Justice 2 Committee, 29 Jan 2003

Meeting date: Wednesday, January 29, 2003

Official Report 131KB pdf

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Subordinate Legislation

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Proceeds of Crime Act 2002 (Investigations: Code of Practice) (Scotland) Order 2003 (Draft)

Item 1 is subordinate legislation. We start with an affirmative instrument: the draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) (Scotland) Order 2003. I ask the minister to speak to and move motion S1M-3801.

The Proceeds of Crime Act 2002 contains a comprehensive package of measures to investigate, seize and confiscate the ill-gotten gains of criminals and their associates. The act received royal assent last July and we are currently implementing its various provisions. The committee may recall that, on 11 December 2002, it approved the draft order and code of practice relating to cash searches by constables in Scotland. The code duly came into effect at the end of December. The provisions on civil recovery, taxation, money laundering, investigation powers and information gateways are being commenced on a United Kingdom basis on 24 February. The provisions on confiscation after a criminal conviction are being commenced in March.

There are two draft orders before the committee today, which have been laid under the affirmative resolution procedure. They relate to the information gateway provisions and to the investigation powers, both of which are to be brought into effect in February.

The draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) (Scotland) Order 2003 brings the code of practice on the use of investigation powers into operation on 24 February. Part 8 of the 2002 act sets out a range of investigation powers in relation to confiscation, money laundering and civil recovery. That covers production orders, search warrants, disclosure orders, customer information orders and account monitoring orders.

The powers can be exercised by proper persons. In relation to confiscation and money laundering investigations, a "proper person" is defined as a police constable or a customs officer. In relation to a civil recovery investigation, proper persons are

"the Scottish ministers or a person named by them".

In practice, persons named by them will be employed in the civil recovery unit and will mainly be seconded police and customs officers.

The investigation order is a powerful tool, which will assist in the pursuit of the proceeds of crime. As a safeguard to ensure that proper and appropriate use is made of the orders, section 410 of the 2002 act requires the Scottish ministers to

"prepare a code of practice as to the exercise by proper persons of"

the orders. The Home Secretary is required to make a similar code in relation to England and Wales.

As required by the act, we published a draft code for consultation in October and we amended it in light of the responses that we received. We have made the summary of responses and the action that we took in relation to them available to the committee. In general, respondents welcomed the code and the comments were of a technical nature. The draft code is intended to be self-explanatory and easily understood. Members of the public will be able to consult it in police stations and it will be available on the Scottish Executive website.

Paragraphs 1 to 4 of the code form an introduction and set out the scope of the code and the implications of not complying with it. Paragraphs 5 to 7 explain that the code covers proper persons, as I described earlier. Paragraphs 8 to 19 deal with general provisions relating to all the orders and warrants. They stress the need to act courteously and with respect for persons and property. They cover procedural issues, such as the need to show evidence of authority and to serve a disclosure order or customer information order.

The following paragraphs explain the statutory requirements and procedures for different types of order or warrant: paragraphs 20 to 31 deal with production orders; paragraphs 32 to 49 deal with search warrants; paragraphs 50 and 51 deal with customer information orders; paragraphs 52 to 54 deal with account monitoring orders; and paragraphs 55 to 63 deal with disclosure orders. Only the Lord Advocate and the Scottish ministers can apply for a disclosure order.

We consider that the code of practice is an important safeguard in ensuring that the investigation powers contained in the Proceeds of Crime Act 2002 are used in a fair and proportionate way. I therefore commend the code to the committee.

I move,

That the Justice 2 Committee, in consideration of the draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) (Scotland) Order 2003, recommends that the Order be approved.

Agreed.

Before we agree to the order, members have the right to take up to 90 minutes to debate it if they so wish.

The minister will be aware that the Subordinate Legislation Committee has asked the Justice 2 Committee to consider whether the issue of human rights should be set out in the legislation. I can anticipate your reasons for saying that it should not be set out in statute. However, a focus has been placed on the legislation, which concerns an area in which we need to be careful about the application of the European convention on human rights. Will guidance be issued to police constables or customs officers on how to conduct themselves in searches in accordance with the convention, or will they be required only to be aware of the convention?

We replied to the Subordinate Legislation Committee on 23 January about two matters that it raised, one of which was human rights. The need to observe human rights obligations and the need to protect vulnerable persons are not unique to investigations under the 2002 act. Those matters are relevant to several activities. Personnel who exercise powers under part 8 of the 2002 act must always be aware of and observe the wider obligations, so we consider it unnecessary to give guidance in the code of practice. We ensure that officials are generally aware of obligations under human rights legislation. We expect that to apply to activities under the 2002 act, as it would to anything else.

The minister will be relieved to hear that I have no intention of debating the order for 90 minutes. What he said about the human rights aspect covers any difficulties that might arise. Human rights legislation has been an impediment to the proper administration of Scots law and we should never have incorporated it into domestic law. However, the general legislation is welcome. It is a positive and—I hope—a far-reaching step in the campaign against money laundering and significant crime. I have no difficulty with the legislation.

As expected, I will rise to the bait and say that not all parties that are represented on the committee agree with Bill Aitken's remarks about human rights legislation. Most of us feel that the human rights legislation is a valuable and important addition to the law of Scotland.

I echo that.

What could a disclosure order cover? Would it cover telephone records or any information that a private company held?

Anything that could assist in the obtaining of information could be covered.

Is that a catch-all provision for anything that would assist in the provision of evidence?

Yes.

Would you like to say anything to wind up the debate, minister?

No.

The question is, that motion S1M-3801 be agreed to.

Motion agreed to.

That the Justice 2 Committee, in consideration of the draft Proceeds of Crime Act 2002 (Investigations: Code of Practice) (Scotland) Order 2003, recommends that the Order be approved.

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Proceeds of Crime Act 2002 (Disclosure of Information to and by Lord Advocate and Scottish Ministers) (Scotland) Order 2003 (Draft)

Agenda item 2 is another affirmative instrument.

Part 10 of the Proceeds of Crime Act 2002 provides a statutory basis for the disclosure of information to and by the Lord Advocate and the Scottish ministers. Section 439 of the act lists several persons and bodies that can disclose information to the Lord Advocate and the Scottish ministers in relation to their role under the act. Section 441 lists several functions for which the Lord Advocate and the Scottish ministers can pass on information that they have obtained as a result of their role under the 2002 act.

The first purpose of the order is to add persons who are permitted to disclose information to the Lord Advocate and the Scottish ministers and to specify the functions in respect of which those people may disclose such information. The persons and functions are listed in the schedule to the order.

The additional persons and functions are specified to ensure that our efforts to pursue the proceeds of crime are sensibly joined up early. By specifying the persons and functions, we shall be able to access information about suspect activities such as social security fraud, offences that involve motor vehicles and activities that might be used for money laundering. Nothing in the provisions authorises the making of a disclosure that contravenes the Data Protection Act 1998 or that is prohibited by part I of the Regulation of Investigatory Powers Act 2000.

Secondly, the order adds two further functions to the list set out in section 441 of the Proceeds of Crime Act 2002, in respect of which Scottish ministers and the Lord Advocate may disclose information to others. Those relate to protecting public health and the functions of the Financial Services Authority under the Financial Services and Markets Act 2000. The designation of protecting public health as a relevant function would allow us to disclose information relating to, for example, illicit supplies of medicinal products. The designations of the functions of the Financial Services Authority will allow us to disclose information that might be relevant to the FSA's regulatory function.

Once more, nothing in the provisions authorises the making of a disclosure that contravenes the Data Protection Act 1998 or that is prohibited by part I of the Regulation of Investigatory Powers Act 2000. The order extends to the whole UK. The Home Secretary is making a parallel order in relation to disclosures to and by the director of the Assets Recovery Agency.

We are satisfied that the bodies and functions specified in the order will allow us to make sure that the relevant information about suspect activities can be passed to the people who need it for the pursuit of the proceeds of crime and the protection of all.

I move,

That the Justice 2 Committee, in consideration of the draft Proceeds of Crime Act 2002 (Disclosure of Information to and by Lord Advocate and Scottish Ministers) (Scotland) Order 2003, recommends that the Order be approved.

I notice that the schedule designating permitted persons includes the Gaming Board for Great Britain. We all know that one of the great cover-ups for unexplained wealth is that it was obtained through gambling. I assume that the intention behind involving the Gaming Board for Great Britain is that it could ask a casino operator or bookmaker whether anyone had done rather well out of a fast horse or dice falling the appropriate way. I am sure that there is an explanation, but I am a little concerned. Would a bookmaker or casino proprietor be aware of the identity of individuals who might have won significant amounts and took that money away in cash?

I would not assume that those who operate a casino would necessarily know that. However, if during an investigation an individual was identified and some activities could be traced to the casino, the order would enable the information to be obtained and exchanged with certain information being given to those who operate the casino. That is an important area to cover and it would be a serious omission if we ignored it, given the vast amounts of money that can exchange hands in casinos and the way in which some criminals use such activities to launder money and cover up the real source of their wealth.

Can the minister confirm my recollection that the relevant gaming acts require that casinos operate on a membership basis? Before accepting someone into membership, a casino requires to receive, verify and record information about the person. If a casino were to fail to do that, that would be a material consideration in the renewal of its licence.

Stewart Stevenson is right. Entry to and use of casinos is restricted to members. Those who apply for membership are required to provide information. Failure to operate under those conditions would be considered seriously by those who issue operating licences. To be fair to casino operators, I should say that people who are intent on covering their tracks can be sophisticated in shielding their true identity. However, the conditions that I have set out go some way towards providing routes for tracing and identifying those individuals.

As there are no other points, is there anything else that you would like to say, minister?

No, thank you.

In that case, the question is, that motion S1M-3800 be agreed to.

Motion agreed to.

That the Justice 2 Committee, in consideration of the draft Proceeds of Crime Act 2002 (Disclosure of Information to and by Lord Advocate and Scottish Ministers) (Scotland) Order 2003, recommends that the Order be approved.

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Act of Sederunt (Fees of Sheriff Officers) (No 2) 2002 (SSI 2002/567)

Item 3 is consideration of two negative instruments. I refer members to the note from the clerk on the Act of Sederunt (Fees of Sheriff Officers) (No 2) 2002 (SSI 2002/567). The Subordinate Legislation Committee had no comment to make on the instrument. Are members content merely to note it?

Members indicated agreement.

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Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment No 4) 2002<br />(SSI 2002/568)

I refer members to the clerk's note on the Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment No 4) 2002 (SSI 2002/568). Do members have any comments on the instrument?

It is significant that the clerk's note underlines the explanation that was provided for the Executive's failure to meet the 21-day rule. For the record, we should note that omission.

Yes. We have come up against the problem before. There is nothing controversial about the instrument, but, if there had been, we would have been placed in difficulty. We have said before that we would not be happy just to recommend an instrument where there had been a failure to comply with the statutory number of days.

The Executive must note the fact that the committee would have been concerned if the matter had been more contentious and that, as far as we are concerned, the 21-day rule should always be adhered to.

When a matter is uncontroversial and could reasonably be thought in advance to be uncontroversial, it ought to be relatively easy to bring it forward in the schedule. I understand why deadlines can be squeezed when an instrument is controversial. However, when an instrument is uncontroversial, that is unacceptable.

After reading the Executive's explanation, I am none the wiser about why there has been a delay.

I have a question not on the procedure, but on the substance of the instrument. There is a schedule attached that itemises the fees that can be charged. To an extent, they are meaningless figures, as they have no context. I wonder whether, in the future, it would be possible for comparative figures to be given. It is not clear whether the figures represent simply an inflationary uprating for the previous two years or something else. Providing that information would be easy for the Executive to do and it would give us some idea whether the figures were exceptional or normal.

That is a fair point. Sometimes, we are given tables showing the previous fees. I am sure that I have seen those in the past.

Yes, the gaming fees were an example. In that instance, I questioned the uplift and we got a perfectly reasonable explanation that the Executive could have provided in the first place.

It is a fair point. This set of figures is meaningless unless we know what the previous figures were. How would we note that point? Could we do that in our report?

Yes.

Okay. We are happy to do that and to note the instrument.

Members indicated agreement.