Consideration of Lords amendments to the Criminal Finances Bill - April 26

Madam Deputy Speaker (Natascha Engel) 

I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 11 and 33. If the House agrees to them, I will cause an appropriate entry to be made in the Journal.

Clause 1

Unexplained wealth orders: England and Wales and Northern Ireland

The Minister for Security (Mr Ben Wallace) 

I beg to move, That this House agrees with Lords amendment 1.

Madam Deputy Speaker 

With this it will be convenient to consider Lords amendments 2 to 147.

Mr Wallace 

I just heard what you had to read through, Madam Deputy Speaker. I have 147 amendments, so I hope the Chair has changed by the time we have got through them. However, I do not think we will be taking them individually.

When we sent the Bill to the Lords some months ago, there was considerable cross-party consensus on its aims and measures. Having received robust scrutiny, we made a number of amendments in this House, including the significant addition of the Magnitsky clause on gross human rights abuses and violations, which I believe significantly improves the legislation. I am pleased to say that the same consensus continued in the House of Lords and that the group before us consists only of Government amendments.

With Prorogation imminent, it is crucial that we get the many valuable powers in the Bill on to the statute book, including unexplained wealth orders, the seizure and forfeiture powers, and the offences of corporate failure to prevent tax evasion. I welcome the support of colleagues across the House to ensure that we can achieve that goal. Although there are 147 amendments in the group, I reassure hon. Members that they are to a great extent minor or technical changes that aim to enhance the operation of the Bill’s existing measures. I will briefly highlight some of the most significant measures.

Undoubtedly, the issue that received the most substantial scrutiny in the House of Lords was that of company ownership transparency in the British overseas territories with financial centres and the Crown dependencies. This topic is of great interest to right hon. and hon. Members in this House. As part of our international efforts to increase corporate transparency, the Government continue to work closely with our overseas territories and Crown dependencies to combat corruption and ensure that they implement the commitments they have made on law enforcement access to beneficial ownership data by the deadline of June this year.

I met the Chief Ministers of Jersey, Guernsey and the Isle of Man earlier this week to discuss their progress, and pressed again our ambition for transparent registers. Yesterday, I co-chaired a meeting of peers and the London representatives of the overseas territories, so that they could update us on their efforts so far.

Once the commitments have been implemented, they will put the UK and our overseas territories and Crown dependencies well ahead of most jurisdictions in terms of transparency, including many of our G20 partners and other major corporate and financial centres, including some states in the United States. As I have said previously, we should be proud of that fact and of the progress we have made since the anti-corruption summit last year. These arrangements will prevent criminals from hiding behind anonymous shell companies and bring significant benefits in terms of the capacity and information that UK law enforcement authorities will have at their disposal to tackle criminal activity and investigate bribery and corruption, money laundering and tax evasion.

It is right, however, that we review the effectiveness of the implementation to assess whether the arrangements are delivering the outcomes that we and our law enforcement agencies are after. That is why we amended the Bill in the House of Lords to require a statutory review of the progress made by the territories against their existing commitments. That report will be laid in Parliament, so that the House can revisit this issue as appropriate in due course.

Some peers and right hon. and hon. Members would have liked us to go further. However, as I have made clear, we are making considerable progress by working consensually with the territories and respect our constitutional settlements with them. The Government maintain that it would not be appropriate to force legislation on jurisdictions that are, to a great extent, self-governing. With Prorogation growing ever nearer, I welcome the fact that that amendment was strongly supported by peers of all parties. I trust that hon. Members will agree that it is a sensible way forward at this stage.

Turning to the provisions that were already in the Bill, we have made a number of amendments to the proposed operation of unexplained wealth orders. The hon. Members for Dumfries and Galloway (Richard Arkless) and for Kirkcaldy and Cowdenbeath (Roger Mullin) raised concerns that the £100,000 threshold for the imposition of unexplained wealth orders could disadvantage law enforcement agencies in certain parts of the country, particularly where property values may be lower or the proceeds of crime more evenly shared out. The Northern Ireland Executive raised similar concerns. In the light of that, Lords amendments 2 and 15 will lower the threshold from £100,000 to £50,000, as was requested by the SNP. The threshold remains an important safeguard that will be considered by the court, along with other factors, before unexplained wealth orders can be made.

Following concerns raised in the Lords and by the right hon. Member for Barking (Dame Margaret Hodge) in evidence to the Public Bill Committee, further amendments were made in the Lords to ensure that unexplained wealth orders could be applied in relation to property held in trusts or other complex ownership arrangements, including through a foreign company. Those amendments will help to ensure that the orders have the greatest possible impact once law enforcement agencies can use them.

Lastly in relation to unexplained wealth orders, Lords amendments 11 and 33 provide for a compensation scheme in relation to the interim freezing orders that can accompany an order. Such a freezing order would be used to ensure that someone does not scarper while we go to court to put in place an order. We therefore need a compensation scheme, should the court decide an order is not appropriate. That is an important safeguard to circumscribe the use of such powers.

Hon. Members will recall that we extended the seizure and forfeiture powers in chapter 3 of part 1 on Report in the Commons to cover gaming vouchers and casino chips, following another concern raised by Opposition Members. Following a representation from the hon. Member for Dumfries and Galloway, Lords amendments 47 to 49 and 91 to 93 will also allow law enforcement agencies to seize a betting slip where they suspect that the funds used to place the bet are the proceeds of crime. Those provisions will be subject to the same safeguards as those on cash seizure, and we will work with bookmakers and their trade associations to ensure that the measures are used effectively. I trust that hon. Members will welcome that further expansion of the powers.

On a related issue, Lords amendments 69 to 71 will allow for legal expenses to be deducted from any property recovered under the seizure and forfeiture powers, helping to ensure that they function effectively in practice.

Following discussions with banks and other regulated bodies, Lords amendment 36 will extend the period in which companies can share information with each other to tackle money laundering. At present, information sharing can take place for 28 days from the initial notification; we are extending that to 84 days. That takes account of more complex cases where, for example, numerous banks may have relevant information. It is a further sign of this Government’s commitment to working in partnership with the private sector to tackle money laundering. It will help to ensure that the information sharing provisions underpin the incredibly important work of the joint money laundering intelligence taskforce.

As I said at the outset, there are a number of other Lords amendments in the group that provide for minor or technical changes to the existing provisions. I do not expect that any of them will provoke significant concern among hon. Members, but I would, as ever, be happy to address specific queries during my closing remarks.

I hope that the House agrees that the amendments that have been made in the Lords improve the Bill, which, as I have said, has been the subject of significant cross-party support throughout its passage. The Bill, as amended, will ensure that law enforcement agencies have the tools they need to tackle money laundering and terrorist financing and to work as effectively as possible with the private sector on those crucial national security priorities.

We must, of course, remember that the Bill is only one element of the Government’s wider approach to tackling corruption and other serious and organised crime. I referred in earlier debates to Labour’s Bribery Act 2010, which is another plank in the assault on corruption. That goes to the heart of how the Bill is part of a wider package and continual process of tackling corruption.

I was pleased that there was a call for evidence on the review of limited partnerships, which closed on 17 March 2017, as this allowed people to make their concerns known about the abuse of Scottish limited partnerships that we have all seen and that has been evidenced by The Herald newspaper throughout this process. I thank the hon. Member for Kirkcaldy and Cowdenbeath, who has been an effective champion on this issue. I hope that, once the review is completed and we see the results, he and I will be in agreement about the next steps. Department for Business, Energy and Industrial Strategy officials are analysing the responses and expect to submit advice on options to Ministers shortly after the election.

The Ministry of Justice has conducted an initial call for evidence to examine the case for changes to the law on corporate criminality liability for wider forms of economic crime. It is considering the responses at present. We are also strengthening the supervisory regimes for the regulated sector, including proposals for a new office of professional body anti-money laundering supervision—OPBAS, I am told it is called—in the Financial Conduct Authority, to help ensure that the non-statutory supervisors comply with their obligations in the money laundering regulations.

The UK’s public register of beneficial ownership information—the first of its type in the G20—has been up and running since June 2016. Recently, we published proposals for a further public beneficial ownership register for foreign legal entities to increase the transparency of overseas investment in UK property and central Government procurement contracts. We are continuing to reform the suspicious activity report regime, including through investment in systems and processes to complement the legislative reforms. Following a commitment at last year’s anti-corruption summit, we have worked closely with civil society, businesses and practitioners to develop the first UK anti-corruption strategy.

I am pleased that we have reached this stage of the Bill’s consideration in such a constructive fashion. I invite the House to agree to the Lords amendments before us, so that this crucial legislation can be enacted without further delay.

Dr Rupa Huq (Ealing Central and Acton) (Lab) 

I rise to speak on behalf of Her Majesty’s loyal Opposition for the final occasion in the current Parliament.

The Minister talked about cross-party co-operation and Labour’s Bribery Act 2010, which the Bill builds on, as well as the Proceeds of Crime Act 2002. We welcome all the Government’s technical amendments, because we want a Bill that works and prevents financial crime.

We all remember the heady days of 2016, when the Bill was first announced. We remember the headlines about the possibility that the assets of human rights abusers who bought London homes would be seized and all the rhetoric about cleaning up dirty money. We welcome the Bill and we are happy to support the amendments, most of which are technical and will ensure that some measures in the Bill will work more effectively. They perform a tidying-up function. We particularly support the measures that are intended to ensure that unexplained wealth orders cannot be circumvented through trusts or other complex financial arrangements, and we welcome the thought that has gone into the specific arrangements for the devolved Governments in Scotland and Northern Ireland. We in the Labour party hope that the return of an inclusive devolved Government in Northern Ireland will be achieved as soon as possible.

Let me now say something about Lords amendment 34. Throughout the Bill’s passage through the House of Commons, we have consistently returned to the elephant in the room: beneficial ownership and transparency in the United Kingdom’s overseas territories and Crown dependencies. I do not want to restate all the arguments—there is no time for me to do so, because we all have to go back to our constituencies and prepare for power, do we not?—but I believe that my position, and that of the Labour party, is clear. Labour believes that the Government have a moral duty to ensure that our overseas territories and Crown dependencies adopt publicly accessible registers of beneficial ownership to prevent them from being at the global epicentre of illicit financial practices, which damage developing countries and the world economy. They contribute to geopolitical instability, and they do our reputation harm as well. We have seen headlines that, while not suggesting that dead bodies can be seen piling up on the streets of London, make it clear that malpractices have been taking place.

The argument can run and run, and we can have another day for it, but I take heart from the Government’s realisation that a step in the right direction on the long and winding road is ensuring that the new arrangements for information sharing between the relevant territories and the UK’s enforcement agencies are subject to an open and transparent review. Territories such as the British Virgin Islands and the Cayman Islands have been astute. They are very clever at using what are essentially tokenistic, box-ticking consultations—soi-disant, in inverted commas—to argue that compliance, competitiveness and security concerns hamper their adoption of centralised and closed registers of beneficial ownership. They do that because they know they can get away with it. They know that having a centralised, as opposed to a decentralised, platform brings them one step closer to laying the foundations for a public register in the future. That is the holy grail. That is what is at the end of the rainbow—what we are all looking for.

The Government’s concession on the issue is much appreciated, but I believe that the original Labour amendment would have been a far more effective vehicle for assessing the substance of the overseas territories’ claims that they are unable to have public registers of beneficial ownership owing to those compliance, security and competitiveness concerns—all the pretexts and excuses that are being wheeled out. We firmly believe that this is a missed opportunity for Britain. The systems of British overseas territories and Crown dependencies allow tax avoidance on what some people describe as an industrial scale. It does go on, and we cannot pretend that it does not. The Government’s unwillingness to support our position on registers of beneficial ownership is unforgivable. Sadly, it shows that the Conservative party is not serious enough about money laundering. It could do better. We used to be tough on crime and tough on the causes of crime—indeed, we still are—but the Conservatives could be tougher on financial crime. They are not as tough as they would have us believe.

Richard Arkless (Dumfries and Galloway) (SNP) 

Unlike some other Members, Madam Deputy Speaker, I did not make my maiden speech with you in the Chair, but I seem to have made a number of speeches in front of you, although some have been made to an empty Chamber. Perhaps, if we are both lucky enough to be re-elected, we will not be drawing the short straw during the next parliamentary term.

As the Minister said, the Bill’s passage has been widely consensual and co-operative. We have managed to work together across all party boundaries in Committee, at various meetings, in discussions with the Minister and during debates on the Floor of the House. We have reached a point at which we think that the Bill is a very decent start towards the longer-term goal of tackling and eradicating financial criminality. I think that everyone agrees with those aims. Of course, we think that the Bill could be improved, and I am sure that the Minister will be minded to agree, in theory, with the principles of the improvements that we envisage. I trust that we will work on that as time goes on.

Touching now on some of the Lords amendments, I was delighted to hear the Minister say that the threshold for unexplained wealth orders will be reduced from £100,000 to £50,000 pursuant to the submissions we made in the Bill Committee. It was gracious of the Minister to give us that credit at the Dispatch Box, and it is taken graciously. There are very good reasons why the threshold should be £50,000, and the Minister acknowledged them in his speech. The last thing we want is something in the terms and conditions—the facets and facilities—of an UWO that could be used by the criminals to get one step ahead and subvert that process. Bringing the threshold down goes a long way towards closing off the gaps for the criminals; I thank the Minister for that and am glad that this change will be in the Bill in its final form.

The inclusion of betting slips as a form of cash in the Bill is also welcome. That was a Scottish National party election pledge, and we are proud that it has been delivered in the Bill.

My hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) has made significant political waves on the issue of Scottish limited partnerships, and special mention must go to the journalists David Leask and Richard Smith from the Herald—as acknowledged by the Minister—who have done some great investigative journalism on this subject over the last couple of years.

Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP) 

I had not intended to participate in this debate, but just want to acknowledge the co-operative way in which the Minister has responded.

Richard Arkless 

I corroborate that: the Minister has never given any indication at any point in the process that he does not agree with the thrust of what we have been saying. It is heartening to hear that he has corroborated our position in the consultation. My only request to him—and I will take him at face value—is that he and his Department show the same energy in tackling this issue beyond the consultation period, so that we can finally get rid of the scourge of the awful vehicle of the Scottish limited partnership, which brings this place and our economy into disrepute.

The question of compelling jurisdictions to publish registers of beneficial ownership has been a hot topic during the debates on the Bill. I would have preferred a situation where we could justify persuading or compelling overseas territories to publish registers of beneficial ownership, although we in the SNP would, rightly, always stop short of allowing this place to tell another jurisdiction what it can and cannot do; clearly, that is consistent with what we believe on constitutional issues. For that reason alone, I am pleased, although not overwhelmingly so, by the new provisions in the Bill. There is a commitment for discussions and an assessment to take place in relation to the information-sharing between the territories and the UK Government. We have had good and constructive discussions with all the territories and with the Government, and they all assure us that, on a 24-hour turnaround, information can be ascertained to aid the tackling of financial criminality in the UK. That is a good and reassuring assurance, but it must be documented and proved in this House.