My Lords, the Government remain committed to establishing a new beneficial ownership register of overseas entities that own UK property in order to combat money laundering and achieve greater transparency in the UK property market. The register requires primary legislation for it to be established, and the Government will legislate when parliamentary time allows.
Does the Minister recognise the complete contradiction between asserting complete sovereignty over Northern Ireland and failing to reassert sovereignty over who owns what land and property in the United Kingdom, as well as failing to prevent dirty money flowing in from authoritarian states? Why have the Government not yet found time to prioritise legislation that enables British citizens to know who owns what?
I think these are two completely separate issues that the noble Lord is confusing. As I said, it remains a priority for the Government. We have already published a draft Bill, we have carried out pre-legislative scrutiny on the matter and we will legislate as soon as parliamentary time allows.
My Lords, the UK itself is a barrier to transparency. Any crook from anywhere in the world can form a company here without any checks on the authenticity of directors, and can conceal illicit financial flows. The Government have had 11 years to reform Companies House but have failed to do so. Can the Minister explain why reform of Companies House has not received greater priority?
We are already investing £20 million in the reform of Companies House to provide many of the services the noble Lord refers to, but many of the reforms also require primary legislation and we will legislate when we can. The noble Lord is not correct in his basic assertion: the UK’s anti-money laundering regime was reviewed by the Financial Action Task Force and the UK achieved the best rating of any country assessed so far in the round of evaluations.
My Lords, Guardian reporter Luke Harding, involved in analysing the leaked Pandora papers, has said, “There is a message for the super-rich here: don’t hide your cash under a palm tree because, sooner or later, an investigative journalist will find it.” That is just as well, because the Government seem very relaxed about dirty money buying up London. Why have only four unexplained wealth orders—McMafia orders—been issued since 2018 and none since July 2019? Is the Minister relaxed that a government assessment last November concluded that money laundering through the UK had actually increased since 2017?
As I just said in the previous answer, we are absolutely not relaxed about this and we are determined to root out any financial chicanery and money laundering where possible. Investigations in which a UWO may assist are likely to be complex: application to a court for a UWO may take many months or years, but enforcement authorities continue to seek opportunities to utilise unexplained wealth orders in appropriate cases. These are difficult and complex matters.
My Lords, the noble Lord mentions the establishment of the register, which is long overdue. Will he tell the House what merit he finds in our continuing to support the existence of anonymous shell companies? As the Tax Justice Network has just said, nobody behaves better when they cannot be seen.
My Lords, it is hard to take seriously the Government’s claim that they aim to lead the global fight against illicit finance, or the register that the Minister has referred to. The Government claim they have impressive controls, but it is now three years since their consultation ended on the draft registration of overseas entities Bill, so can the Minister tell the House what plans they have to tackle our high-risk score, stop money laundering and protect the UK against terrorist financing?
As I said, the Financial Action Task Force that we established got the best rating of any country assessed so far in the round of evaluations in countering money laundering. We are opposed to it and we will do all we can to fight it, as noble Lords will want us to do. We intend to legislate on the registration of beneficial ownership and will do so as soon as parliamentary time allows.
My Lords, as we all know, “legislate when time allows” is a phrase to kick things into the long grass. The evidence to date is that this item is nestling very deep in the long grass. The Government have had the time and the opportunity to bring forward legislation, so can the Minister be clearer to your Lordships’ House why they have not done so?
It is absolutely not an intention to kick it into the long grass: it remains a priority, which is why we published the draft Bill, why we invited pre-parliamentary scrutiny and why we have acted on many of the recommendations that were issued during that time, but there remains a lot of pressure on the parliamentary timetable and we will legislate when time allows.
One hundred and thirty countries have now signed up for a global tax arrangement with a minimum tax threshold of 15%. What will Her Majesty’s Government’s attitude be towards tax havens where the tax is very much lower than that and which fail to sign up to this regime? In particular, what will their attitude be to UK property owners who register their property with companies in such tax havens?
The Chancellor continues to work with other jurisdictions to expose many of these havens and to increase the tax take. Only recently, the G7 Finance Ministers agreed a minimum corporation tax that has been implemented in many countries across the world. So, the Chancellor and HMRC need no lessons to try to increase the tax take.
My Lords, we are talking about £170 billion-worth of property owned offshore. Think what the tax revenue could buy to sort out the energy crisis, the social care crisis and the low pay crisis. Will the Government bring back some legislation, or have they listened to the society for the protection of oligarchs? Ministers themselves claim that 75% of the property industry supports tougher action against foreigners who use the UK to wash their dirty cash. Is it not time that the Government made some parliamentary time for this?
Again, the noble Baroness is confusing different issues. Having hereditary beneficial ownership—which we are greatly committed to and would be, I think, a great step forward—provides transparency. It does not, of course, itself increase the tax take. But she can be convinced that HMRC is very seized of this issue and is intending to increase the taxation take where it can possibly do so. Since 2010, the UK Government have secured and protected over £250 billion in tax revenue that would otherwise have gone unpaid, including an additional £3 billion from those trying to hide money abroad.
My Lords, the Minister has said “when parliamentary time allows” a number of times. But, of course, your Lordships recently passed the Financial Services Act. Transparency International recently analysed 400 corruption and money laundering cases and identified 600 UK businesses, institutions and individuals that have helped those corrupt cases. Does the Minister acknowledge that the Financial Services Act, so recently passed, is inadequate in regulating the actions of our businesses and needs to be strengthened?
I am not familiar with the details of that Act, but, as I said and will repeat again: the register of beneficial ownership remains a priority; the role of Companies House remains a priority; and we will come to this when parliamentary time allows.
Could the Minister explain why we should not come to the conclusion that the reluctance to take action on this and other tax evasion and avoidance is because of the very generous donations given by Russians to the Tory party and Tory MPs?
The noble Lord would be incorrect if he came to that conclusion. HMRC and the Chancellor have taken robust action against tax avoidance and evasion and will continue to do so. Many of the complaints I get from people about HMRC are that it is too aggressive in pursuing individuals and companies for its tax take. So, it will take no lessons from the noble Lord in wanting to increase its tax take.
My Lords, the All-Party Parliamentary Groups on Hong Kong and on Uyghurs, on which I serve as vice-chair, have drawn the Government’s intention to the impunity of those such as Carrie Lam and Chen Quanguo, involved in the destruction of Hong Kong’s democracy and the Uighur genocide. Will the Minister instigate a UK asset audit of such officials and the families of those responsible for these depredations, and accelerate scrutiny of Chinese-UK property developments, such as Nine Elms in south London? This has borrowed £430 million from banks, potentially leaving us vulnerable to collateral damage from the Evergrande crisis, with liabilities—in a re-enactment of the South Sea bubble—now topping some £2 billion.
The financing of development activity is, of course, a commercial decision and the Government do not intervene in those investments. But, in March 2021, in a co-ordinated effort with the European Union, the US and Canada, the UK imposed sanctions, including travel bans and asset freezes, on several Chinese officials in response to the human rights abuses against the Uighur community. I assure the noble Lord that we continue to monitor the situation. The UK has introduced global human rights sanctions regimes, complementing our anti-money laundering measures, including those implicated in human rights abuses, ensuring that they cannot utilise funds that have been obtained illicitly in the UK.