nature of the offences that we are discussing in relation to these powers, namely the breaching of directions, I accept that they are of a different order to such terrorist offences, and that there is therefore less requirement for such provision in relation to offences committed in the UK. Therefore, although I cannot agree to the amendment, the Government are prepared to table an amendment at Third Reading so that the provision applies only to offences committed outside the UK. I turn to Amendments Nos. 61AE to 61AK. They all concern the same principle of the appropriate time limits for summary proceedings across the three jurisdictions in which prosecutions might be commenced. I believe that it is necessary to provide for extensions of the standard time limits due to the nature of the offences concerned. In these circumstances, it is quite possible that an offence may not come to light for some time, and that the subsequent investigation into it may be a complicated process involving the analysis of large amounts of documentation and computer records concerning complex transactions. Furthermore, it is not unusual to extend the time limits by this amount. I note it has been done, for instance, in the Terrorism (United Nations Measures) Order 2006; by Section 1128 of the Companies Act 2006; and by Section 431 of the Insolvency Act 1986. I hope that that will reassure the House that the provisions are useful and consistent with other legislation, and that noble Lords will understand why I cannot agree to the amendments. I note the points made by the noble Lord, Lord Thomas, on Amendment No. 61AL, but this is not an unusual provision. It is simply designed to prevent unjustified delay to any proceedings resulting from argument over precise dates. Similar provisions exist in other legislation, including the legislation I just mentioned. I shall deal with Amendments Nos. 61AM, 61AN and 61AP together, as they concern the same issue: that if an offence committed by a company is shown to be attributable to neglect of an officer of the company, the officer is guilty of an offence as well. Subsequent sub-paragraphs in the schedule replicate that provision in respect of partnerships and unincorporated associations. I appreciate the concern of the noble Lord, Lord Thomas, that that makes individuals potentially liable for non-compliance with a direction. However, I think that that is justified. It is a standard provision in relation to criminal offences that may be committed by a company, and it replicates the existing situation under the money-laundering regulations. Similar provisions exist in a number of other pieces of legislation, including the Energy Act 2004, the Animal Welfare Act 2006 and Section 78 of the Anti-social Behaviour Act 2003. An important point was raised in connection with Amendment No. 61B. We are keen to provide Parliament with appropriate information on the Treasury's use of the powers. Paragraph 38 of the schedule makes provision for the Treasury to submit an annual report to Parliament that sets out how it exercises those powers. The noble Baroness, Lady Miller, said that that was a probing amendment. She kindly said that it was in the nature of these things that whatever one listed, there would always be something that one forgot—rather like packing for a holiday—so it is probably not right to be prescriptive about the content. However, the general sense of the points that she made is well taken. The Government feel that their approach is the right one from a legislative point of view. It would be unusual for specific details to be included in primary legislation. Given that much of this information would already be in the public domain as a result of the Treasury providing it to Parliament for the making of an order and/or subsequently publicising directions, it would be helpful to maintain some flexibility in the preparation of each report. I assure noble Lords that the Government intend the Treasury’s annual report to be helpful and informative. On Amendment No. 61A, I should point out that guidance by industry bodies and supervisors has been of great assistance in enabling firms to implement the money-laundering regulations consistently and on a risk-sensitive basis. This guidance was developed by the supervisors and industry-led bodies, and was ultimately approved by the Treasury. The Treasury expects in this instance as well to help supervisors and others to develop guidance to ensure that any directions issued under the legislation can be implemented effectively and without undue burdens on business. We have begun initial discussions and engagement with the industry, including the British Bankers’ Association, to consider potential issues of implementation. Given this, I am ready to table an amendment at Third Reading to provide for such assistance to be given, although such a provision is not strictly necessary. We will consult noble Lords on the wording of that amendment. I can best say to the noble and learned Lord, Lord Mayhew, that I undertake to consider the point that he made about drafting. We will bear in mind his careful and precise observations. In conclusion, I thank all noble Lords for their constructive engagement. I hope that I have been able to respond fully to their questions about these important issues. If I have failed to do so, I apologise. I will be happy to answer any questions that I may have missed. Alternatively, I will write to noble Lords and to those who have participated in the debate. I very much hope that the House will support the amendment—again, I apologise for its late appearance—and that it will also support the other government amendments in this group.