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Economic Crime: Planned Government Bill

Volume 818: debated on Monday 31 January 2022

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 26 January.

“I thank my honourable friend for his Question, but, as I am sure he will appreciate, I am not going to speculate about the content of any future Queen’s Speech, which is the correct moment for the Government to be setting out their legislative agenda for the next parliamentary Session.

However, I can confirm that the Government remain committed to tackling economic crime, which is why my colleagues in the Home Office and the Treasury take the lead on this. In recent years we have taken a number of actions, including creating the new National Economic Crime Centre to co-ordinate the law enforcement response to economic crime, and establishing the Office for Professional Body Anti-Money Laundering Supervision to improve oversight of anti-money laundering compliance in the legal and accountancy sectors. We delivered the Criminal Finances Act 2017, which introduced new powers including unexplained wealth orders and account freezing orders. We are determined to go further to crack down on dirty money to protect our security and our prosperity. With the publication of the fraud strategy and second economic crime plan this year, we will further level up the response to crack down on crimes of this type.

My department is playing its part. The Department for Business, Energy and Industrial Strategy announced plans to reform Companies House in September 2020. In 2021 we consulted on more detailed aspects of the reforms, and we will respond to the consultation soon. Investment in new capabilities at Companies House is already under way, with £20 million being invested in this financial year and a further £63 million announced in the spending review. The draft registration of overseas entities Bill has undergone pre-legislative scrutiny. We are amending the Bill in line with the committee’s recommendations, and in line with comments that the Prime Minister made to the House just yesterday. We will introduce the Bill and the broader reforms of Companies House when parliamentary time allows.”

My Lords, when this Question was put in the Commons last week, the Conservative MP John Penrose said:

“The well of excuses after three or four years of promising this piece of legislation or its related pieces has now run dry. This legislation is essential for the credibility of this country and this Government”.—[Official Report, Commons, 26/1/22; col. 1008.]

I agree. Does the Minister agree with his colleague in the Commons and, if so, when will this legislation be brought forward?

My Lords, as the noble Lord is aware, I cannot give him a timescale for this. As the Prime Minister said last week, we remain committed to this legislation. We have already carried out pre-legislative scrutiny on it and we will legislate when parliamentary time allows.

My Lords, the Government have long promised a full public register of beneficial ownership, alongside a comprehensive set of reforms to Companies House. Reforms are being made, but the pace is slow and the level of ambition is low. If the Government truly want to crack down on fraud and other forms of economic crime, why have these work streams been allowed to move at such glacial pace? If the noble Lord, Lord Agnew, was not able to secure progress from within, why should we believe other Ministers when they say that this issue is being treated with urgency?

Well, the issue is being treated with urgency. The Treasury is undertaking a number of different anti-money laundering pieces of work. We have already commenced the reforms required in Companies House. We will spend £12 million in 2023-24 and 2024-25 on economic crime reforms and £63 million in a spending review for Companies House reform. As the Prime Minister said, we are committed to making progress on this urgent and essential legislation, and we will do so when parliamentary time allows.

It is an important matter; it is one of many important matters on the Government’s agenda; and, when parliamentary time allows, we will legislate for it.

The draft legislation over these entities is quite closely linked to this. Perhaps the Minister can tell us whether that will be wrapped up in an economic crime Bill when it comes, or whether it will be a separate Bill. Perhaps at the same time he could tell us what the relationship is with the overseas territories on the beneficial ownership of these properties. A great many of them are owned by companies based in the British Virgin Islands or other overseas territories. They are sovereign parts of the UK. They seem to have all the benefits of British sovereignty but none of the responsibilities. Are the Government going to ensure that the secrecy of our overseas territories on financial matters is also covered in these Bills?

Indeed, the register of overseas entities Bill is currently tied up in the economic crime Bill, which we hope to make progress on as quickly as possible. However, I do not want to rule out any alternative legislative routes that might present themselves. As the noble Lord will be aware, it has gone through pre-legislative scrutiny and was well received by the committee that looked at it. We have incorporated some of the suggestions that were made. Of course, I cannot commit to what may, or may not, be in Her Majesty’s speech, but clearly a key element of taking forward this work is liaising closely with the overseas territories, which we will do.

Will the Bill, when it arrives, fulfil the commitments that David Cameron made in his seminal speech in Singapore?

I cannot give the noble Lord a commitment about when a Bill might arrive. I also cannot give a commitment about what might be in it when it does arrive.

One of the key recommendations of the recent Joint Committee on the Online Safety Bill was that scams and economic crimes on the internet should be in scope of the revised Bill when it comes forward. We obviously await the Government’s response to that, but does this not give the Government an opportunity of a double win? Either Bill would do, but the issue has to be addressed.

There are indeed a number of positive elements to legislating on this issue. One of them is the issue highlighted by the noble Lord. However, we are again dealing with hypotheticals: something that may happen in good time. As I keep saying, we are committed to pursuing this legislation, but I am afraid I am going to sound a bit like a broken record when I say I cannot give a commitment at this stage to noble Lords on when we might be able to do it.

The latest full accounts of Aquind Ltd give its directors as Mr K Glukhovskoy and Mr A Temerko. Four years ago, the Minister was a member of the board and at that time it had a controlling entity in the British Virgin Islands. It now has a controlling entity in Luxembourg. The last set of accounts showed a loss of more than £3 million and it paid no tax, yet it was able to find £213,000 for donations to the Conservative Party. Will the Government’s measures, which they say are urgent, also address the source of the wealth of controlling entities registered in the Virgin Islands—or, indeed, Luxembourg?

My Lords, it seems that this Bill will be some time in coming, but surely there are things we can do more quickly. For example, the Companies Act 2006 sets out clearly what information is required on directors and shareholders. Is it actually necessary to legislate for Companies House to verify that information? It may not be able to refuse to register the information, but there is nothing to stop it flagging the fact that the information is unverified.

I am afraid that it is necessary for primary legislation to enact the reforms of Companies House. This is an area for which I am responsible, and I work closely with Companies House on it. I get a steady flow of complaints from noble Lords and from Members of Parliament about abuses of the Companies House register. There is a certain amount that we can do with the funding that I announced in terms of reforms, but the primary reforms require primary legislation.

My Lords, will this Bill perhaps offer a remedy to ensure that when political parties have had donations from criminals who are fugitives from justice—such as Mr Michael Brown, who made a substantial donation to the Liberal Party—that money will be returned?

I thank my noble friend for that question. As he was straying on to the issue of party-political donations, I noticed groans from the Liberal Democrat Benches. I think that is evidence that they can dish it out but are not so keen on taking it.

My Lords, does the Minister agree that the Government’s inability to recover the billions of pounds obtained by fraudsters from Covid business plans, as highlighted by the noble Lord, Lord Agnew, in his resignation speech last week, demonstrates the vital need for urgent legislative reform?

The issues are not necessarily related. We are continuing to pursue many of the frauds that the noble Lord referred to. I can give the House some examples. The Insolvency Service has already achieved 86 director disqualifications, 39 bankruptcy restrictions have been imposed, and 13 live companies have been wound up in the public interest. It has also identified 947 further director disqualification and 46 criminal cases for investigation, all of which contain an element of bounce-back loans scheme abuses. That scheme was put in place in response to a global pandemic at a very rapid pace, and I think all noble Lords can agree that it succeeded in saving many businesses and many hundreds of thousands of jobs in this country. However, we will not tolerate any abuses of the scheme, and we will continue to pursue people who are fraudulently benefiting from it.

My Lords, there is clearly a problem of international confidence in the UK’s financial governance system. Without targeting any particular party, are the Government considering controls on financial donations to all political parties and candidates, as a way of restoring international confidence?

I thought that I had come to answer questions on an economic crime Bill, but I see that we are getting into party-political donations again. That is not a matter for which I am, or my department is, responsible, so I am unable to furnish the noble Baroness with a response to her question.

My Lords, those who decide to perpetrate economic crime are apparently targeted, swift and very bright about how they do it. I read the Statement and it mentions the Home Office, the Treasury and BEIS. Is it not time for more targeted, thought-through, quick action by government, rather than action that is divided across too many departments?

All departments are working together to try to combat this menace, and there are a number of different elements to that. Obviously, BEIS’s responsibilities, in terms of Companies House and the register of beneficial owners, are one aspect—but of course there are also tax elements, which are the responsibility of the Treasury, and there are Home Office enforcement matters as well, in terms of criminal liability. So it is not a question of which department looks after this: an enormous amount of cross-departmental co-operation goes on to try to combat it.