Economic Crime (Transparency and Enforcement) Bill

Alison Thewliss Excerpts

2nd reading
Monday 7th March 2022 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

SNP Members are delighted to see this well-overdue Bill. We have called for action on these issues many times in this Chamber, in Bill Committees, in Select Committees and in Westminster Hall, yet no action has been taken until today. The measures within the Bill are far from the full package of measures that we need to tackle economic crime and we look forward to hearing the further measures that will come forward soon.

Tom Keatinge of RUSI has said:

“War has not made this money dirty—it has been here, corroding society and undermining the country’s institutions, for decades.”

The failings that we hope the Bill will address have long been identified, but have been ignored through incompetence, disinterest or worse. That goes to the heart of why the Bill is urgent. The money has been sloshing around in the UK and people have benefited from it, but they are not the ones from whom it was stolen. We need to take further action to ensure that we address that.

[Stewart Hosie]

My hon. Friend is absolutely right about where the money was stolen from, and many of the kleptocrats the Home Secretary mentioned made their money by looting Russia after Yeltsin’s privatisations. Does she agree with me that no matter how many times that cash has been through the laundromat, it is still stolen and is still unexplained wealth, and does she share my concern that the use of unexplained wealth orders will never actually get to the root of where some of that grubby stolen money came from?

[Alison Thewliss]

My right hon. Friend is absolutely correct to point that out. This money has been around the world many times and we may never ever find out where it has come from, but we could take further action to stop it coming through bank accounts in this country, helped by lawyers and accountants in this country, and the Bill does not go far enough to deal with the people who are facilitating this economic crime.

On the register of overseas entities, Members will know that I sat on the Joint Committee with the Lords on the draft Registration of Overseas Entities Bill, because I have mentioned it several times before. I cannot understand why it took so long before we had this legislation coming before us today—and in such haste, I should say. Introducing the registration of overseas entities is intended to shed light on the individuals behind overseas companies that control property in the UK, and that is welcome, but again it is too late. The proposals were discussed in detail in that scrutiny Committee, and I still do not understand—I would like some kind of explanation from the Minister, if he would stop chatting—why the Government twiddled their thumbs for four years instead of getting on with implementing such legislation.

I should note that the Scottish Government have moved on this. The register of persons holding a controlled interest in land in Scotland will come into effect and start operating, by taking names on the register, on 1 April. I seek some information from Ministers about what exactly will be the interaction between this register of property in Scotland, which includes overseas entities, and the provisions they are trying to pass today. It has been remarked by a number of organisations that the Scottish register will actually have transparency at its heart and has better transparency than what Ministers are proposing with their register. I would ask that they go to that higher level, rather than ask Scotland to level down on what we are putting on the register of persons holding a controlled interest in land.

Transparency International has estimated that £6.7 billion of questionable funds has been invested in UK property since 2016, of which at least £1.5 billion-worth has been bought by Russians accused of corruption or links to the Kremlin. When we take into account the secret nature of these transactions and how hard it is to get the actual information, the real figure is likely to be much higher.

The Bill as it stands will give the owners of about 95,000 foreign-owned properties six months to reveal their identities. I am glad that the Government have cut that back from the original 18 months they proposed in the draft Bill, but as things stand six months gives people an awful long time to move their money, down what Oliver Bullough calls the “Moneyland tunnel”, to hide those assets and to spirit them away to where they cannot be seen and cannot be found. Such secret jurisdictions will be used by the people who want to do this.

I would like to know from the Minister whether this register will be to the same standards as the Companies House register just now, because the Companies House register is basically full of guff. I have said this many times, but someone can register a company to “Anytown, Anyplace”. I could register one in the Minister’s name if I wanted to, and if I did not give any indication that I had done that, I would get away with it scot-free. The Minister really needs to tell the House what the standards of registration for these companies will be.

Our new clause 4 suggests that Companies House should be an anti-money laundering body, and it should use the Government’s Verify scheme to make sure that a person is a real person when they register a company at Companies House. I want to know what this register of overseas entities is going to look like and how we can make sure that the data put in will be maintained.

[Mr Kevan Jones]

Does the hon. Lady agree that full transparency at Companies House of who owns companies is in everyone’s interests? It was only because of the investigation undertaken by Caroline Wheeler of The Sunday Times that we discovered that Viktor Fedotov was one of the beneficial owners of Aquind, a company that has given huge sums of money to individuals in this House as donations. Does the hon. Lady think it would perhaps have helped some of those individuals decide whether to accept that money if they had known that Fedotov was an owner, especially because of his track record of alleged corruption in the Transneft gas pipeline deal?

--- Later in debate ---

[Alison Thewliss]

That is a fair point, and I absolutely agree. I will speak in the sanctions part of my speech about the fact that the Government do not know who has what in order to sanction them because the Companies House register is such nonsense, and we do not have a good enough understanding of who actually owns property in this country right now.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

Does the hon. Lady share my concern that there are still 11,000 companies at Companies House that do not have a person of significant control registered, yet there have been only 119 prosecutions? Surely we have to transform the regulatory power of Companies House to get rid of this nonsense.

[Alison Thewliss]

I absolutely agree. I was going to speak about Scottish limited partnerships later but will jump forward to that bit of my speech now, because it ties in nicely with the point the right hon. Member makes.

The House will have heard me speak on numerous occasions about SLPs, which have the distinction of being able to hold assets—property, yachts or whatever else—as a company. They have been used in the past as a means of funnelling money out of Ukraine as well other countries. OpenDemocracy reported last year that it had found €35.9 million in an SLP account which had been stolen from people in Ukraine through a fraud; Remini Consulting was the company involved in that. As the right hon. Member pointed out, the key to tracing those involved in such frauds is the persons of significant control.

SLPs have been obliged to have a person of significant control for several years now; that is a reform the SNP pushed for and the Government said they were going to introduce. Sure enough, the numbers of SLPs on the Companies House register decreased, and the number of people who were not registering as persons of significant control also decreased, but according to the most recent figures 203 companies are still SLPs with no person of significant control registered. That is just not right, and that is not being pursued either. Of all the thousands of SLPs that have existed and that still exist, only one has been issued with a fine for not having a person of significant control, and that fine was £210. That is absolutely pathetic, and it highlights that this Government are not even bothering to enforce the rules they have.

The Government are proposing in this economic crime Bill to fine companies that do not comply, but they are not fining companies that do not comply right now. That is not just about not enforcing the rules; it is money that is walking out of the Treasury—money they could have had to spend on services and do other things. They are not enforcing the rules, and they are not fining the companies that are not playing by the rules—they are not striking them off the register; they are not doing anything to make sure the rules are complied with.

This Bill does not go far enough to address that. The fines suggested are £2,500 a day, which is nothing to many of the companies who are shifting billions of pounds through shell companies. That is just the cost of doing business; it is nothing to the oligarchs with deep pockets stuffed full of Putin’s money, and the Government should be doing a hell of a lot more about that. At this moment, welcome as this Bill is, they are not doing anything to address that imbalance.

[Mr John Baron (Basildon and Billericay) (Con)]

I can tell the hon. Lady that there are concerns across the House on this issue, as she can see from those of us who have signed various amendments. In the last five years the number of prosecutions for money laundering has fallen away. The number of prosecutions from the Serious Fraud Office has fallen away, and the National Crime Agency has managed just five prosecutions a year on average. Does she agree that laws and regulations are only worth their salt if properly enforced, and that we need to come together on both sides of the House to address this issue and make sure moneys are available to properly fund our enforcement agencies?

[Alison Thewliss]

I very much agree with the hon. Member and acknowledge the strength of cross-party support in the House on this issue. I am sure he has read the Treasury Committee’s report on economic crime, which highlighted that not enough has been done on enforcement or invested in the law enforcement agencies to give them the skills that they need. Without that, the crooks will continue to be several steps ahead of the law enforcement agencies, which do not have the resources, the skills or the talent to get around these schemes and stop them in their tracks.

I agree with the hon. Member for Oxford West and Abingdon (Layla Moran) about the loophole in the Bill that she highlighted, which allows individuals or their assets to be exempted if so doing would be in the interests of the economic wellbeing of the United Kingdom. That gives the Government a whole lot of scope to exempt people from the Bill. There are clearly huge sums of money involved, and the economic wellbeing of the United Kingdom is ailing in many respects because of many things—not least Brexit—so they could look to that as a loophole. That must be closed. I do not think I got in to put my name to amendment 4 in time, but I fully support what she puts forward in it.

On sanctions, the Bill sets out a series of reforms that are likely to intensify sanctions enforcement. The SNP pushed for greater action on sanctions and their enforcement back when the Sanctions and Anti-Money Laundering Act 2018 was going through the House. There are limitations for the Office of Financial Sanctions Implementation: as I mentioned earlier, when we do not know where people are hiding their money, it is difficult to track them down, impose sanctions on them and enforce those sanctions. A great deal more needs to be done in that regard as well. As my colleague on the Treasury Committee, the hon. Member for Wallasey (Dame Angela Eagle), mentioned earlier, the OFSI has only 37.8 staff, which does not seem sufficient to the size of the task it faces. I hope that it will be able to get more resource to do that. Clearly no one could have quite anticipated the scale of the current sanctions, but it needs further resource for sanctions, both so that it has the expertise it needs and to ensure that our sanctions are aligned with those of other jurisdictions around the world.

Finally, according to figures put out at the weekend by the Minister for Brexit Opportunities and Government Efficiency, although the UK’s sanctions are only a fraction of the EU’s or US’s efforts, they have captured more in value than either of them. That is an interesting and curious point, and a serious one if it indicates how much Putin-related cash is swilling around in London’s economy. If the figures are to be believed, the UK has more in assets belonging to oligarchs than the EU and the US combined, which really shows us the scale of the problem that the UK Government have got themselves into.

The SNP supports the measures in the Bill that will strengthen measures on economic crime. Although they do not go far enough or fast enough, they are long overdue. We look forward to moving some amendments later this evening—and, if the Government have any sense at all, they will accept them.

[Several hon. Members rose—]