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Money Laundering

Volume 454: debated on Thursday 7 December 2006

1. What estimate he has made of the total amount of money laundered through British businesses and by individuals in each year since 1997-98; and if he will make a statement. (104881)

It is estimated that the total quantified organised crime market in the UK is worth about £15 billion a year. As a result of actions taken to counter money laundering, we have seized more than £230 million of assets from criminals over the past three years. Last year we recovered a record £97 million.

The Minister will be aware that when the Permanent Secretary to the Treasury was giving evidence to the Treasury Committee he confirmed that only £500,000 of suspect terrorist funding had been frozen, but the United States has interdicted 400 times that amount. Why has the Treasury’s performance been so poor in that vital regard?

I am aware of the hon. Gentleman’s interest in those matters and I read his very interesting speech in the debate on the Queen’s Speech a few weeks ago. It is true that we have frozen 192 accounts with some £500,000 of suspected terrorist funds since 2001. That is less than the US, but more than other G7 members, including Canada, France, Germany and Japan. In addition to that £500,000, a further £460,000 cash has been seized under the Terrorism Act 2000, a further £126,000 of assets has been forfeited by those suspected of being involved in terrorism, and the latest figures show that £1.385 million—which is solely terrorist-related money—has been seized under the Proceeds of Crime Act 2002. Across the piece we have been freezing and seizing assets. We have also been acting to ensure that we crack down on terrorist networks. I know that the hon. Gentleman has a great interest in those matters and I believe, as he does, that we should try to achieve a consensus across both sides of the House on the many actions that we are taking to deal with that important issue.

Are there not matters that are not only abused by terrorists but by others, which lead to considerable tax losses? Those matters include the abuse of remittances; the abuse of taxed resident status; the shunting of private equity capital between tax jurisdictions; the abuse of trust services; and the failure to register trust service providers. Those issues have been on the agenda for some time and more tightening up is required.

My hon. Friend is right to say that we need to tighten up even further and we are doing so. We have just completed a consultation into how we may strengthen the regulation of bureaux de change and the money services businesses so that we can deal with precisely the issues that he raises. In the past three years there has been a 46 per cent. rise in prosecutions for money laundering through those money services businesses and he is right to say that we need to act. We need to strengthen regulation and, following our consultation, we will have a consensus with the industry on tougher action to deal with those issues.

Will the Treasury bear in mind the fact that, without expert supervision at all times, casinos can be used by criminals to launder money. Criminals are believed to do so in many parts of the world, so why are we bringing super-casinos to Britain?

The hon. Gentleman is quite right: we need to ensure that we get the regulation of that area right, as in all other areas. We have been consulting on how to implement the third money laundering directive to provide a better and more risk-based approach to the regulation of the casino industry. It is an important industry that creates jobs, but we must ensure that it is properly regulated and that is what we will do.

The UK joint money laundering steering group’s guidance notes acknowledge that misuse of corporate entities is the most likely vehicle for money laundering. When in July the Treasury published its consultation paper on the measures that are necessary to comply with the EU’s third money laundering directive, the proposals were seriously criticised by non-governmental organisations such as Transparency International because they would not monitor trust and company service providers tightly enough to avoid such misuse. Can my hon. Friend reassure the House that he will introduce proposals for legislation shortly that will include tough monitoring of company service providers?

I can assure my hon. Friend that we have indeed been toughening up the guidance. We have also been consulting on how we implement the directive. I believe that we will have a consensus on the way forward on money laundering and I will take seriously the points that he makes. We have not only strengthened our rules and regulations on the important issue of money laundering over the past year, but have taken action that has involved 13,000 different financial investigations by the police in the past two years alone. We are acting and ensuring that we have the best approach to regulation of that area, and I take seriously the points that my hon. Friend makes.

In last year’s pre-Budget report, the Chancellor promised a comprehensive progress report on countering money laundering and terrorist finance in the spring. It is now winter: where is the report, and why is it more than six months late?

As the hon. Gentleman knows, we have produced report after report on these matters all year. We produced new guidance on countering money laundering in February, and will produce Sir Stephen Lander’s Serious Organised Crime Agency report in the spring. In addition, we produced a consultation document on money laundering in July, and we made an economic statement to the House in October in which we outlined all the measures that we are taking. Those measures include two new orders and new powers to deal with benefits paid to the households involved. We have taken action month by month, and we are working very closely with the security services and the police to make sure that we have the best regime. As I said a month ago, we will produce a report around the end of the year that will bring together everything that we are doing.

I advise the hon. Member for Tatton (Mr. Osborne) and his colleagues that they would do much better if they took this matter seriously and tried to build a consensus about the ways forward and the measures that we are taking. I should be very happy to meet him and the hon. Member for Chipping Barnet (Mrs. Villiers)—if she can fit it into her diary—so that we can discuss these matters.

I very much look forward to that meeting, when we can discuss Oxford days. When the Economic Secretary publishes the review to which he referred, will he learn lessons from the Treasury’s past mistakes? The Treasury’s permanent secretary has confirmed that when steps were taken to freeze terrorist funds in 2001 a loophole was left open that allowed terrorist assets to go on being transferred. The Treasury closed the loophole only two months ago, when news broke that Abu Hamza was playing the property market from his prison cell. Why did the Treasury not spot that glaring error for five years, when it is clear that Abu Hamza was able to spot it? Why do the Chancellor’s claims on security fall apart on closer examination, just like his claims on the economy?

I shall be very happy to have a serious meeting to discuss these serious matters. We discussed them at last month’s Treasury questions, and I wrote to the shadow Chief Secretary to the Treasury to offer her a meeting, but unfortunately she had to cancel. The meeting is being rearranged, and when we get together we can discuss the details.

In the meantime, I advise the shadow Chancellor to stop repeating statements that are factually incorrect. The police and security services advise us on these matters, which they looked at in 2005. They submitted a report, and I can tell the hon. Gentleman that there was no illegal transaction at all that involved Abu Hamza. As I said, I shall be happy to discuss these matters with the hon. Member for Chipping Barnet when she can fit a meeting in. In my letter to her I said that there was no evidence that Abu Hamza bought any properties while he was subject to an asset freeze or in prison. Moreover, there is no evidence that the financial sanctions against him were breached, or that funds from the sale or use of properties had been diverted to him or to terrorism.

I advise the shadow Chief Secretary and the shadow Chancellor to look at the details of the matter and listen to the advice of the police and security services, as the Government do. When we have the meeting that we are arranging, I will be able to discuss these matters in detail and seriously—if that is possible with the hon. Gentleman. Then we may be able to put an end to false and erroneous statements that undermine the national interest.