Secret government documents detailing the UK's policies towards fighting global terrorist funding, drugs trafficking and money laundering have been found on a London-bound train and handed to 'The Independent on Sunday'.
The government papers, left on a train destined for Waterloo station, on Wednesday, contain criticism of countries such as Iran that are signed up to the global Financial Action Task Force (FATF), an inter-governmental body created to combat financial crime and the financing of terrorism.
The confidential files outline how the trade and banking systems can be manipulated to finance illicit weapons of mass destruction in Iran. They spell out methods to fund terrorists, and address the potential fraud of commercial websites and international internet payment systems. The files also highlight the weakness of HM Revenue & Customs' (HMRC) IT systems, which track financial fraud.
The Independent on Sunday has returned the documents, and will divulge no details contained in them.
This latest security gaffe involving top-level government documents is the second breach in the past week and is hugely embarrassing to Gordon Brown. The Government is already investigating the loss of other files by a senior intelligence officer in the Cabinet Office, who is understood to have been suspended. This official also left documents, containing a damning assessment of Iraqi forces and a Home Office report on "al-Qa'ida vulnerabilities", on a train. They were handed to the BBC.
The Government has been hit by a series of security breaches in the past year. HMRC lost two computer disks containing the personal details of 25 million people, while the details of three million driving-test candidates were mislaid.
Alistair Darling, the Chancellor, who is in Japan at the G8 meeting, has been told of the latest debacle, and his department insists steps are being taken to tighten security procedures.
Last night, a spokesman said the Treasury regretted the latest incident: "We are extremely concerned about what has happened and will be taking steps to ensure it doesn't happen in the future."
Opposition politicians reacted to the latest news with astonishment. Baroness Neville-Jones, shadow security minister, said the Government needed to "get a grip" on the issue of protecting sensitive data, and lamented "yet another example of a lapse in discipline".
Chris Huhne, the Liberal Democrat home affairs spokesman, said: "This latest failure is extremely damaging to the Government's fight against terrorism as no one knows where the information may have ended up. This is another appalling embarrassment for an accident-prone government."
The discovery of these confidential files is all the more embarrassing as they relate to a week-long global financial crime conference, organised by the FATF, which starts in London tomorrow.
Sir James Sassoon, the Treasury's ambassador to the City, is president of FATF, the Paris-based watchdog, which has 32 members around the world.
The revelations will come as a blow to Sir James, who is hosting this week's gathering of 450 of the world's leading anti-crime experts. He was unavailable for comment but sources say he is furious about the latest security breach. It is particularly galling as Britain has had a successful year holding the FATF presidency.
The files include briefing notes for the closed conference – to be held at the Queen Elizabeth II Centre – and draft speeches to be delivered by British officials at No 11 Downing Street on Wednesday at a reception for the most senior FATF representatives. Officials at the reception will include the Deputy Assistant Secretary to the US Treasury, Daniel Glaser, and Antonio Gustavo Rodrigues, Brazil's incoming FATF president.
The FATF has already expressed its concern that Iran lacks an effective system to prevent money laundering. It wants Iran to criminalise the financing of terrorism and stop illicit money being diverted to its nuclear programme. The watchdog says this is a significant vulnerability within the international financial system.
It is negotiating with countries such as China, Pakistan, Uzbekistan, Turkmenistan, Burma and the Comoros on their anti-terrorism policies.
Misplaced secrets: Lost laptops, disks and dossiers
The British government has an ignoble history of misplaced sensitive files, in paper and electronic form. The most serious loss of sensitive data came in 1990 when a laptop containing plans for the first Gulf War was stolen from the boot of a car in west London. The computer contained detailed information about how the military planned to remove Saddam Hussein's forces from Kuwait. The RAF officer responsible for the laptop was court-martialled, but the secrets were never leaked.
In 2000 a laptop was stolen from the home of Armed Forces minister John Spellar, the man responsible for Britain's nuclear secrets. The burglar ignored two red boxes containing potentially sensitive documents.
That same year, an MI6 officer left a laptop in a taxi after a night drinking in a bar. Another was snatched when an MI5 officer put it down while buying a ticket at a Tube station. A Royal Navy laptop was stolen in Manchester in 2006, and an Army laptop containing data on 500 people was stolen from a recruiting office in Edinburgh in 2005.
In January 2008, a laptop with details of 600,000 people interested in joining the armed forces went missing. The theft caused concern in light of a terrorist plot in which Muslim extremists planned to kill a British serviceman. The MoD then banned staff from taking home laptops with unencrypted data.
In April, a thief stole the laptop of an Army captain from under his chair at a McDonald's near the MoD. And only last week, secret files on the threat from al-Qa'ida were left on a train.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies