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

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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.

Airport Expansion: Road and Rail Upgrades

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Wednesday 27th April 2016 Lords Chamber

[Lord Ahmad of Wimbledon]

That is an interesting suggestion—but I cannot say that it is something to which I personally subscribe.

[Lord Naseby (Con)]

Is my noble friend aware that these figures are about as colourful as the Mayor of London? They really ought to be taken with a pinch of salt—and, perhaps, with a declaration of interest behind them.

[Lord Ahmad of Wimbledon]

Again, just for clarity, I am sure that my noble friend was referring to the figures provided by TfL, which are for others to analyse, and not to the commitment that the Government have given to spending £65 billion on transport infrastructure in this Parliament.

Asylum: Processing of Applications

Lord Naseby Excerpts

Wednesday 2nd March 2016 Lords Chamber

[Baroness Ludford (LD)]

My Lords—

[Lord Naseby (Con)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

There we go; saved by the bell.

Channel Tunnel: Migrants

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Tuesday 1st December 2015 Lords Chamber

[Lord Bates]

No. On Friday there will be a Justice and Home Affairs Council meeting, which the Home Secretary will be at. At the emergency meeting on 20 November following the Paris attacks, a whole new raft of initiatives was set out on which we are going to co-operate. These include the Schengen information systems, which exchange information on people who represent a potential threat across Europe. The noble Baroness was absolutely right in her first point, which is why we set up the Syrian vulnerable persons programme. We have said that checks on the 20,000 additional refugees who will come in over the lifetime of this Parliament will take place in the camps so that they do not have to make dangerous journeys and can be verified by the UNHCR and by us.

[Lord Naseby (Con)]

Is my noble friend aware that Bedfordshire, where I live, seems to be blessed with having more illegal immigrants disgorging at motorway service stations, allegedly because that is the first place where the lorries refuel? In those circumstances, why is it impossible to undertake a check on the ferries once they have left Calais en route to the United Kingdom and before people disembark at Dover?

[Lord Bates]

It is certainly an issue to which we have to find a solution. Part of that solution lies with the border force arrangements on both sides at the juxtaposed controls in Calais, and we are working very closely with our French counterparts on that. There is also a huge role for the hauliers to play—not necessarily the UK hauliers but some of the continental ones. They need to take the most basic security steps in relation to their vehicles to ensure that this does not happen. That is why we have introduced the accreditation scheme, together with civil penalties for people who fail to abide by it.

London Airport: New Runway

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Thursday 2nd July 2015 Lords Chamber

[Lord Ahmad of Wimbledon]

I suggest to the noble Lord that he might be minded to read the response of my right honourable friend the Prime Minister to the acting leader of his party during Prime Minister’s Questions yesterday, where he gave a commitment that the Government would make a decision by the end of the year. On the noble Lord’s reference to “no ifs, no buts”, as I am sure he is well aware, the Prime Minister ruled out a very different proposition in 2010.

[Lord Naseby (Con)]

Since one of the key elements of this report is about emissions and noise, will Her Majesty’s Government consult deeply with the aero industry, particularly in the context of quieter jets, more efficient jets and jets that produce far fewer emissions? Certainly, a great many of us on this side think that this is fundamental.

[Lord Ahmad of Wimbledon]

My noble friend is quite right that the development of aircraft has resulted in larger but quieter and more fuel-efficient aircraft. In coming to their final decision on the report, the Government will ensure that all key players are fully consulted.

Student Visas

Lord Naseby Excerpts

Tuesday 24th June 2014 Lords Chamber

[Lord Taylor of Holbeach]

ETS was licensed in 2011 to carry out the English-language testing that we brought in at that time. ETS has been a long-standing supplier of educational testing services to the Government. Its appointment in such a role predates our period in office. Five companies were selected by a process of competition to perform this task, and ETS was one of the successful companies. In all fairness, we had no reason to suppose that it would be undertaking this task fraudulently.

[Lord Naseby (Con)]

My Lords, is my noble friend aware that this issue has been going on for at least a decade? This is about the fifth time that I have stood up on this issue. Are not his actions greatly to be welcomed? Is it not really worrying to discover that time and again our newer universities and colleges, on the whole, are at fault? Previously it was London colleges, and now I hear that my home county of Bedfordshire is under deep suspicion. Will my noble friend tell us what action will be taken when he has carried out his investigations to ensure that senior personnel at those universities who are, or are supposed to be, in charge are fully reprimanded and, I hope, removed from their posts?

[Lord Taylor of Holbeach]

My Lords, how universities deal with this is largely a matter for them. I believe that I was right to draw the attention of the House to those measures which we eventually agreed in the Immigration Act to deal with this matter. It should make it much easier to monitor and deal with in future, but we have to deal with things at present. I emphasise that the vast majority of students here are genuine and are here to study. We want to make sure that we give them our support. We want to make sure that the vast majority of educational institutions are genuine and doing their best for their students’ education. We will invite the Department for Education, the Higher Education Funding Council for England, the Higher Education Funding Council for Wales, the Scottish funding agencies, Universities UK and the National Union of Students to join a working group on how we offer support to genuine students who find themselves in situations not of their making as a result of the measures that we are taking today.

Visas: Health Insurance

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Monday 17th March 2014 Lords Chamber

[Lord Taylor of Holbeach]

I have some figures here in front of me. I respect the noble Lord and I think he would agree that we have had some good debates on this issue. The figures say that non-EEA students cost the NHS around £430 million per year, with an average cost per head to the NHS of more than £700 per year. Those are the figures that I am giving the House, and I am assured that they are authoritative.

[Lord Naseby (Con)]

Is my noble friend aware that these proposals are very broadly welcomed? Will he reassure the House that a proper monitoring system will be set up so that we do not reach the situation 12 or 24 months hence where we do not actually know what has happened?

[Lord Taylor of Holbeach]

During the course of the Bill I have agreed to report back to the House on how this particular element of it is working.

Visas

Lord Naseby Excerpts

Monday 17th June 2013 Lords Chamber

[Lord Taylor of Holbeach]

My Lords, I read the article containing Miss Yu’s comments. It is vital that the UK is seen as being open for visitors and business. That is very much the case as far as China is concerned. The President of China has talked about there being 400 million visitors from China by 2018. We need to recognise the need for a customer focus in our visitor offer. That is why the Government have broken up the UK Border Agency into two parts, one of which deals with immigration enforcement. The other, UK Visas and Immigration, is dedicated to delivering a high-quality customer service to those wishing to enter the UK.

[Lord Naseby]

Is my noble friend aware that the new fast-track system introduced in Colombo for prospective visitors, particularly from the business sector, is working well and is greatly to be welcomed? On behalf of those who are using it, I say a huge thank you to the Home Office for listening and implementing this new system.

[Lord Taylor of Holbeach]

I thank my noble friend as brickbats are often flung on Questions such as this. I emphasise that the Government are actively looking at ways in which we can improve the focus of UK Visas and Immigration. I have met Sarah Rapson, the new director-general of the service. The whole point behind the creation of this new service is to make sure that our offer to visitors is competitive and customer-oriented.

Electoral Registration and Administration Bill

Lord Naseby Excerpts

Monday 14th January 2013 Lords Chamber

[Lord Naseby]

As a former leader of the London Borough of Islington, which is very similar to Lambeth, I can say that the electoral register over time has never been more than 70% to 75% accurate. What magical qualities are there now that will change the situation in boroughs that have a transient population, always have had and always will have?

[Lord Rennard]

Those of us who have followed in great detail the Committee proceedings on this Bill will know that I have argued at length, together with other noble Lords, for a large number of measures that could greatly improve the accuracy and completeness of the electoral register, particularly schemes of data matching and data mining, which would enable public and private databases—