Serious Crime Bill [HL] — House of Lords, 2015-03-02
Topic: Law and Crime
Michael Bates (Conservative, Centre-right): My Lords, I shall also speak to Commons Amendments 24, 25, 35, 36 and 37. This first group of Commons amendments principally makes two further changes to the Proceeds of Crime Act 2002 Part 7 of the Proceeds of Crime Act places obligations on the "regulated sector", such as banks and accountants, to submit suspicious activity reports to the National Crime Agency, where the reporter has suspicions that a transaction might be linked to money-laundering or the financing of terrorism. This part of the Proceeds of Crime Act provides for a category of suspicious activity reports, called consent SARs. Where there are reasonable grounds to suspect that a transaction might be related to money-laundering, the reporter may seek the consent of the National Crime Agency to proceed with the transaction to avail themselves of some defence against a money-laundering charge. Some 14,000 consent SARs are submitted each year The National Crime Agency has seven working days to respond to a consent SAR. If consent is refused, the National Crime Agency has a further 31 calendar days to investigate the transaction. While the reporter awaits the NCA’s decision on consent, the activity or transaction must not proceed. The process can therefore unavoidably hold up the financial transaction in question. The consequences for a customer whose request or transaction is so delayed may go beyond mere inconvenience and lead to financial loss. A customer who has suffered such loss may seek to take legal action against a bank or other institution to recover any losses or otherwise to make a claim for damages. While the Government recognise the concerns of customers, we believe that where an institution has suspicions regarding the transaction and reports those to law enforcement authorities in good faith, as the law requires it to do, that institution should not be liable for civil claims for damages The UK is obliged, under Article 26 of the EU’s third anti money-laundering directive, to provide protection to those who report suspicions of money-laundering in good faith from incurring civil liability for doing so. The common law currently affords such protection through the Court of Appeal ruling in the case of Shah, which held that while customers can require institutions to prove that the suspicion that gave rise to the SAR was reasonable, provided the suspicion is so proved, the institution cannot be held liable for loss suffered by the customer as a consequence of the institution’s failure to carry out promptly the customer’s instructions We believe that placing this civil immunity on a statutory footing will provide for greater legal certainty. Commons Amendment 1 is directed to that end. That immunity from civil proceedings will apply only where a suspicious activity report is submitted in good faith, and those in the regulated sector responsible for submitting such reports will continue to be liable for any negligent or malicious conduct. We will work with the National Crime Agency and the Financial Conduct Authority to ensure that the change to the law does not lead to an abuse of the process. We believe that this amendment to the Proceeds of Crime Act will strengthen the partnerships we have built with the regulated sector and will increase the regulated sector’s trust and confidence in the SAR regime Commons Amendments 35 to 37 give effect to a recommendation made by the Joint Committee on Human Rights in its report on the Bill. The Commons amendments would in turn amend the Proceeds of Crime Act to give statutory force to the 2012 Supreme Court judgment in the case of Waya. The Supreme Court ruling and these amendments relate to the making of a confiscation order following a criminal conviction. If the prosecutor applies to the Crown Court for a confiscation order, the court has to consider making such an order—it has no discretion. In its consideration, the Crown Court sets a value for payment on the confiscation order at what is termed as the "recoverable amount". The Supreme Court ruled in the case of Waya that the duty on the Crown Court to make a confiscation order should be qualified so that it did not apply where such an order would be contrary to the defendant’s right to the peaceful enjoyment of his or her property, as enshrined in Article 1 of Protocol 1 to the European Convention on Human Rights. I stress that that does not mean that a confiscation order should not be made in such cases. The Supreme Court was saying that the amount for which a confiscation order is made must be proportionate in light of the circumstances of a case. It is possible that a court may decide not to make a confiscation order, but we believe that that would be highly unlikely. The Crown Court would most likely decide to set an amount to pay at less than the full recoverable amount The current situation is, of course, that the Crown Court is bound by the judgment of the Supreme Court as the superior court. The Crown Court should be, and is, already applying the findings in Waya to confiscation cases before it. However, we wish to make the obligation on the Crown Court explicit and ensure its consistent application. As I have said, that accords with the conclusion of the Joint Committee on Human Rights, which said that, "the Bill provides an opportunity to bring greater legal certainty to the legal regime governing the proceeds of crime by inserting into the statutory framework express language which would give clear effect to the judgment of the Supreme Court in Waya" Commons Amendments 24 and 25 make consequential amendments to the commencement clause Finally, Commons Amendment 2 makes a technical change to Part 4 of the Bill, which provides for the seizure and forfeiture of substances used as drug-cutting agents. Clauses 59, 60, 62 and 63 provide for applications in respect of various matters—for example, the continued retention of suspected drug-cutting agents—to be made to the appropriate court. In Scotland, such applications will be made to the sheriff. Commons Amendment 2 provides that in Scotland those applications must be made by way of summary application, as distinct from other forms of application, such as an initial writ or small claim. I beg to move.