Economic Crime (Transparency and Enforcement) Bill

Kim Johnson Excerpts

2nd reading
Monday 7th March 2022 Commons Chamber

[Layla Moran (Oxford West and Abingdon) (LD)]

It is a pleasure to follow the hon. Member for Amber Valley (Nigel Mills), and I associate myself with his comments. Although, as the right hon. Member for Barking (Dame Margaret Hodge) said, it has taken a war for us to get to this point, I find myself forgetting how often I go to other countries and speak to people there, or speak to family members who live abroad, who say how they look to this place for what should be best practice. Yet when it comes to tackling economic crime we have been lagging behind. The Secretary of State said that this was done speedily, and I am reminded of when I was a teacher and people used to stay up all night to do the homework I had set three weeks earlier. The Government could have done this better and sooner, and they did not, but we are here now.

[Kim Johnson (Liverpool, Riverside) (Lab)]

The hon. Lady is making an excellent speech. Does she agree that actions speak louder than words? We have had an awfully long time to get this right—it goes back to 2016—so let us see some action, and action now.

[Layla Moran]

I thank the hon. Lady for her intervention, and she is right. I do not say this in any other spirit than one of wanting to help. I thank the Ministers for the ways in which they have engaged with us, and I will keep working constructively with the Government on this, because we need to get it right, and not just for the people of Ukraine. Before I came into the Chamber today, I was talking to some Russians in Russia. I cannot name them and will not do so, because if I did, it would put their lives in danger. Members will be aware that on Friday Putin put in place legislation to give them 15 years’ imprisonment for simply saying that Putin is waging a war, as opposed to an exercise or a peacekeeping mission. They describe what is happening as strict and cruel legislation designed for political oppression, and they are asking Members of this House to work with the Russian community here in the UK to get the message out through their networks and to their friends about things such as how to circumvent Putin’s internet clampdown in Russia in order to get the BBC in Russian to people on the ground. There is something that all of us can do to help those Russians who want to help us here, and who are desperate not to be tarred with the same brush.

I look forward to the Committee stage that will take place later this evening, so I shall be brief, but I would love to hear from the Minister what exactly will be in the economic crime Bill part 2, especially in relation to the Companies House reform that we seek. I also want to associate myself with what has been said about enforcement. When I asked doughty third-party groups such as Transparency International and the Royal United Services Institute why other countries—America, for instance—had managed to include far more companies and individuals on their lists, I was told, “They have fewer laws, but they enforce the hell out of them.” Can we please be a country that enforces the hell out of this and any further legislation that we might want to introduce?

We also want to ensure that the second Bill clamps down on enablers. Amendments have been tabled to that effect, but we know that stand-alone legislation will be required for this purpose. It is not just the lawyers who are involved; it is the PR firms, the accountants, the banks, and all the others who knew what they were doing. It should not be ‘a case of acting “recklessly”—there are some get-out clauses in this Bill that we need to be careful about—because those people knew or decided to turn a blind eye, and that can no longer be good enough. I appreciate that this cannot be covered in today’s Bill, but when will it be covered?

I look forward to working with the Minister in future iterations of these matters, and I especially look forward to the Committee stage, when we shall be able to discuss some of the holes in the Bill in more detail.

Economic Crime (Transparency and Enforcement) Bill

Kim Johnson Excerpts

Committee stage
Monday 7th March 2022 Commons Chamber

[Dame Angela Eagle]

I support all the amendments that are intended to close loopholes in this long-overdue legislation, narrowing the gap between the Government’s rhetoric and the reality of what it is possible for them to do, strengthening the legislation, and ensuring that we have transparency so that we know who owns what, so that people can indeed be sanctioned, and so that their progress across our financial system can be followed in a meaningful way to make sanctions a reality. I also support new clauses 7 and 2, which seek to beef up enforcement.

Today, we in the Treasury Committee heard that the Office of Financial Sanctions Implementation has 37.8 full-time equivalent staff. I put it to the Government that that is not nearly enough for us to make sanctions against Russia workable and effective. We also learned recently that the National Crime Agency had no Russian speakers. I am not sure how it is meant to pursue sanctions against Russia if it does not have anyone with the appropriate language skills to do so. I hope that it will be beefing up its enforcement activities as well.

We understand and support what the Government are trying to do with this legislation. It is long overdue, and we think it needs to be strengthened. The bewildering and fragmented nature of enforcement, and its underfunding, must be put right if we are to get to the stage where we can finally deal with the corruption of our financial system and its infiltration by those authoritarian regimes and kleptocrats who are putting our democracy at risk, and who, even as we are having this debate, are murdering and bombing innocent people in Ukraine and threatening the peace and prosperity of Europe and the world. I hope that the Government will listen and accept a lot of these amendments by the time the Bill comes back to this House in due course.

[Kim Johnson (Liverpool, Riverside) (Lab)]

I rise to speak in support of new clauses 7 and 8, but I want to start by expressing my solidarity with the people of Ukraine, who face unimaginable heartbreak and horror, and particularly to black residents who have been subject to unacceptable levels of racism and brutality. I call on this Government to open our doors and welcome without discrimination all refugees who are fleeing oppression, violence, occupation and war. I applaud the courageous protesters in Russia, at home and across the world who are demonstrating for peace.

The National Crime Agency estimates that £100 billion of dirty money flows through the UK every single year. This is not a new phenomenon. Since as early as 2016, the Government have been making empty promises for tighter regulations to prevent these illicit activities, but since then, £1.5 billion-worth of property here has been bought by Russian oligarchs accused of corruption with links to the Kremlin. As long ago as 2018, draft legislation was published by this Government for a register of beneficial ownership to consolidate and clarify our legal structures in order to prevent profiteering by way of laundering money through the UK property market, but despite a wealth of evidence pointing to the illicit activities of oligarchs in London and elsewhere in the UK, the Government have done nothing but kick the can into the long grass. Given the almost £2 million received in Russia-linked donations by the Tory party since the current Prime Minister entered No. 10, it seems pretty clear why.

Labour has consistently been on the front foot when it comes to clamping down on oligarchs. Our plan included an oligarch levy to tax secret offshore purchases of UK residential property, the application of the Magnitsky clause to apply sanctions against human rights abuses, and to extend the beneficial ownership register for Crown dependencies and overseas territories. Labour has not just jumped on the bandwagon now that this has become the issue of the day; we have been putting forward detailed plans to tackle this injustice for many years, as my hon. Friend the Member for Rhondda (Chris Bryant) has pointed out. Our amendments today will give this toothless Bill some bite, speeding up action against some of the worst offenders and bringing forward reforms to Companies House that will root out the activities of criminal elites who are legitimising their loot in the UK without scrutiny or repercussions. I hope the Minister will commit today to backing our amendments.

[Paul Scully]

I thank all hon. Members who have spoken in this important debate for their constructive approach to this important legislation, and for their engagement prior to today as well. Let me quickly whip through as many of the points that have been raised as possible. The right hon. Member for Birmingham, Hodge Hill (Liam Byrne) talked about SLAPPs. The Deputy Prime Minister made a call for evidence on Friday, and it is definitely not just a listening exercise. It is important that we act when we need to act.

Nominees were raised both on Second Reading and in Committee. If nominees are directed by someone else—say, the beneficial owner—the person doing the directing is caught by condition 4 in paragraph 6 of schedule 2 and is therefore a registerable beneficial owner. My hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) and the right hon. Member for Barking (Dame Margaret Hodge) both made important points, and I am keen to work with them in the coming days to make sure we do not leave any gaps. We have a common interest in doing so.

The Government tabled the amendments to reduce the transition time from 18 months to six months but, as I said in my closing speech on Second Reading, I see merit in requiring all those selling property to submit a declaration of their details at the point of transfer of land title during the transition period. In effect that means we will be giving sellers a zero-day transition period. They will have to register ownership, so we will get their ownership details either when they sell or at the end of the transition period.

I am keen to work with my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) to see how far we can go in the other place, because this is difficult to draft. I hope he is satisfied will an invitation to sit down with me in the coming days so that we can give further consideration ahead of finalising the Bill in the Lords. I therefore ask that the other amendments in this area are not pressed.

On new clause 7, tabled by the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), it would serve little purpose to introduce new legislation at the end of this parliamentary Session as it would actively harm the quality of the measures we are introducing in the broader economic crime Bill early in the third Session—I accentuate the word “early.”

We spelled out the Government’s position on the further reforms to increase the reliability of the information on the register and the ability of Companies House to share data in the “Corporate Transparency and Register Reform” White Paper, and the forthcoming economic crime Bill will introduce those measures early in the next Session, but we want to make sure that we get it right because this is the biggest change to Companies House law for nearly 200 years.

On amendments 10 and 11, also tabled by the right hon. and learned Member for Holborn and St Pancras, I point out that the Government tabled amendment 49, which commits to introducing regulations under clause 16 on information verification so that they come into force before any applications for registration may be made under clause 4(1). Amendment 49 achieves in practice what amendments 10 and 11 seek, so I hope those amendments will not be pressed.

The hon. Member for Glasgow Central (Alison Thewliss) talked about Companies House reform and verification, which is something we are introducing. People with anti-money laundering expertise will look at this within Companies House.

I think I have highlighted my intentions regarding amendments 24 and 25, which obviously seek to add to the list of statements an overseas entity must provide to the registrar when applying for registration or when complying with the updated duty. I see the merit of the proposals made by the hon. Member for Rhondda (Chris Bryant), and we take these matters seriously. As I said, we will look further at these proposals and we will work together to make sure we can do this in the other place.

I heard the hon. Gentleman’s protestations that amendment 26 takes out three words. However, it is our opinion that removing those three words may have unintended consequences. It is not quite as easy as simply taking out those three words. I would like to work with him to make sure that, if there are any unintended consequences, we can have something that gets the drafting absolutely correct. I therefore ask him not to press the amendment, in the spirit of unity in this House on standing together to make sure we have the strong measures we all want in the Bill.