Monday, 2 December 2024 • Lords

Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (Northern Ireland) Order 2024

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Speaker

Considered in Grand Committee

Speaker

17:22:00

Speaker

Moved by

Lord Hanson of Flint

That the Grand Committee do consider the Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (Northern Ireland) Order 2024.

Lord Hanson of Flint

This debate relates to another statutory instrument that was debated in Committee on 11 November. I therefore will not go into too much detail on this instrument’s context but will briefly remind the Committee that it relates to the Economic Crime and Corporate Transparency Act 2023. This Act contained a wide range of reforms to reduce economic crime and increase transparency over corporate entities conducting business in the United Kingdom. This included reforms to enable targeted information sharing to tackle money laundering and remove reporting burdens on business. Additionally, the Act introduced new intelligence-gathering powers for law enforcement and reform of outdated criminal corporate liability laws. The legislation also introduced reforms to keep pace with the use of emerging technologies to launder money and commit economic crime, including a new regime to tackle the use of criminal or terrorist crypto assets. The measure also introduced new search, seizure and detention powers when crypto assets are used illegally or for terrorist purposes. The legislation aims to remove criminal gains and disrupt the ability to use emerging technologies for illicit purposes. I see a heavy Northern Ireland contingent here—it is like the old days, and I am very pleased to see colleagues here today. They will be particularly pleased to know that this debate relates to the order that came into force in Northern Ireland, as well as England and Wales. As of the end of October, across the United Kingdom as a whole the new powers have been exercised in over 90 cases. I will not cover the content of the powers, as they were debated extensively by both Houses during the passage of the Bill, but will outline briefly the purpose of the instrument, which is to establish a code of practice. The code of practice being brought into operation by this statutory instrument is the search, seizure and detention of property code for Northern Ireland. Codes of practice determine and clarify the circumstances in which powers may be exercised to ensure that they are applied consistently and proportionately. This is vital, given the broad range of law enforcement agencies to which the powers can apply. The guidance on the exercise of the powers in the code in this order sets out clearly, I hope, the required powers to safeguard against improper use. The search, seizure and detention code is made by the Home Secretary to guide the exercise of search and seizure powers in the context of criminal confiscation investigations for specified officers who operate in Northern Ireland. The order sets out the officers and the circumstances, and it gives strong guidance on reserved powers. This draft instrument is required to complete the cycle that we started with the Economic Crime and Corporate Transparency Act 2023. It will ensure that all the necessary legislation is in place and that law enforcement can operate the powers proportionately and in accordance with the aim of the legislation. I expect and hope to get some questions from colleagues across the Committee, but I hope that that is a reasonably clear outline of the order and its purpose. I commend the statutory instrument to the Committee.

Baroness Ritchie of Downpatrick

My Lords, I declare my registered interest as a member of your Lordships’ Secondary Legislation Scrutiny Committee, in which we considered this SI in some detail. I welcome my noble friend to the Front Bench. We well recall him serving as a Minister in Northern Ireland; in fact, I succeeded him in the Department for Social Development and I remember the handover meeting very well. The following day, he went off to be a Minister of State here. I welcome this statutory instrument. It is important that we move to a normal society in Northern Ireland, that the proceeds of crime are adequately addressed and that people refrain from crime in Northern Ireland, where we have the association of crime with paramilitarism. They are two scourges in our society that must be eliminated. I have certain questions for my noble friend. While this is a reserved matter, the code is to be published by the Department of Justice in Northern Ireland. When will it publish the code, and will it be by way of a statement in the Assembly? Maybe there has already been one. Is an assessment available of the success of the Proceeds of Crime Act 2002 in Northern Ireland? I realise that will require a detailed answer, so I would be content if my noble friend could provide one in writing. I note that there is no impact assessment; can he indicate why? Will the police resourcing of the implementation of the code come out of the Northern Ireland block grant? There is a little difficulty there in that policing resources in Northern Ireland, in both funding and people power, are gravely overstretched.

Lord Empey

My Lords, there is obviously a conspiracy here: the people running the Football Governance Bill have obviously decided to keep us all occupied here so that we are not dealing with them. Perhaps we should go into the Chamber later and see if we can make a contribution. There are two sides to this: the devolved issue and the national issue. I want to explore the interface between the two and ask whether, as the noble Baroness, Lady Ritchie, mentioned, there is a resource implication. In other words, are any additional resources required? With crypto assets and so on, we are dealing with very sophisticated people who have access to complicated software and things like that. Are we capable of dealing with that as quickly as we can?

Speaker

17:30:00

Speaker

Secondly, I want to establish that we do not leave a gap between the law that is applicable in Great Britain and the law that is applicable in Northern Ireland. We have enough of that as it is and, if there is any vacuum at all, criminal elements will take the opportunity to fill it. Are we satisfied that we are keeping pace?

Speaker

Thirdly, what level of co-operation exists between us and, for instance, the European Union, the United States and other international bodies? These are worldwide crimes; they are not confined to any one country and there is a big international element to this. We could be doing joint operations between Northern Ireland and the Republic. Of course, HMRC has already pursued with the Irish authorities smugglers engaged in fuel laundering and so on, but, for these sorts of crimes, what level of co-operation exists between the authorities on both sides of the border, given that we have this division between devolved institutions and national bodies and additional communication and co-ordination are therefore required?

Speaker

Obviously, one welcomes any process that updates our law to make life more difficult for criminals. It appears that this is basically a catching-up instrument that modernises the existing arrangements and brings them up to date. Perhaps the Minister could confirm that, as well as addressing the other matters I have raised, in his winding-up comments.

Lord Browne of Belmont

My Lords, I support this draft instrument. It goes a long way in allowing the police and law enforcement agencies to seize and recover illicit proceeds of criminal activity. Unfortunately, in Northern Ireland the threat from terrorism remains at “substantial”. Paramilitary organisations remain active and many former paramilitaries are heavily involved in criminal activity. They are highly organised and sophisticated in their activities. As we have heard, they are well versed in utilising modern technologies to their advantage. In particular, cryptocurrency has increasingly become involved in almost every criminal activity that matters to anti-money laundering and counterterrorism financing. Marketplaces on the dark web use cryptocurrency to facilitate the sale of drugs and unlicensed firearms, which provides a substantial monetary advantage to these criminals and paramilitaries. The Financial Conduct Authority’s marketing rules have brought crypto assets into the spotlight. Criminals can launder this money using clean intermediary pseudo-anonymous e-wallets and virtual private networks. Through a series of steps, they can withdraw cleansed funds, so it is important that the legal authorities have all the necessary powers to keep ahead of the criminals. The measures contained in this order will go some way to combating illegal activity. Of course, as we heard from the noble Lord, Lord Empey, these illegal activities can operate across borders and worldwide. I therefore ask the Minister: has there been any consultation and is there any co-operation with the Garda Síochána in the Republic of Ireland? Again, are our law enforcement and police properly resourced to carry out this new order? I believe that this revised code of practice relating to the search, seizure and detention of property meets the right to private and family life under the European Convention on Human Rights. I am sure that law enforcement will go about this in a proper manner, so I am pleased to support this order.

Lord Morrow

My Lords, first, I apologise for my earlier indiscretion; I thought my phone was on silent but it was not. I am looking at the extension of powers in relation to restraint orders. I hope that it is as good as what it says here; in fact, I would like it to be even better because, in the past, we have often been the victims. In saying this, I am not casting aspersions on anyone sitting here today, but we have been the victims of political restraints. We often find that, if it is not politically expedient for things to happen, they do not happen. I hope that, as a result of what we are hearing here today and this draft statutory instrument, that will not be the case. In paragraph 13 of the code of practice, which is headed “Extension of powers in relation to restraint orders”, we are told—I have no problem with this—that this measure will align Northern Ireland more with the United Kingdom. As the noble Lord, Lord Empey, rightly said, we have too much unalignment at times. If this is implemented—it is a sincere piece of work—we can look to better days. In the past, in Northern Ireland, bordering the Republic of Ireland, there has always been this element of smuggling from one territory to another; some people have gotten very wealthy on it. I just hope and trust that, when this SI comes into force, there will be co-operation between the security forces on both sides of the border to bring this scandalous activity to an end. In the past, in terms of government, there has been too much of us turning our heads and looking the other way; it is a feature that happens here. I trust that that is going to cease and that we will no longer have to tolerate an activity that, to put it mildly and succinctly, is illegal criminality—as well as everything that goes along with it—happening on our borders. I hope that this instrument will go some distance, if not the full distance; I would like it to go the full distance but, if it does not, I welcome the fact that, as is mentioned here, there will be a genuine effort to stamp these criminals out and take them out of activity, no matter whom that hurts. In the past, it has perhaps not been politically expedient to do that, so I ask the Minister to assure us that that will not be given any account as a result of this instrument here.

Lord McCrea of Magherafelt and Cookstown

My Lords, I, too, will welcome the Minister’s reply. I regard him, as I have done for many years, as a friend; I am delighted, therefore, that he is here answering our questions. May I make a statement? First, it is so important to put anything that makes life more difficult for criminals on the statute book because no one should benefit from criminality, irrespective of where they may come from. The truth is that criminals always seem to be ahead of the game and Governments always seem to be catching up. No matter how far you go, criminals’ skills and craft to carry on their criminal activity seem without bounds. Therefore, we have to do all we can to ensure that their programme is impeded. The noble Baroness, Lady Ritchie, said that the code is not as yet drawn up, but I noticed that paragraph 5.7 of the Explanatory Memorandum says, “The codes require”. If they are not drawn up, how can they require? It says: “The codes require an officer who is contemplating using the powers to consider the impact on the community in their use, balanced against the public interest and the benefit the use of the powers would add to the case”. My noble friend Lord Morrow, mentioned that point. This is what concerns me because, as my noble friend pointed out, we had this scourge in the past: if it somehow impacted on a particular community, you did not act. People were therefore not only surprised by the authorities’ inactivity but annoyed because it seemed that they could act if it was a different community but, in a certain community, they did not. I want the Minister to assure me that, when it comes to this statutory instrument, no officer will be compelled “to consider the impact on the community in their use, balanced against the public interest”, because criminals do not care who they impact on. Therefore, we have to ensure that their programme is impeded and that the proceeds of their crime are taken. Paragraph 6.1 of the EM says: “POCA provides powers to recover the proceeds of crime”. Can the Minister clarify where the proceeds of crime go when they are seized? Who benefits from the proceeds that are seized? Knowing exactly where the proceeds go is important. The last thing I want to draw attention to is paragraph 7.2, which says: “On the codes generally, law enforcement agencies’ responses requested clarification of certain definitions in the legislation and additional guidance on the practical operation of the powers to seize cryptoassets and related items”. I would like the Minister to clarify whether these clarifications on the definitions were requested by the people who responded. Has proper clarification of certain definitions in the legislation and guidance been given? Finally, it is right to say that the resource implication is so important, because we know that we do not have sufficient officers to carry out policing on the ground in Northern Ireland. We are well below the target that was said to be necessary to police Northern Ireland. I do not want resources to be taken from that and put into this; rather, money needs to be given to ensure that we have the proper agency to tackle those who carry on with criminal activity.

Lord Hay of Ballyore

My Lords, I want briefly to bring noble Lords back to the whole issue of resources. I welcome this statutory instrument but I worry about resources. You will continue to hear the chief constable of Northern Ireland talk about the lack of resources. With these new powers, there certainly need to be additional resources. As a former Minister in Northern Ireland, the Minister will be aware that these criminal gangs sometimes work fairly freely, not only in Northern Ireland but across the border. These criminal gangs will have all the resources they need to do what they are doing. Unfortunately, the different agencies that have to deal with them do not have the resources to do what they need to do. That is more of a worry than anything else. I keep coming back to the chief constable: most times when he is interviewed, he says, “No, I don’t have the resources within policing to do what needs to be done”.

Speaker

17:45:00

Speaker

The other issue is: has there been any dialogue between the Justice Minister in the Assembly and those in Westminster on this particular statutory instrument? That is important. Has there been any dialogue with the Executive, or at least with the Justice Minister? However, the new powers are certainly welcome. Anything that stifles the criminal gangs in Northern Ireland or elsewhere has to be welcome.

The Earl of Effingham

My Lords, His Majesty’s Opposition welcome this order, and we hope that it will allow the police in Northern Ireland to seize the property of criminals who abuse crypto assets, ensuring that Northern Ireland has the appropriate measures in place to tackle illicit financial activity. This order brings into operation a revised code of practice relating to the search, detention and seizure of property in Northern Ireland, making it easier for the police there to take control of and recover crypto assets under the powers in Part 4 of the Proceeds of Crime Act. We request that the Minister provides the latest figures on the use of crypto assets in Northern Ireland. We need to ask: is there a specific problem related to crypto assets and criminal activity in Northern Ireland that he is aware of and that the order seeks to address? Clamping down on the misuse and criminal use of crypto assets is an essential part of stopping crime in Northern Ireland. As much as we welcome this order, we must pose additional questions to further understand its scope. Can the Minister please outline roughly how many people he expects to receive a custodial sentence because of this order? How does the policy fit in with recent moves to release some criminals early? Finally, the Explanatory Memorandum notes that an agency “requested that the definition of ‘control’ is given clear guidance”. Will the Minister provide guidance on the use of this term in the legislation? We welcome this order as a necessary evolution of our legislative response to economic crime, and we look forward to hearing the Minister’s responses to our questions.

Lord Hanson of Flint

I am grateful to the noble Earl for his support for the order, and I will return to his questions in due course. I am also grateful for the contributions from the noble Lords, Lord Empey, Lord Hay, Lord Browne, Lord Morrow and Lord McCrea, and the noble Baroness, Lady Ritchie. It feels like old times. I have not been a Minister in Northern Ireland since 2007. I had two fabulous years there, and it is good to see that scrutiny of government continues as it did when I was in Northern Ireland previously. It was good to hear the points that were raised. I remind colleagues and noble Lords that the purpose of this order is to provide a code of practice to ensure that guidance is given, on a reserve basis, to officers who exercise the powers under the Act, in order to give proper accountability for the use of those powers by those officers. Colleagues and noble Lords will know that that includes scope on the search and seizure powers and limitations on the exercise of powers. It also provides for seeking senior officer approval and it gives reasonable grounds for suspicion, refusal of prior approval, limitation on the exercise of powers by immigration officers and a whole series of measures that are designed, in that code, to put a framework around the operation of the powers under the Act. I will answer noble Lords’ points in a different order, but I hope we will cover them all. The noble Baroness, Lady Ritchie of Downpatrick, talked about the date of implementation and the discussion with the Northern Ireland Assembly, as well as the impact assessment and the impact of the Act. The Northern Ireland codes came into operation on 17 July 2024. Those codes have been published and are available. Northern Ireland ran a public consultation on its code and any citizen or organisation in Northern Ireland was able to comment upon this code. The codes in Northern Ireland have been approved by the Northern Ireland Assembly on a cross-party basis. The noble Baroness mentioned the impact of the Act. From April 2024 to the end of October, 90 cases have been exercised with this new power. Those figures are for Northern Ireland, England and Wales. I am not able today to give her and others a breakdown of the particular usage in Northern Ireland, as opposed to England and Wales, but the powers have been used 90 times. Noting what the noble Earl and other colleagues said, I say that the purpose of this order is to ensure that we take action against people who wish to use cryptocurrency for illicit criminal purposes. The code we are discussing is about putting in place the framework so that the powers are not open to challenge, so that there is clarity about how they are used and so that, when they are used, individuals have the ability to challenge them—but there is a legal back-up to ensure that, when bad actors are doing bad things, they cannot wriggle out of those bad things by saying that those powers were used improperly. That is the purpose of this code. I hope that answers the points made by the noble Lords, Lord Empey and Lord Browne, and others, but, if not, please feel free to intervene. Again, these powers were subject to wide discussion and consultation generally. The noble Lord, Lord McCrea of Magherafelt and Cookstown, particularly raised what happens to the assets when seized. I am pleased to tell him that, when a court has been satisfied that the crypto assets are the proceeds of crime or are terrorist crypto assets, the asset holder—whoever that may be—will be permanently deprived of those assets. They will be sold and the proceeds will go into supporting the compensation of victims—that is an important aspect, to make sure that victims are at the heart of this—or they could be retained by the state and reinvested into tackling economic crime and countering terrorism downstream. We want to stop the type of activity that is taking place. Seizing assets means that people are still trying to get some assets through. Hopefully, we can get to a position where this is a deterrent as well and stops people wishing to act with these assets. But, in the event that they do, that they are convicted and that there is an asset recovery regime in place, those assets will be used for the wider community at home. A number of noble Lords asked about the impact assessment. We produced an impact assessment on the legislation, which was assessed and went through a number of routines—including on 11 November in this Room—and we finalised it very recently. I point out to the noble Earl and others that there is cross-party support for the legislation. It would have possibly gone through earlier had we not had the great event of the general election in July, which has propelled me from a quieter life back here. It also meant we had some delay in our cross-party discussions and agreements on the legislation. We did not have a specific impact assessment on the powers in the code, but I hope they have been established in the way they have so that they can be operated and safeguarded. There was a consultation, which has come forward, although there was no impact assessment. Another point noble Lords mentioned is the confiscation regime, which is largely for the Northern Ireland Assembly and devolved matters. I am repeating myself, but it is important to reflect on what we are discussing: the code is about how UK officials in immigration, Border Force or other named organisations in the code are held to account by a standard set by this House, the House of Commons and the UK Government on those devolved areas. I think the points the noble Earl mentioned have been covered; if not, I am happy to reflect on Hansard in due course and any points that have been made by noble Lords and try to refer back to them. However, I think and hope there is a co-terminosity of agreement between us in this House, from His Majesty’s Official Opposition through to the Ulster Unionist Party, the Democratic Unionist Party and the SDLP in Northern Ireland. We are trying to ensure that crypto assets under this legislation are deterred and, if they are found to be used for criminal activity, seized. There is a code of practice that monitors the use of officers for seizing those assets. If those assets are seized for criminal purposes, they are wound back into the community in a positive way. That sends a signal to both sides of the border in Northern Ireland in relation to the Administrations there that the use of crypto assets is not an acceptable way of financing criminal activity or terrorism. I will check this outside of the Committee, but to answer the noble Lord, Lord Hay, there has not been any formal consultation with the Irish Government on these powers because they are for the Northern Ireland Assembly, under the joint leadership of the First Minister and the Deputy First Minister, the Justice Minister and the Home Office, under the leadership of my right honourable friend the Home Secretary. However, I believe they are not areas that would cause concern as they are entirely matters for within the confines of the United Kingdom, with different responsibilities between the two different agencies. With that, I hope the Committee can accept the order. If I missed any points, I will reflect on Hansard and write. If anybody wishes to intervene on any point I have not made, please do so now. I can see my noble friend Lady Ritchie ready to bungee jump into action, so I will let her intervene.

Baroness Ritchie of Downpatrick

I thank my noble friend the Minister for his very detailed answers. Could he indicate whether any discussions have taken place with the Minister and the Department of Justice in Northern Ireland? If not, will they take place on the implementation of the code and this SI?

Lord Hanson of Flint

As the Minister responsible for this order, I have not had any discussion with Naomi Long or the Department of Justice on these matters, but I hope it will give some confidence to my noble friend to know that it is my intention to meet our counterparts in Northern Ireland. My right honourable friend the Home Secretary has, I believe, already met the First Minister and Deputy First Minister, and I intend to do the same. I have a potential visit to Northern Ireland planned for the new year to discuss areas of mutual co-operation. I will make sure that this issue is raised as one of many items on the agenda of any future meeting in January. With that, I commend this order to the Committee.

Lord Empey

Will the Minister reflect again on the resources issue? If he does not have any material to hand, he could write to us, which I imagine would be easily achieved.

Speaker

18:00:00

Lord Hanson of Flint

Helpfully, I have had a chance to reflect on the points that the noble Lord made. I understand, genuinely, that it is important that agencies have the required resources to implement the new powers. That is why, as I mentioned earlier in response to questions, as well as to victims, there is the potential for the proceeds of crime to be recycled back into agencies under that system. I cannot give the noble Lord a figure because, again, this is a relatively new area of work. Since April, we have had 90 cases; I do not know how many of them are reflected into Northern Ireland, but I have asked officials and I hope that we will be able to tease that out. I hope that I can reassure the noble Lord that today’s order is about a code of practice to put a box around the activities of people who might be using the Act, to enforce the areas of concern that we all have. I will reflect on the points he made and, if I can provide further information, I will of course do so.

Speaker

Motion agreed.

Speaker

Committee adjourned at 6.01 pm.

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