My Lords, the UK money laundering regulations require the Government to make an assessment of the UK’s money laundering and terrorist financing risks and to keep this assessment up to date. The Government accordingly published a national risk assessment in 2015, 2017 and 2020. Assessments detailing specific threats are published by UK law enforcement more regularly, including by the National Crime Agency’s National Assessment Centre and the National Economic Crime Centre.
I thank the Minister for his Answer, but is he not curious about the effects of transnational kleptocracy by British professional service providers such as HSBC and Mishcon de Reya, which enable crooked elites to launder their money and reputations? Would he condemn, as does the recent Chatham House report, the lawyers and PR agents who make quasi-libel defamation cases against journalists and researchers researching money laundering and then go on to deter the ill-resourced regulators, who can be bought off, as in the recent Mishcon case?
I am sure the noble Lord will be aware that a number of very substantial fines have been levied for breaching money laundering regulations over the last few years. In 2020, Goldman Sachs was fined £48 million; in 2019, Standard Chartered was fined £102 million; and, even in the last few weeks, NatWest was handed a fine of £264 million. This just emphasises our commitment to dealing with this whole area.
My Lords, having had the dubious privilege of being one of those who helped to draft the anti-money laundering directives in Brussels, and thereby finding himself described by friends as an expert in money laundering, may I enquire about the word “proportional”, which appears in the directive? Does my noble friend feel that that word is being properly applied by our financial institutions to small investors and those who will never be engaged in money laundering? Does he think that that is balanced and fair and that we have the right approach?
I would certainly defer to my noble friend as someone who is an expert in this area, which I am not. It is extremely difficult to get the right balance in these things, because what one person would consider an intrusion, another would consider a protection. We have to remain alert and sensitive to the different forces, but what is most important is that we have a coherent system which is clamping down on an extremely complex and fast-evolving crime.
My Lords, in last year’s parliamentary debate on the Church Action for Tax Justice report Tax for the Common Good, the Minister assured us that progress was being made on reducing money laundering and financial fraud in our British Overseas Territories and Crown dependencies. Would he be able to update the House on this? If he cannot do so now, would he please write to me with information on the progress we are making?
It is important to remind the House that the overseas territories are independent entities and that we cannot just force them to comply with our own regulations. But we have an ongoing dialogue with them. For example, we have a very useful exchange of information through the exchange of notes arrangements, and they have agreed to introduce publicly accessible registers of companies’ beneficial ownership. The discussions are very much ongoing and I respect the right reverend Prelate’s concern.
My Lords, at the anti-corruption summit in 2016, the Government committed to producing a register of overseas owners of British properties. In 2018, they produced a draft Bill on that which has still to become law. Could the Government say whether they are in fact committed to stopping this sort of overseas activity in the UK?
My Lords, I can assure the House that we are absolutely committed to stopping that. I accept that the introduction of the Bill is taking too long, but active discussions are going on at the moment about a new economic crime Bill and I hope that we might see its introduction within the next few months.
My Lords, the Minister’s colleague, the noble Viscount, Lord Younger, said during our proceedings on the NICs Bill:
“In the last three years, we have recovered over £550 million from the proceeds of crime, charged over 100 people with money-laundering offences, and seen over 75 people convicted for money laundering.”—[Official Report, 10/1/22; col. GC 113.]
That is a pathetic figure—or at least it feels like one. In his original Answer, the Minister indicated that assessments had been made over three recent years. What he failed to do was tell us what the answer was. Could he provide the answer so that we can judge the success so far and see whether the right resources and energy are being devoted to this issue?
My Lords, if we were to go the very top-down figures, which are ultimately the most important, I would look at the tax gap, which we have been very successful in closing over a number of years. In 2005-06, the gap was 7.5%; in the last year for which figures were available, 2019-20, it was down to 5.3%. That is of course against the enormous headwinds of the build-up of hot money around the world. I would therefore be more optimistic and say that we are making good progress.
My Lords, it is the turn of the Liberal Democrats. The noble Lord, Lord Jones of Cheltenham, wishes to speak virtually. I think this is a convenient point to call him.
My Lords, the Royal United Services Institute suggests that the scale of money laundering in the UK is “too big to measure”. Transparency International has had a stab at it and says that the problem may be causing £325 billion-worth of harm to the UK economy each year. Why has the UK become such a magnet for this illegal activity, which damages the vital financial services sector and our reputation as a safe place to do business?
My Lords, as I am sure the noble Lord will be aware, the City of London is one of the largest financial centres in the world and therefore the flows of money going through our economy, particularly in the City, are enormous. However, we lead the world in our attempts to reduce bad activity. I refer the noble Lord to the Economic Crime Plan, which lists some 48 action points to tackle the whole spectrum of money laundering and financial crime. We are in good shape in implementing those, and we are committed to an economic crime plan 2.0 that will be announced this autumn.
My Lords, to take us back to the question on resources, there is some evidence that where banks refer cases to the police, such cases are not high on their agenda. Do the police have sufficient resources to tackle this crime and to investigate it thoroughly?
My Lords, we have the National Crime Agency as the main crimefighting force in anti-money laundering. It is an extremely effective organisation, and it is well funded. Of course, one could always say that more money is needed, but I can assure my noble friend that we believe that we have adequate resources.
The Minister has mentioned some fines in respect of a limited number of banks, but much money laundering is in respect of property transactions, particularly in London. Since the passing of the Sanctions and Anti-Money Laundering Act 2018, how many prosecutions have there been of professional people who facilitate money laundering: the estate agents, the solicitors and others?
My Lords, the Minister has referred to the work of the Assets Recovery Agency. Paramilitary organisations have undertaken considerable money laundering over many years throughout the UK. Can the Minister provide us with a detailed assessment, including figures, of the amounts that have been laundered by paramilitary organisations? I am thinking in particular of Northern Ireland, where it has had an insidious impact on society.
I share the noble Baroness’s concern about money laundering getting into the hands of serious organised crime groups, but we are very much aware of such concerns. I do not think that one can put a figure on it, because, if we knew what it was, we would be able to stop it. We have created a large umbrella structure to oversee all these organisations. It is overseen by the Chancellor and the Home Secretary. Underneath that sit a number of organisations; for example, the Office for Professional Body Anti-Money Laundering Supervision. A whole range of such agencies are now working and sharing intelligence. I believe that we are getting better all the time.