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Money Laundering

Volume 790: debated on Monday 19 March 2018


My Lords, with the leave of the House, I will repeat in the form of a Statement an Answer to an Urgent Question given by my right honourable friend the Minister for Security and Economic Crime in another place. The Statement is as follows:

“Mr Speaker, I thank the right honourable gentleman for giving the Government the opportunity to say what we have been doing on this area. We have made it harder for crooks to launder money through property, jewellery and betting. We have reversed the burden of proof so that people whom we think have links to organised crime have to prove where their assets come from. If they cannot, we will seize and dispose of the assets. We served the first unexplained wealth order within 14 days of the new powers being implemented. We have, for the first time, through the Magnitsky amendment, made it possible to confiscate assets from people guilty of gross human rights abuse. We will complete that with an amendment to the Sanctions and Anti-Money Laundering Bill currently going through Parliament.

We have made it easier to seize criminals’ money from bank accounts. We have introduced new powers to be able to freeze assets of terrorists. We did so on the day the new law came into force. We have made it a criminal offence to fail to prevent tax evasion, both at home and overseas. We are currently exploring the potential of widening other areas where failure to prevent may apply in economic crime. We have brought a number of prosecutions for those involved in bribery under the Bribery Act, and have had the first conviction of a company for failure to prevent bribery. We introduced deferred prosecution agreements to ensure we maximise the incentive for companies to face up to fraud and corruption. We are setting up the National Economic Crime Centre in the NCA and have brought together the many strands of economic crime under one Minister. We have bolstered the SFO by ensuring access to blockbuster funding to make sure that big business and overseas oligarchs cannot use their wealth to obstruct justice.

Under the previous Prime Minister, David Cameron, we initiated an international anti-corruption summit. In response to the Panama papers, we established the joint financial analysis centre in the NCA. We have established one of the world’s first public registers of beneficial ownership of companies. We have helped to establish in all overseas territories and Crown dependencies a register of beneficial ownership with mutual, and in some cases almost live-time, access for law enforcement. We have committed to establish a public register of overseas owners of property in the UK.

This Government have taken real steps to tackle criminal finance in this country. Whoever crooks are, no matter what nationality, we will pursue them and their cash”.

My Lords, I thank the Minister for repeating the Answer to the Question. According to the Daily Telegraph, official figures suggest that £90 billion in crime proceeds is laundered through the UK each year. The UK has for many years been seen as a desirable place to hide suspicious wealth. Can the Minister explain why the Government have done relatively little to discourage this activity thus far? Does she agree that the current laws under which owners of overseas companies can buy UK property while hiding their identities are ripe for abuse? They have not only led to an influx to the UK of suspicious wealth, but further exacerbated the crisis in the housing market. Can she please explain why the Conservatives blocked the Labour Party’s amendment in Committee on the Sanctions and Anti-Money Laundering Bill, calling for the introduction of a Magnitsky clause? When will the Government take more effective action to tackle this problem?

My Lords, I can agree with the noble Lord on one thing: the impact of money laundering in the UK. However, in 2016, 1,435 people were convicted of money laundering in England and Wales. The Government established the joint money-laundering intelligence task force in 2015 to tackle the issue, and between May 2016 and March 2017 it contributed to more than 1,000 bank-led investigations into suspect customers, the closure of more than 450 suspicious bank accounts and the freezing of £7 million in suspected criminal funds.

The noble Lord talked about Labour putting forward the Magnitsky amendment. I certainly remember that, under the Criminal Finances Bill, it was the noble Baroness, Lady Stern, who put forward the Magnitsky amendment in this House and Labour did very little to tackle serious crime and corruption in this country, so I do not accept the charge he makes that we have done nothing to address this issue.

My Lords, I have only three very quick points. First, will the Government speed up the process of getting a public register of overseas ownership of property in the UK? Transparency International estimates that some £4 billion-worth of property in London alone has been bought by suspicious wealth. Frankly, the programme the Government have laid out gives all the perpetrators plenty of opportunity to reorganise their finances. Will they please move?

Secondly, having listened—I hope—to calls from both the Minister’s own Benches as well as from the other Benches, will the Government institute a verification process at Companies House so that information on corporate ownership can be established with some clarity and accuracy as a mechanism for trying to counter laundering?

Lastly, I want to ask the Minister about a letter sent to me—I believe it was put in the Library—by her colleague the noble Lord, Lord Young of Cookham, who is in his place. It is on the freezing order applying to Andrei Lugovoi and Dmitry Kovtun. In the letter, the Minister referred to a comment he had made that the freezing order applied to overseas banks. He then said:

“I should more precisely have said that the freezing order applies to any UK incorporated banks overseas”.

Could she now give us an assurance that overseas banks that have money in the UK—whether it is through branch arrangements or any other—are covered by those freezing orders, because presumably, they will be very important in the next steps to be taken in the Salisbury poisoning case?

I thank the noble Baroness for those questions. The Government will publish draft legislation on the creation of a register of the beneficial ownership of overseas companies that own property in the UK or bid for government contracts. This will mean that overseas countries that own or buy property or participate in central government procurement will be required to provide details of their ultimate owners. This will reduce the opportunities for criminals to use shell companies to launder their illicitly gained wealth in London properties, and it will make it easier for law enforcement to track and seize criminal funds. I can confirm the freezing order process for overseas banks so that criminals cannot hide their finances anywhere. Those freezing orders can be applied overseas as well.

The noble Baroness asked me a third question, but because of the noise in the Chamber, I did not quite hear what she said.

Just to be helpful, this was a call for verification. As she will know, there is a public register at Companies House, which I greatly approve of, but there is no verification process. This has led to criticism from around the House.

The noble Baroness makes a fair point. We are at a relatively early point with the public register and it is constantly being checked and reviewed to ensure that the information contained within is accurate.

My Lords, the Minister will be aware of the list published on 30 January by the US Treasury of 114 officials and 19 Russian oligarchs who are being considered for sanctions regarding Russia’s various infringements against the rule of law and international order in the last seven years. The Government know that many of the people on that US Treasury list, such as Mr Abramovich and Mr Oleg Deripaska, are based in the United Kingdom, are directors of listed companies in the UK and own property and other assets in this country. Will the Government collaborate with US authorities to list the people against whom they have evidence under sanctions, bribery and other regimes, including the fit and proper person test for corporates?

I am sure the noble Baroness will understand that I will not talk about individuals, but I am sure she will also appreciate that we work with other countries to share intelligence, certainly through the Criminal Finances Act and the unexplained wealth orders. Through these institutions, we will make progress on bringing these people to book who are laundering and hiding their money in the UK.

What do the Government propose to do about the role of the British Overseas Territories in this area? There has been a lot of controversy about the use of the facilities available there, both for UK residents and those of other countries, and the Government seem rather loath to intervene. Are they reviewing that situation?

We made it clear during the passage of the Criminal Finances Act that we would certainly not intervene with legislation but would work with the overseas territories and the Crown dependencies to have a register of beneficial ownership with mutual and sometimes almost live-time access for law enforcement purposes.

My Lords, have the Government fully thought through how the Russians might reciprocate if we take action against any of their citizens in the United Kingdom?

My Lords, would the noble Baroness like to revisit something she said in her opening Statement, which was that Labour in government had done nothing on money laundering? I have just been using Google, which says that the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 were made under the Proceeds of Crime Act 2002. I have some recollection that I played a part in that legislation. Perhaps the noble Baroness ought to reflect on what she said earlier, because she is wrong.