Investigatory Powers (Communications Data) (Relevant Public Authorities and Designated Senior Officers) Regulations 2020

Lord Naseby Excerpts

Wednesday 2nd September 2020 Grand Committee

[Lord Naseby (Con)]

My Lords, I have read the papers in front of us this afternoon and should like to highlight a couple of things. I note from paragraph 7.2 that there has been a

“rapid escalation of organised crime”

in recent years of fly-tipping and so on. It seems to me, as one who has been using the tidy tip in Biggleswade in Bedfordshire by appointment, that there is no provision for small businesses or small builders to get rid of their bits and pieces of rubbish. Although it is not absolutely covered by the order, I wonder whether it is not time to look at the fly-tipping challenge that we are facing in this country.

My other point concerns paragraph 7.3 and the Department of Health and Social Care. Am I right in thinking that that is to do with the purchasing done by the department? If not, what else does it cover?

Moving on, I note that 10 departments are now involved. One asks who is co-ordinating those 10 to ensure that they are consistent in their approach to what they think is fraud.

I declare an interest as a trustee of the parliamentary pension fund. We all know that small businesses have, quite rightly, been brought into the national pension scheme since 2012. Why, at this point, eight years on, is it felt for the first time that the Pensions Regulator should be given powers? Previously, it was not given powers, because they were not up to scratch. Any of us who are involved in that world know that it is hugely complicated at the moment; it is not easy, particularly for the millions of small businesses, to keep up to date with the changes that are being made. I am sure that mistakes are made, but I do not think that, at this point in time, this particular edition of the Pensions Regulator is proportionate to the problems in that area.

Moving on to the second order, those of us who have worked with or alongside the United States will be well aware that there are six states, Delaware being the leading one, that do not co-operate with the US Government very much at all in declaring who has moved money in and out of a state. We have had instances in the past on the Public Accounts Committee where it was clear that that particular state—and five others, I think—just does not co-operate. This all sounds fine here, but what will happen in relation to those states that do not co-operate with the US Government as a whole?

Secondly, what is the position of our overseas territories? I declare an interest: I have family in the Cayman Islands. In my judgment and, I think, in that of Her Majesty’s Government, those islands have been highly co-operative in trying to find a modus vivendi in the illegal movement of funds. Other parts of the overseas territories have not been quite so co-operative. It is not clear to me whether this agreement with the US is limited to just the UK and, as far as the States is concerned, probably does not touch those six states—I have mentioned only the leading one. I am not sure whether this measure covers the overseas territories. I do not think that it does, but I would be grateful for elucidation on that point.

Are we in a position to say okay, we have got the States, but there are other countries that we believe we should have a similar agreement with? If that is private and confidential, I do not expect it to be indicated this evening, but it would be helpful for the Committee to know the key parties—that is, countries—that we would like to have agreements with.

Paragraph 7.5 of the Explanatory Memorandum says that

“the Parties shall engage in a review of each Party’s compliance with the terms of this Agreement”.

One wonders how often. I happened to notice that tomorrow we will deal with a separate SI in which reviews will occur every three years. In other places, it is eight years. There does not seem to be too much consistency in government.

Paragraph 7.6 states:

“The IPA is included in this list, but the COPO Act is not, because it did not exist when the IPA was drafted. Consequently, the IPC is currently unable to keep under review any Agreement-related activity exercisable by virtue of the COPO Act, such as the use of OPOs.”


Is this not a loophole? Since we are doing this now—this measure must have been prepared some time ago—what are we doing to close that loophole?

[The Deputy Chairman of Committees (Lord Lexden) (Con)]

I call the noble and learned Lord, Lord Morris of Aberavon, Lord Morris? I think we have to move on, so I call the noble Baroness, Lady Jones of Moulsecoomb.

--- Later in debate ---

[Baroness Williams of Trafford (Con)]

I thank all noble Lords who have taken part in the debate and the noble Lord, Lord Morris of Aberavon, for his brief appearance. I could not keep up with the questions from the noble Lord, Lord Rosser, so I have missed some bits out. I hope to pick them up in the answers to other questions, but I will write to him if not.

I was very pleased to hear the opening remarks from the noble Lord, Lord Blunkett; I thought he would be supportive. He admitted to never having heard of the UK National Authority for Counter Eavesdropping. I join him in that: neither have I. It is the national authority for technical security and counter-eavesdropping. It helps the Government on technical espionage attacks by hostile state actors. Its capabilities and purpose are distinct and focus on countering close-access technical operations that could ultimately damage national security.

As he will know only too well, hostile state actors currently have the desire and the means to gain access to or otherwise compromise the integrity of highly classified communications systems and secure facilities. They are known to be able to carry out close-attack technical attacks, as demonstrated by the attack on the Organisation for the Prohibition of Chemical Weapons in The Hague by the Russian intelligence services in 2018. In that case, the Dutch authorities were able to detect and apprehend the agents involved, along with a car full of equipment.

We assessed that Russia and other hostile state actors, particularly China, will continue to attempt to disrupt, attack and commit espionage in the UK. I do not think any noble Lords in the Committee would disagree with that. The Intelligence and Security Committee’s recent report into the interference by Russia in UK democracy demonstrates intent, capability and, indeed, tenacity.

There is also the insider threat to consider, whereby an individual in an organisation may place a device for eavesdropping purposes. Insider threats can be from corrupt, compromised, disgruntled staff or from contractors. They can be among the hardest threats to identify. In order to fulfil its role, the UK National Authority for Counter Eavesdropping needs to be able to identify illicit and covert eavesdropping devices that may be present in sensitive and classified areas and then identify the user behind the device using communications data. We are now all experts in that particular agency.

There were a number of questions, particularly from the noble Lords, Lord Paddick and Lord Foulkes, about agencies being added and taken away, about why that happens and about the purposes of the various agencies that have been added. For clarity, the authorities we are talking about are the Pensions Regulator, the Civil Nuclear Constabulary, the Environment Agency and the Insolvency Service. It was right that those powers were removed in 2015, just as it is right for them to be reinstated now. We cannot foresee how operational requirements will evolve in response to the crimes that public authorities are investigating. We need to have the option to add and remove authorities depending on the necessity of the powers; the noble Lord, Lord Paddick, was right that it is nothing to do with the coalition. This is precisely why the IPA included the power to add and remove bodies from Schedule 4.

These authorities have all demonstrated a strong necessity and proportionality case against similar criteria that the Home Office applied when removing powers in 2015. Those criteria were: the statutory responsibilities of the authorities with access; the seriousness of the offences that they investigate; and the number of requests that they made. As is demonstrated by the case of the Civil Nuclear Constabulary in particular, which does not expect to use the powers often, assessing the volume of applications made is perhaps not the most effective of criteria for deciding which bodies should be listed in Schedule 4. The risk here is just too high to ignore. A public authority can make infrequent use of powers, yet still lead on investigations where communications data is critical.

I congratulate my noble friend Lord Naseby on celebrating his diamond wedding anniversary today.

[Lord Naseby (Con)]

Tomorrow.

[Baroness Williams of Trafford (Con)]

In fact, I think I ought to congratulate his wife more than him on enduring 60 years of marital bliss with my noble friend.

My noble friend talked about local fly-tipping. That is precisely the type of thing for which the Environment Agency might wish to use its communications data powers to protect the natural environment. Its statutory duties include the protection of the environment, natural resources and, of course, human health, which fly-tipping affects. It prosecutes offences that create serious risks of harm to people and the environment, such as illegal landfills and hazardous waste disposal—that might come under my noble friend’s question—and treatment and shipments. Its remit encompasses more than 400 different offences and it encounters some 40,000 suspected offences each year. Of course, we know that waste crime costs the economy in excess of £600 million a year.

Back in 2018, the Secretary of State for the Environment announced an independent review into waste crime, which published the report Independent Review into Serious and Organised Crime in the Waste Sector. That report recommended that the Home Office grant communications data powers under Part 3 of the Investigatory Powers Act. We have a duty to respond to that recommendation.

My noble friend asked about the DHSC. Its inclusion has nothing to do with financial matters; it is purely because its name has changed. He also talked about the Pensions Regulator. It is sad to say so, but criminality in pensions is not only a present threat but a growing one. It is recognised as a risk by the Pensions Regulator and its supporting regulatory partners, including the Serious Fraud Office, the National Crime Agency and HMRC. Having previously referred cases to law enforcement partners to prosecute, the Pensions Regulator now actively leads on these types of investigations and the prosecution of offenders. As my noble friend will appreciate, communications data will be a vital tool in assisting these investigations.

The Pensions Regulator took ownership of Project Bloom from the NCA in 2016. Bloom is a multiagency approach to pension scams and fraud. The Pensions Regulator can evidence £500 million-worth of scams in its regulatory remit, which is quite significant. It estimates that the ongoing threat runs into several billion pounds. Through Project Bloom, the Pensions Regulator has been running a communications campaign with the FCA featuring national television advertising campaigns, which noble Lords may well have seen.

The noble Lord also asked about states, such as Delaware, that do not co-operate. It is to companies rather than states that these requests will be made. That is an important point. Overseas territories do not use it.

The noble Baroness, Lady Jones of Moulsecoomb, asked about the review. It has not yet appeared because the agreement is not yet in force. I am sure that when it is the review will be forthcoming.

The noble Lord, Lord Foulkes of Cumnock, asked about temporary powers. Those statutory powers will last for one year. He asked about the IPCO’s role in all this. It will cover its role in the agreement and in the annual report, which is publicly available.

The noble Lord, Lord Paddick, rightly asked about the business cases, which I did not go into at great length because they are sensitive and extremely lengthy. Reflecting on that thought, I am very happy to organise a private session to go through the business cases for interested noble Lords. The noble Lord also asked about the consultation period under the Investigatory Powers Act. A 12-week period is required for consultation with relevant public authorities and the IPCO on Schedule 4 changes.

The noble Lords, Lord Paddick and Lord Rosser, asked how many organisations have applied and been turned down. I do not know the answer to that question, but I can find out. They also covered the death penalty assurances, which they know are being sought. It was interesting that we have received assurances from the US that should the UK accede to the 2015 MLA request by transferring evidence, the death penalty will not be sought or imposed in any prosecution in the recent case of Kotey and Elsheikh. I hope noble Lords will understand—I know they will—that it would not be appropriate to comment any further while legal challenges are ongoing in that case.

The noble Lords, Lord Rosser and Lord Paddick, talked about additional resources. They are well-versed in our ambitions for 20,000 police officers. The noble Lord, Lord Rosser, also asked about lowering the rank. Quite simply, no lowering of the rank is required. On the ISC, it is not a requirement in the legislation already using the enhanced procedure—laid for 40 days and debated in both Houses—but I fundamentally agree with the noble Lords that engagement with the ISC is an important factor.

The final question to which I have an answer is about safeguards, raised by the noble Lord, Lord Rosser. I am sure the IPCO will lay out any concerns the commissioner has in his annual report, particularly on any safeguarding issues around the whole regime.

I will leave it there for now. I will attempt to answer any questions I have not answered in writing.

Motion agreed.

Immigration and Social Security Co-ordination (EU Withdrawal) Bill

Lord Naseby Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Wednesday 22nd July 2020 Lords Chamber

[Lord Naseby (Con)]

My Lords, I believe our nation welcomes the broad thrust of this Bill, as I do, but in the short time available, I will pick out just three points. First, I suspect that all noble Lords are well aware of the challenge with care workers. There is no doubt that there needs to be some transition, some amendment to how we deal with care workers. We have 8% of roles in adult social care vacant at the moment: 122,000. In addition, 8% of the social care workforce have an EU identity—et cetera.

It seems to me that Canada, Australia and New Zealand, to mention just three countries that face a very similar problem, have found what they believe to be a fair answer to meet this challenge—which is not a challenge that can be dealt with in five minutes. I have been a Member of Parliament, as have a number of my colleagues sitting in the Chamber this afternoon. We know about care homes, old people’s homes and nursing homes, so we know you cannot adjust them furiously in a few minutes. But I say to my noble friends on the Front Benches that we have to find an answer.

The other aspect of the NHS is doctor recruitment. We have had far too few young men and women entering the medical profession. It is highly oversubscribed, but—I am sorry to say this; I might be seen to be sexist—60% of the intake today is female, and, of those, well over half only ever work part time, so that is not an answer. We need to increase the intake to our medical schools.

My noble friend Lord Lilley mentioned nursing. What was the figure he gave: 25,000 nurses applying to nursing schools turned down last year? We have to find an answer to this. If we do not, the figure of 29% of doctors working in NHS hospitals coming from overseas will never be solved. I say to my noble friend on the Front Bench: I hope that will be looked at.

Finally, a number of colleagues in the House know that I am closely involved with Sri Lanka. I know a fair bit about illegal immigration; I know about self-harm; I know about alleged torture; and it is still happening. I am sorry to say that: self-harm is still happening. That is not good for the individuals involved and it is putting money into the pockets of people that it should not be, so I should like that investigated, and I will be supplying my noble friend with some information about that.

Port Examination Codes of Practice and National Security Determinations Guidance Regulations 2020

Lord Naseby Excerpts

Friday 10th July 2020 Lords Chamber

[Lord Naseby (Con)]

My Lords, this is an absolutely vital piece of legislation. I agree with the noble Lord, Lord Mann, about the maximum duration of retention from two to five years, and in fact I ringed that when the question came up. I am not at all sure that five years is sufficient. Perhaps my noble friend can tell us why five years as opposed to a longer term has been chosen.

I also want to raise the question of ports. I raised this matter previously in relation to airports. Northampton has a modest airport outside the town, and at the height of terrorism no checks were made there. However, there is now a sort of observation post. Therefore, in relation to UK ports that are not permanently staffed, I wonder whether there should be a degree of observation and a means of communication.

Regarding paragraph 6.2 of the Explanatory Memorandum and the subject of staff, are we up to full complement? Are there are regional differences? Are we confident that there is now diversity, and is the necessary skill set there? Those are important issues in today’s world but they might not have come up previously.

Under paragraph 7.6 of the Explanatory Memorandum, I am also slightly mystified as to why oral evidence cannot always be given. Oral evidence should presumably be recorded in today’s world. Also, I am not clear why, under Schedule 7, a different lawyer should be used at that point.

I also have some questions about the consultation, referred to in paragraph 10.2 of the Explanatory Memorandum. I do not know how many people were consulted and it would be interesting to know, but eight responses do not seem to be very many. Then there is the question of training and, finally, the withdrawal review. I wonder whether the review should not be more regular than is indicated in paragraph 14.1.

Surrender of Offensive Weapons (Compensation) Regulations 2020

Lord Naseby Excerpts

Wednesday 8th July 2020 Lords Chamber

[Lord Naseby (Con) [V]]

My Lords, I too welcome this measure and I have some questions. How do the Government intend to communicate with the owners? I see from paragraph 10(2) that we are at least showing some realism where weapons or knives are particularly valuable. Secondly, I note that on monitoring there is talk of a five-year review. Given the seriousness particularly of knife crime, I wonder whether three years would not be a better length.

As someone who has followed this problem in the past, particularly as regards firearms, I would say that it is possible that there are people out there who own a firearm illegally, are dead scared to hand it in, but know in their heart of hearts that they should hand it in. In that case, I wonder whether some sort of amnesty could be given to them for doing the right thing—after a period of time, clearly. The sum of £30 does not seem to be a lot of money for certain knives, where people went to great trouble to obtain them—so, again, I think that there might need to be some flexibility in this area.

Covid-19: UK Border Health Measures

Lord Naseby Excerpts

Thursday 4th June 2020 Lords Chamber

[Baroness Williams of Trafford]

If someone arrived from Dublin in the last 14 days, they would not have to quarantine. I can see that people will want to flout some of the rules and will try to find loopholes. I can only say that these rules are put in place to keep people safe and save lives.

[Lord Naseby (Con)]

Are these proposals intended to cover all airports or just the major airports? The same goes for the shipping ports. Does my noble friend remember that when we were trying to tackle illegal immigration people came through the minor airports? Secondly, are we to audit what happens, certainly at our major airports, so that a report can be done about this at a reasonable interval so that we know what has happened?

[Baroness Williams of Trafford]

My Lords, I can barely hear my noble friend, but I assure him that all the airports that are open will be subject to these monitoring arrangements and locator forms. I am so sorry that I did not get the rest of my noble friend’s question. Perhaps we can take this offline.

India: Scam Call Centres

Lord Naseby Excerpts

Tuesday 21st April 2020 Lords Chamber

Asked by

[Lord Naseby]

To ask Her Majesty’s Government what representations they have made to the government of India to request the closure of call centres targeting British citizens with scams.

The Question was considered in a Virtual Proceeding via video call.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, the Government take fraud very seriously and are committed to combatting it. The City of London Police, which is the national lead force for fraud, has partnered with law enforcement and industry to combat call centre fraud from India and other jurisdictions. UK authorities continue to work with their Indian counterparts on a case-by-case basis to target criminals responsible for defrauding members of the public and businesses.

[Lord Naseby (Con)]

Is the Minister aware that I have lived, worked and visited India, and I know both good and rogue call centres there? The BBC recently exposed call centres that target UK elderly people, saying that their computer is frozen and giving them a phone number for technical support that will unfreeze it in return for payment. These are vulnerable people who are currently in self-isolation. They are elderly people with no family support and are worried stiff that they will lose their only means of visual communication, so they pay up. Will the Minister urgently link up with the City of London Police fraud action force and the National Crime Agency to put real pressure on the Indian Central Bureau of Investigation to act on this matter?

[The Lord Speaker (Lord Fowler)]

Minister. I was going to add “Baroness Williams of Trafford”, because I did not introduce you the first time.

Terrorist and Extremist Propaganda: Online Sources

Lord Naseby Excerpts

Wednesday 28th June 2017 Lords Chamber

Asked by

[Lord Naseby]

To ask Her Majesty’s Government what measures they are taking to combat terrorist and extremist propaganda released through multimedia channels, particularly social media, videos, the internet, and other online sources.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, before I begin, I wish Muslims here and all round the world Eid Mubarak.

The Government have been clear that there should be no safe space online for terrorists and their supporters to radicalise, recruit, incite or inspire. We continue to work closely with industry to come up with innovative ways to tackle terrorists’ use of the internet.

[Lord Naseby (Con)]

Is my noble friend aware of the detailed and excellent work done by the Henry Jackson Society, which proves that if a radicalised individual sees material such as a beheading video, he or she is likely to act within two to three weeks? My noble friend mentioned industry, but is she further aware that Facebook, Microsoft, YouTube, Google and Twitter have teamed up to make the servicing of hostile material very difficult? Nevertheless, that does not cover encryption of messages, there are no financial penalties as there are in Germany, and videos are taken down only when there is a complaint. Against that background, will Her Majesty’s Government move with all possible speed to ensure that the agreements between those companies are tightened up even further, and look at the other elements that I have mentioned?

[Baroness Williams of Trafford]

My Lords, my noble friend is right that the move to actual radicalisation can be very quick indeed. I pay tribute to the Counter Terrorism Internet Referral Unit, which since 2010 has helped to secure the removal of 270,000 pieces of material from the internet by social media providers—8,000 a month in 2016 alone. The CTIRU was the first of its kind globally and continues to be world-leading in its operation. My noble friend mentioned encryption, and we support the use of strong encryption. However, we must also ensure that, in tightly prescribed circumstances, our law enforcement and security and intelligence agencies are able to access the communications of criminals, including terrorists.

Criminal Finances Bill

Lord Naseby Excerpts

3rd reading (Hansard): House of Lords & Report stage (Hansard): House of Lords
Tuesday 25th April 2017 Lords Chamber

[Lord Naseby (Con)]

My Lords, the Minister rightly wishes the United Kingdom to be ahead of the curve. In relation to Amendment 8, which is the principal amendment that we are considering, she is absolutely right. If she is saying that the objective is co-operation on beneficial ownership information in order to deal with tax evasion and stamp out corruption, money laundering and terrorist finance, that is greatly to be welcomed and is welcomed, as far as I can see, by those in the overseas territories. I will come back to this in a minute, but the amendment will mean that the overseas territories have, as I understand it, committed themselves to provide real-time, 24-hour information in response to requests from the legal authorities in the United Kingdom. That is a massive step forward in this area of great difficulty and challenges and is to be welcomed.

However, I too am concerned about some of the detail of this new clause. It is unfortunate that a clause of this importance has appeared in the Marshalled List so late in the process. Of course, I recognise that my noble friend on the Front Bench is in some difficulty in that this is a major Bill and here we are at the 11th hour having to look at an absolutely vital amendment, and one has to make some allowance for that. But I share the view of the noble Lord, Lord Eatwell, about exactly what information is going to come from the UK and who on earth will verify that information. The overseas territories have every right to be told exactly what the information is and how it has been verified. In addition, there seems to be a great rush to have this work done in the next period so that it will all be based on one year’s experience. This is a major step forward and I wonder whether 12 months is enough. We have heard this evening from my noble friend that the Turks and Caicos Islands are hoping to get started soon, but one year is really asking an awful lot, and not many statisticians would work on the basis of one year’s information. Nevertheless, we are where we are.

I have one other concern. Proposed new subsection (2) states:

“The report must include an assessment of the effectiveness of those arrangements, having regard to such international standards as appear to the relevant Minister to be relevant”.


We do not know who the Minister may be in the next Government or what international standards are to be used. I do not blame my noble friend for this, but I suggest to her that when the report comes forward, we shall want to have great clarity about what international standards are being used and whether they are being consistently used in the analysis of implementation that flows from the new clause in Amendment 8. However, the basic point is that there must be great joy both in the overseas territories and in the law enforcement agencies of the United Kingdom that they are now going to get a first-class service which ought to have a major impact on the areas that I have described.

I have had the privilege of working overseas in Pakistan, India and Sri Lanka, and I spent part of my national service in Canada. Certainly when I was in commerce, with the Reckitt & Colman Overseas group, one of the bugbears about international trade—I am talking about several decades ago, but I am afraid it has not changed—is that it is not a level playing field. Here we are, approaching Brexit and hoping to trade internationally, but the tragedy of the situation is that somehow neither we in the United Kingdom nor other countries have ever managed to persuade the United States, Hong Kong and Singapore to have a central, non-public register. We have not even got that far. Even on the basis of what we are doing now, we have rivals. Make no mistake about it: most of our overseas territories are in the Caribbean, their main competitor is the United States and they do not even have a central beneficial ownership register. Not only will they lose business if we go too far but if the other parties, particularly the US, Singapore and Hong Kong, take business from our overseas territories, the net result will be that where we are getting information out of our overseas territories, if the business goes elsewhere then the co-operation that the UK gets from those territories—which is good and is going to be even better—will be totally undermined. Frankly, we will not get any information from the US, Hong Kong or Singapore.

On Amendment 14, which keeps reappearing, I certainly do not think that Her Majesty’s Government are committed to producing anything on a public register at the end of the review on beneficial ownership. The review should be solely on that subject, and there may well need to be further amendments or extensions to that situation. I remind noble Lords that neither the law enforcement agencies nor the tax authorities support public registers. UK intelligent law enforcement is a key part of our foreign policy, and we look for co-operation from friendly countries across the world. That will be jeopardised still further if there are these public registers.

So I say to my noble friend on the Front Bench that I support very much what she has done on the Bill and the way that she has pushed forward progress with the overseas territories. However, let us be quite clear: beneficial ownership is one thing, and it is very important, but in my view public registers are totally à décours.

[Lord Luce (CB)]

My Lords, I support government Amendment 8. I apologise to the House for the fact that I have not been here for the earlier proceedings because, among other things, I have been visiting one of the overseas territories, Gibraltar, as I am chancellor of the new university there. As a former Governor of Gibraltar I am probably the only person in the Chamber who has been a governor of an overseas territory, so I thought I ought to say something in this very important debate.

The noble Baroness, Lady Stern, and all those who have added their names to the amendment have done a service to the House in ensuring that we debate the vital issue of standards of regulation in overseas territories. After all, at the end of the day it is our Government who are ultimately accountable to Parliament for the performance in our overseas territories. Therefore the Government must satisfy themselves that the standards both in this country and in the overseas territories meet those required by the OECD and elsewhere, so I congratulate my noble friend on the leadership that she has shown in ensuring that we debate this issue.

However, there is a delicate balance to be struck—from listening to the debate, I think the House understands that—because we are now in a non-colonial era. I remember that after I became Governor of Gibraltar, the late Robin Cook became Foreign Secretary two or three months later and one of the first things he did, very sensibly, was to drop the term “colonial” from our overseas territories so that we have the title we use at present, “British Overseas Territories”. We have to approach these issues in a very non-paternalistic and non-colonial fashion. To my mind, that is essential. The danger with the devolved powers that we have in these overseas territories—quite rightly, in my view—is that if we try to impose in a paternalistic fashion our views and policies upon them, we will be doing them a great disservice. Above all, we want to avoid having to impose direct rule, which could be the implication of taking some of these measures. At the same time, we have to ensure that there is a level playing field, which includes us as well, and that in making progress on this we do not do so at the expense of the overseas territories.

The Government have shown tremendous initiative in responding to the amendment from the noble Baroness, Lady Stern, with their Amendment 8 because it provides a framework with which we can move forward in negotiation and dialogue with the overseas territories over the next two or three years to try to move the whole issue forward. Many of the overseas territories, as we have already heard today, have made good progress. I congratulate the Government on this and strongly support their amendment.

Criminal Finances Bill

Lord Naseby Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Monday 3rd April 2017 Lords Chamber

[Lord Eatwell (Non-Afl)]

My Lords, I regret that I did not have the opportunity to participate in the Second Reading debate on this Bill as I was abroad. I have, however, read with care the record in Hansard, in particular those speeches by noble Lords who referred to the matters under consideration in this group of amendments. I wish to speak to Amendment 169 and do so because I have a particular interest to declare. I am the chairman of the Jersey Financial Services Commission. The company register in Jersey, which maintains the register of beneficial ownership, is a division of the Financial Services Commission and hence Amendment 169 refers to matters which are my direct personal responsibility.

I should say at the outset that I will not comment on the main issue of this debate, which is whether a register should be publicly available, other than to comment on the claims by Her Majesty’s Government that link public availability to effective verification. The issue of public availability is a political matter. The JFSC is an independent regulator; that is, it is independent of the political authorities in Jersey and hence the question of public availability is not a matter for me. What is a matter for me is subsection (4) of the proposed new clause in this amendment which states that,

“‘a publicly accessible register of the beneficial ownership of companies’ means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006”.

It is of course this information that forms the basis of the register at Companies House. I regret that this subsection reflects a serious lack of relevant understanding of the issue of reliability both of the Jersey register of beneficial ownership and of the Companies House register of People with Significant Control. Reliability depends upon verification, whether the information is true or false. The Panama papers were so successful in revealing ill-doing because they happened to contain information that was broadly true. I am afraid that this is not the case in the Companies House register.

Jersey has maintained a register of beneficial ownership since 1989. Initially, the legal requirement was for a statement of beneficial ownership when a company was first registered. That statement had to be updated when there was a change in circumstances amounting to a 25% change in ownership. Today, the requirement is for regular updating. At this very moment a detailed survey of beneficial ownership is under way to provide a complete picture of the state of affairs on 30 June this year. Thereafter, it will become a requirement to update information in Jersey on a 21-day limit when information is available.

This information is subject to detailed supervision and verification. For example, trust companies are required under the money laundering order to obtain and maintain beneficial ownership information. Client files are checked on supervisory visits to ensure that they have done so. Record-keeping failures are subject to enforcement action with failures resulting in individuals being banned from the industry and firms being subject to significant remediation. As was noted earlier, the Jersey register is available to all relevant authorities, including the National Crime Agency’s financial intelligence unit, and in the next year or so will be available in real time. In addition to current procedures, an annual validation process on beneficial ownership and control is to be introduced in 2019 to replace annual company returns.

Jersey not only maintains a detailed register of beneficial ownership, but subjects that register to detailed supervision and verification. Compare this state of affairs with the UK’s register of People with Significant Control. Almost all UK companies are required to maintain registers of people with significant control, known as PSCs. This information is maintained on the Companies House register and is available publicly through the Companies House website. But note: Companies House carries out no noticeable verification of the information provided. It certainly does not in terms of annual returns or regular confirmation. Companies House has always seen itself as a repository of information—a library, if you like, but not a regulator. Of course, company formation agents are often used in the UK and they are subject to anti-money laundering supervision by Her Majesty’s Revenue & Customs. However, I understand it is standard practice for such agents to argue that setting up a company is a one-off transaction and thus exempt from anti-money laundering requirements. So HMRC does not verify either.

Just as in Jersey, it is of course an offence to submit false information to Companies House and a company will commit an offence if it does not declare its beneficial ownership information accurately. But I am afraid that enforcement of this offence is akin to the enforcement of the offence of not putting the ball in straight at a rugby scrum. The consequences for the UK register are well known. For example, an investigation in November last year by the organisation Global Witness noted that with respect to the UK register there were,

“2,160 beneficial owners born in 2016. Now either these are a very precocious bunch of toddlers or the data has been entered incorrectly”—

there is no verification. It continued:

“We also had people who listed 9988 as their year of birth—clearly a visitor from the future”.


It will not surprise noble Lords that the UK register has been the subject of some criticism, notably in the recent consultation on the fourth money laundering directive. Referring to such criticism in the consultation, Her Majesty’s Treasury argued:

“Some responses argued that consideration should be given to the accuracy of data on the PSC register, and the benefit of introducing verification measures in the incorporation process conducted by Companies House. The government is confident that maintaining one of the most open and extensively accessed registers in the world is a powerful tool in identifying false, inaccurate, or possibly fraudulent information. With many eyes viewing the data, errors, omissions or worse can be identified and reported. This means that the information held on the register can be policed on a significant scale by a variety of users. Ongoing consideration is being given as to whether this could be complemented by any additional measures”.


With all due respect, this is just wishful thinking. It amounts to saying that it is the responsibility of civil society to find out for itself what the structure of beneficial ownership might be, because our register is unreliable. Unearthing the reality of beneficial ownership requires the advanced skills of a financial services supervisor or, as I have learned, a forensic accountant. The deliberate provision of false, inaccurate or possibly fraudulent information is to deceive the authorities and civil society. We are not talking about simple mis-registration of a date of birth; it is false information which is the key. It is fanciful to suppose that many untutored eyes will identify clever fraud. I regret to say that, as a regulator, it is my personal opinion that Her Majesty’s Government’s unwillingness to verify the register of PSCs is a dereliction of regulatory duty.

Indeed, it is evident that, in reality, Her Majesty’s Treasury has no confidence in the Companies House register. In the draft regulations published by Her Majesty’s Treasury for the implementation of the fourth money laundering directive, Regulation 28 sets out the requirements for a firm to carry out due diligence on its customers. In doing so, Regulation 28(9) states that firms,

“do not satisfy their requirements … by relying only on the information … contained in … the register of people with significant control kept by a company under section 790M of the Companies Act 2006”.

In other words, Her Majesty’s Treasury will not accept information taken from the register at Companies House as fulfilling any due diligence responsibility. It does not believe the register.

Given that Her Majesty’s Treasury clearly regards the Companies House register as inadequate, I would be grateful if the Minister would tell the House what are the current conclusions of Her Majesty’s Government’s “considerations” as to whether the Companies House register will be verified. When will the UK produce a register that can be believed in?

To return to the main point, I hope that it is now clear that proposed new subsection (4) in Amendment 169, which calls for information in Crown dependency registers to be “broadly equivalent” to the Companies House register, would result in a major deterioration in the quality of the Jersey register. The amendment calls for the replacement of information that is subject to detailed and regular supervisory scrutiny with information that is not verified at all. I hope that, on this basis, noble Lords will not press their amendment, having been made aware of the damage that it would do to the cause of the availability of accurate and verified information on beneficial ownership.

[Lord Naseby (Con)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Eatwell. I apologise to the noble Baroness for not hearing the totality of her speech.

I shall not repeat what the noble Lord has just said. He cited in particular Jersey. I declare an interest as vice-chairman of the All-Party Group for the Cayman Islands, and I necessarily had some discussions about this Bill. I also have a member of my family working in the Cayman Islands. As to verifying beneficial ownership, which is what we are primarily talking about here, the situation in the Cayman Islands is that it has been a legal requirement there for 10 years now, and the authorities do verify the accuracy of the information that is given, in contrast to what the noble Lord rightly says about UK Companies House, which is basically a self-registration system. That is clearly nowhere near comparable to the norm in the best of the overseas territories.

Airports: Heathrow Third Runway

Lord Naseby Excerpts

Monday 23rd May 2016 Lords Chamber

[Lord Ahmad of Wimbledon]

I agree with the noble Lord. Many business leaders have spoken in favour of our continued membership of the European Union, and as I have said before it is certainly the Government’s position that the UK will remain stronger, safer and better off by continuing its membership of the European Union.

[Lord Naseby (Con)]

Given the passage of time since the research was done, is my noble friend aware that the case for the London airport at Heathrow becomes ever stronger, particularly because of developments in air traffic control and aircraft, which are now more cost-efficient, and the use of synthetic fuels?

[Lord Ahmad of Wimbledon]

My noble friend talks to the development of fuels and aircraft, and he is of course correct in that respect. As regards the decision, the case has been made and the principle has been accepted by this Government that we need expansion of airport capacity in the south-east, and we will move forward on that decision later this year.