PARLIAMENTARY DEBATE
Draft Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) Order 2024 Draft Proceeds of Crime Act 2002 (Search, Recovery of Crypto Assets and Investigations: Codes of Practice) Regulations 2024 Draft Proceeds of Crime Act 2002 and Terrorism Act 2000 (Certain Information Orders: Code of Practice) Regulations 2024 Draft Terrorism Act 2000 (Code of Practice for Authorised Officers) Orders 2024 - 16 April 2024 (Commons/General Committees)

The Minister refers to terrorism, but could he clarify whether that would capture state entities involved in state terror, such as the North Korean regime, which we know is involved extensively in cyber-crime?

It is a pleasure to serve with you in the Chair, Dr Huq. All four of the instruments before us are about ensuring that the authorities have the tools they need to combat criminals and terrorists in a digital world by giving them the powers they need to investigate, search for and seize crypto assets. As the Minister says, we know that this is a growing, fast-moving and changing area of crime and criminality, and it is vital that the relevant authorities have the powers they need to keep pace.

I will refer to each set of regulations in turn, but let me say at the outset that the Opposition do not intend to oppose them. The principles underpinning the instruments were debated during the passage of the Economic Crime (Transparency and Enforcement) Act 2022 and the Economic Crime and Corporate Transparency Act 2023, and I will not repeat arguments made than. It is important that the authorities have codes of practice in place to guide the use of the new powers, so that we can find the appropriate balance between individual liberty and collective security.

First, under the Proceeds Of Crime Act 2002, there are regulations concerning codes of practice on the investigative powers of prosecutors, the search and recovery of crypto assets, and investigations. The reforms will enable officers to seize crypto assets and other property during the course of an investigation without having first arrested someone for an offence. They will also enable officers to seize crypto asset-related items and enable the courts to better enforce unpaid confiscation orders against a defendant’s crypto assets, which is really important.

Can the Minister clarify whether non-fungible content is included in the phrase crypto asset, which is a well-established term? Non-fungible tokens were not something that interested me, so my position is not a universal one, but they were of some public interest. I know that they hold some value because they are bought and sold, although not in the way they were as recently as a year ago. I am interested to see if they are covered. I think they are, and rightly so. In general, these provisions are an important clarification of authorities’ powers, so that individuals who are subject to those authorities’ investigative powers will have clarity about what they can and cannot do, which must be right.

Secondly, in relation to the POCA 2002 and the Terrorism Act 2000, we have regulations concerning a code of practice for information orders. The regulations deal with new information order powers to support the NCA’s operational strategic analysis of information relevant to money laundering or suspected money laundering and/or terrorist financing or suspected terrorist financing. That seems clear and sensible to us. There are also regulations in relation to the Terrorism Act 2000 concerning a code of practice for authorised officers; again, the clarity there is to be welcomed. There are reforms to the Anti-terrorism, Crime and Security Act 2001, again enabling officers to seize and detain crypto assets, so I hope that the Minister will also give clarity around the status of NFTs and non-fungible content in that context.

As we have said previously in debates on these matters, we welcome the Government bringing forward measures on crypto assets. The technology is changing and fast-paced, and so is the usage of criminals in that space. We must have a digital approach, not an analogue approach, to freezing and seizing assets, and this instrument has found the balance.

My hon. Friend is making an excellent speech. I want to come in on that particular point, because much attention has been given to terrorist and criminal organisations, but what about individuals? A number of individuals, including some of my constituents, have been defrauded of cryptocurrency, and I am intrigued to see what we can do to support them.

My hon. Friend makes an important intervention. We know of individuals whose lives have been ruined. They may have lost their business or their house because of such transactions. Ensuring that the authorities have the relevant investigative powers to follow these new types of crime is really important. We can have a degree of confidence that these instruments move us forward in that direction.

I have a couple more questions to the Minister to get some reassurance; they follow on neatly from what my hon. Friend said. It is important that we ensure that the relevant authorities have the right powers, and the right capacity, resources, knowledge and experience. There has been a consultation on the codes of practice, but what consultation or conversations has the Minister or his right hon. Friend the Security Minister had with relevant authorities, such as the NCA, about their capacity to deal with this growing threat?

Similarly, on consultation more generally, each of the explanatory memorandums to the instruments has a section 10 on consultation. A consultation clearly has taken place, and it seems to have been a valuable one. It makes note of some of the changes that have happened as a result, which is always a positive, but was there anything in those consultations that the Government were not minded to accept? Can the Minister tell us any of those things? I will not say anything more than that, but hopefully he will be able to address those questions.

I shall be extremely brief, Dr Huq. In no way do I question the purpose behind the instruments, but I am interested to hear from my hon. Friend the Minister on this question. As I understand it, one of the reasons that crypto assets are particularly attractive to those engaged in terrorist or criminal activities is that it is very difficult to discover them, and even harder then to establish who owns them. Although I do not wish the Minister to give away any confidential information, I am interested to get his assurance and whatever information he can provide on the extent to which law enforcement authorities can trace crypto assets and the people who sit behind them.