Bob Seely contributions to the Sanctions and Anti-Money Laundering Act 2018

Tue 1st May 2018 Sanctions and Anti-Money Laundering Bill [Lords] (Commons Chamber)
3rd reading: House of Commons
Report stage: House of Commons
15 interactions (1,154 words)
Tue 20th February 2018 Sanctions and Anti-Money Laundering Bill [Lords] (Commons Chamber)
2nd reading: House of Commons
3 interactions (592 words)

Sanctions and Anti-Money Laundering Bill [Lords] Debate

Full Debate: Read Full Debate
Department: HM Treasury
Legislation Page: Sanctions and Anti-Money Laundering Act 2018

Sanctions and Anti-Money Laundering Bill [Lords]

(3rd reading: House of Commons)
(Report stage: House of Commons)
Bob Seely Excerpts
Tuesday 1st May 2018

(2 years, 3 months ago)

Commons Chamber
Read Full debate Bill Main Page
HM Treasury
Dame Margaret Hodge Portrait Dame Margaret Hodge - Hansard
1 May 2018, 2:36 p.m.

I simply draw the attention of the hon. and learned Gentleman to what his Government stated in 2012 in the White Paper. In that White Paper, they set out the fact that they were jealously guarding their right to legislate as and when that became appropriate. That is what his Government said in 2012.

Bob Seely Portrait Mr Bob Seely (Isle of Wight) (Con) - Hansard
1 May 2018, 2:36 p.m.

On a point of record, I believe that that was in our previous two manifestos, so I am not quite sure why we, on the Government Benches, are arguing on this point.

Dame Margaret Hodge Portrait Dame Margaret Hodge - Hansard
1 May 2018, 2:36 p.m.

I thank the hon. Gentleman for his intervention.

For the sake of clarity, let me just say that, in the past, Conservatives have used this power when they legislated to ensure that capital punishment was abolished in all our overseas territories. A Labour Government used the power to ensure that we brought to an end discrimination on the grounds of sexuality in our overseas territories. One of us—I never remember which—used the power to intervene in the Turks and Caicos when there were problems with the administration of governance.

Break in Debate

Sir Henry Bellingham Hansard
1 May 2018, 1:59 p.m.

My right hon. and learned Friend the Father of the House is, as ever, very wise. I want to proceed on a pragmatic, staged basis, and I think we could have come together on the Government’s compromise, had it been tabled in good time.

Bob Seely Portrait Mr Seely - Hansard

Would not just waiting until everyone else moves show a lack of leadership on our part?

Sir Henry Bellingham Hansard
1 May 2018, 1:59 p.m.

That is a fair point, and those of us who have been supporting the Government loyally on this and working with them accept that it is a weakness in the argument. If we set an example, we hope that other people will follow. I hope that when the Minister winds up he will say how we will try to influence other countries and jurisdictions to follow this example.

Break in Debate

Catherine West Portrait Catherine West - Parliament Live - Hansard
1 May 2018, 3:32 p.m.

Indeed. And I hope that the challenge will be met to reduce inequality in housing in Scotland, because I know that a very small number of people own rather a lot of properties.

On the role of other facilitators of tax evasion and avoidance and the big four accountancy firms, many Members feel it is time that they were brought to book. My right hon. Friend the Member for Barking has done a lot of work on that. The next stage is to try to clean up the City of London more effectively and to see the closure of certain poor practices, such as Mossack Fonseca and others. Yes, it was a one hit wonder, but we did see the closure of a number of underperforming legal practices. The next step of this campaign is how to allow the pin-striped enforcers of tax evasion and avoidance to have a more honest and equal way of practising their profession.

That is all I want to say. It is so good to see consensus in the House today.

Bob Seely Portrait Mr Seely - Parliament Live - Hansard
1 May 2018, 3:33 p.m.

It is a privilege to follow the hon. Member for Hornsey and Wood Green (Catherine West).

I believe that the fight to improve the integrity of our financial system and to do what we can to reduce money laundering is critical in the fight against not only corruption but the malign influence of authoritarian states. I very much welcome the work done by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and the right hon. Member for Barking (Dame Margaret Hodge). I felt very proud to agree to rebel against the Government— I am quite glad I did not have to—but nevertheless, I thank them for that amendment.

On the point about corruption and the malign influence of others, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), the hon. Member for Rhondda (Chris Bryant), the right hon. Member for Exeter (Mr Bradshaw), my hon. Friend the Member for Gravesham (Adam Holloway) and I have been shown documents that we believe relate to our national security and money laundering. They originate from Monaco’s Sûreté Publique, the police department that manages security and foreign residents in that area. They are based on the Sûreté Publique’s own information and on information provided by the French Direction de la Surveillance du Territoire—the DST—which at the time, was the French equivalent of MI5.

These documents are brief, terse, factual files, listing activities, associations and judicial actions. They have been authenticated by senior French intelligence sources and by British and American counterparts familiar with their contents. The documents link a noted individual in this country with Russian intelligence. These files are dated from 2005 and cover the period from the mid-1990s. The documents concern Christopher Chandler and his brother—Christopher Chandler is a public figure, owing to the Legatum Institute. In citing this evidence, I note the words of the right hon. Member for Exeter, who in November 2017 called for the House’s Intelligence and Security Committee to examine Mr Chandler.

According to the French security services, as recorded by their colleagues in Monaco—and clearly, I am confident that these documents are genuine—Mr Chandler is described as having been

“an object of interest to the DST since 2002 on suspicion of…working for the Russian intelligence services.”

I repeat:

“an object of interest to the DST since 2002 on suspicion of…working for the Russian intelligence services.”

Mr Ben Bradshaw Portrait Mr Ben Bradshaw (Exeter) (Lab) - Hansard

As the hon. Gentleman rightly said, I first raised concerns about Legatum and Mr Chandler back in November. Does he agree that the information that he has just put in the public domain, combined with the growing concern about corruption, money laundering and the sale of passports in Malta, where Chandler has just acquired citizenship, demands urgent investigation by the UK authorities now?

Bob Seely Portrait Mr Seely - Hansard
1 May 2018, 3:36 p.m.

I am most grateful for that intervention. I am aware that the right hon. Gentleman has seen these documents and that he shares my concerns. I believe that the right hon. Member for Birmingham, Hodge Hill, should he have the privilege of being called to speak, will talk further on that point and make reference to these files.

Christopher Chandler’s personal file is marked “File code S”, a DST marker indicating, if I understand correctly, a high or higher level of threat to France. In France, the letter “S” is now used to designate radical Islam. In Monaco then, it was used to designate counter-espionage. As I have said, Mr Speaker, I believe that other Members, if you wish to call them, may cite further details—the right hon. Member for Birmingham, Hodge Hill, the hon. Member for Rhondda, the right hon. Member for Exeter or my hon. Friend the Member for Gravesham.

I wish to state explicitly that I make no criticism of the staff at Legatum, nor those people who have engaged with its charitable work, nor members of the public, nor, clearly, Members of this House who have dealt with this institution. I have thought long and hard before making this statement, but I have done so because I believe, and the five of us believe, that it is in the national interest to do so. If people like Mr Chandler are vulnerable to malign influence—maybe he is an innocent party in this, who knows?—especially if the information on them is covert, that matters to our democracy.

In November 2017, the Prime Minister highlighted the danger from Russia of subversion. I take my lead from her when she said that the Russian regime was trying to “undermine free societies”. I also read the excellent piece in The Sunday Times this weekend looking at how Russian bots may have manipulated elections. One of the problems in elections is that if they are manipulated successfully, the winning side does not want to know and the losers plead sour grapes, so the answer is to do what we can to strengthen our electoral system before it is too late.

Chris Bryant Portrait Chris Bryant - Hansard
1 May 2018, 3:38 p.m.

I commend the hon. Gentleman for what he has said and fully concur with what he has argued—I have seen the papers as well and I have come to the same conclusion as him. Does he think that the Magnitsky clause will make a significant difference in our being able to tackle this kind of hidden pervasive influence in British society and British politics?

Bob Seely Portrait Mr Seely - Hansard
1 May 2018, 3:39 p.m.

Anything that helps us is important because we need to keep our society free of covert and malign influence. I was in the States last week, as the hon. Gentleman knows, and I am working with Congressmen there and in Canada, Australia and New Zealand, so that we can combine best practice. That is important because a counter-propaganda Bill is going through the United States Congress—do we need that here, etc.?

If I see information of this kind, I have a choice: I can disregard it and become complicit or, if it is genuine, I can put it in the public domain. It might be that Committees will wish to have access to this information, and I suspect that those who have it will provide it to any of the six Committees investigating Russia, if they wish to do so. It might be that Mr Chandler can provide a satisfactory explanation or argue that these relationships, if they existed, are now historical or have been misrepresented in the documents. I do not use privilege lightly, Mr Speaker. He might wish to offer evidence, written or oral, to any of those six Committees, whose work I am supporting, in a modest way, as secretary to the Russia steering group. I look forward to his response— I am quite sure there will be one.

I will be writing to the Prime Minister in the coming weeks to suggest further measures to strengthen our democracy and electoral system. The struggle of our generation is how we deal with authoritarian states and their actors, official or proxy, who use free and open societies to damage those free and open societies. We need to do something about it. Increasingly, Members now see that covert malign influence from authoritarian states, most commonly our friends in the Kremlin but also elsewhere, is a real and present danger to our nation, to our financial system—hence this debate—and to the transparency of our democracy and electoral system, not to mention the Kremlin’s ability to conduct acts of violence and murder on our soil. We have a duty to speak up and to use this House for the public good. That is what I am doing now.

Mr Speaker Hansard
1 May 2018, 3:41 p.m.

Order. I want to call several more colleagues and therefore there is a premium upon brevity.

Sanctions and Anti-Money Laundering Bill [Lords]

(2nd reading: House of Commons)
Bob Seely Excerpts
Tuesday 20th February 2018

(2 years, 5 months ago)

Commons Chamber
Read Full debate Bill Main Page
Foreign and Commonwealth Office
Alex Norris Portrait Alex Norris (Nottingham North) (Lab/Co-op) - Hansard
20 Feb 2018, 9 p.m.

As I have been sitting here listening to the debate, I have had a growing sense of déjà vu with regard to a similar sedentary vigil just before the recess when we debated the Nuclear Safeguards Bill. That is an important piece of legislation that we need as we leave the EU and seek to quickly and safely reproduce the benefits of our EU membership. It is in the same vein that we consider sanctions and anti-money laundering provisions. We must have arrangements in place not only because sanctions and anti-money laundering provisions are important causes, but because we have international duties to fulfil. This must be done, as is widely accepted across the Chamber.

Nuclear safeguards are of course high-impact, but also relatively easy to define and understand. That makes things a bit easier. We have civil nuclear matter, we need it, we want to move it, and we do not want it to fall into the wrong hands. Our current arrangements work, and we want to continue to have the same level of protection and safeguards. We cannot say the same about this area of murky finance, with money moving across boundaries and individuals profiting from criminal activities and then seeking to legitimise that wealth elsewhere. This is an ever-changing world, so our arrangements must be able to keep up. As we have heard very powerfully from Members throughout the Chamber, our current arrangements leave a lot to be desired. It would therefore be remiss of us just to lift and shift current systems; we should seek to improve them, and I will suggest a couple of ways in which we might do so.

First, I want to address the issue of the EU’s fifth anti-money laundering directive. This has now been agreed in principle between the EU and member states, of which we are still one, but it is scheduled for a phased introduction from next year, presumably falling during a post-Brexit transitional period. We have not had a lot of clarity from those on the Treasury Bench about how we will approach this. I hope that we will not see a request for us to concede a boatload of secondary legislation to Ministers. There was considerable interest about that in the other place, and I think we can do better. Even the hon. Member for Amber Valley (Nigel Mills), who is not currently in his place, said that we ought perhaps to transpose the directive into our law. When we hear the hon. Gentleman talk about transposing EU directives, we really are in a special place.

So what could we do about our sanctions regime? Currently, we lag behind the US and Canada. We need a targeted, flexible approach that promotes human rights and protects innocents from paying the price for the crimes of their leaders. That is why we have heard many voices call for Magnitsky-style amendments to the Bill. I add my voice to that. Such provisions allow us to pick and choose public officials from around the world who have committed human rights abuses or violations, and seize their assets and ban their travel. Such sanctions work because they target the wrongdoer specifically. A broader sanction or embargo at a national level punishes all, and often those who can least afford it bear the burden. Instead, such provisions target the people we need to get to. They would give Ministers flexibility and promote our attempts to meet our human rights goals as a country. We could underpin that—I am very keen on this, and it has not been mentioned yet—with humanitarian impact assessments of any sanctions that the Government impose. When our Government seek to impose sanctions, it is reasonable that we ought to have a clear understanding of their impact on the wider community in the affected area.

With regard to the anti-money laundering provisions, I start with the obvious: it is time for a property register. The initial commitment was made by the Government in 2016; we are now told that it will be operational in 2021. That will not do. This Bill is a good opportunity for us to pick up the cudgels and get on with it. Bricks and mortar is an obvious place to start, where we can disrupt the supply chain and follow the money. That would also have benefits in affected communities through releasing properties for people who actually wish to live in them.

That would help us at home, but we need to take on the broader challenge across the world. We will have failed if we get to the end of the process with a gold-standard piece of legislation—as I very much hope we will—but find that those high standards can be easily circumvented through a British overseas territory or Crown dependency. I know that this is controversial and there are strong feelings on it, but while we have a relationship whereby this Parliament has responsibility for defence, security and foreign relations in those territories, we should continue to take a strong interest in money laundering, because it sits at the very root of all those things. When the British Virgin Islands is at the heart of the Panama papers and Oxfam rates Bermuda as the No. 1 worst corporate tax haven, we should want to act and use all the tools that we can. Notwithstanding the qualifiers heard from the Government Benches, it is not too much to ask that we should see a public register of beneficial ownership of companies in the overseas territories and Crown dependencies.

The final way we could improve is by looking at the role of the banking system in preventing money laundering. We know that banks are under pressure to serve the bottom line and that they can have their heads turned when they encounter potentially profitable customers. We also know that relative to estimated levels of money laundering, regulatory fines have been low. When penalties are low, rewards for looking the other way are high. When there is little personal reputational risk, these things can happen.

The current legal framework is inadequate, and we should seek to change it. Two years ago we had a consultation on creating a specific “failure to prevent economic crime” offence, which would have covered money laundering. That was downgraded to a call for evidence, which closed in March 2017. It has been nearly a year, and we have not seen the fruits of that. I know as well as anybody what 12 months can do in life—it has been a big 12 months for me—but it is time we got around to this.

In conclusion, how we approach the Bill will tell us a lot about Britain’s place in the world post Brexit. Do we still believe that we have an outward-looking leadership role? Do we still seek to set high standards for ourselves and others? Are we keeping up with the pace of the modern world and the changing nature of crime? I believe that we ought to want to do all those things, and that we can use this Bill to do so.

Bob Seely Portrait Mr Bob Seely (Isle of Wight) (Con) - Hansard
20 Feb 2018, 9:05 p.m.

It is a pleasure to follow the hon. Member for Nottingham North (Alex Norris), who spoke so eloquently. I welcome the Bill, but like so many other Members who have spoken this evening, I think we should be doing more.

It is not in our interests to have lax standards. It is in our interests to have the highest standards, which I know the Foreign Secretary and others are trying to achieve. The Bill is not just about finance; it is about power. Our finance system—the western finance system—is a source of power. Russian and Chinese oligarchs, and especially the Russians, use our finance system. That gives us influence over them. This is not just about terrorists, dodgy individuals or drug dealers. This is about changing and influencing state behaviour. I very much hope that Ministers will see it in that guise. With new forms of conflict in the world that we inhabit, financial power is a hard bit of soft power. The power to make rich people poor by freezing their assets should not be underestimated because it is a significant source of our influence.

Other Members, such as my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), have spoken eloquently about the lack of Magnitsky elements in the Bill, which concerns me. There are no visa bans in the Finance Bill amendments, and there is no presumption of action. I remind Members that Magnitsky was a Russian lawyer who worked for Bill Browder. He was tortured for several months and murdered, and his dead body was put on trial. That is remarkable, even by Russian standards. It would be nice if the Government had more ambition when it came to the Magnitsky elements of either the Finance Bill or this Bill.

The idea that weak or lax standards help the UK to compete in international money markets and international economies is deeply misguided. We are in danger of wagging our fingers at people like the Russians while allowing their state officials, people close to their regime and those on sanctions lists a free light to live here and use the western system.

EN+ was floated recently in the City. It has been reported that US security officials were concerned about the float and raised issues about it, as it may have been used to pay off loans to VTB, a Russian state-owned bank that is subject to sanctions. If that is the case, I would love Ministers to explain to me why it is a wise move effectively to turn a blind eye while the Russians play the sanctions process that we have put on them.

I will touch briefly on the offshore problem. I congratulate Private Eye on the work it has done in recent years to highlight the effects and the extent of offshore vehicles in the UK. When even in a place such as the Isle of Wight we have property owned by companies based in the British Virgin Islands, the Cayman Islands, Jersey, Guernsey, Luxembourg or Gibraltar, the system is flawed. Lax standards are corrupting for our country and our financial system and it is short-sighted to see it otherwise; I am sure Ministers will agree. When houses in Belgravia and Hampstead are used as glorified Rolexes for the international kleptocracy, we are getting something wrong.

I very much hope that the Minister will pledge to continue to make aspects of the Bill tighter, consider what can be done about the missing Magnitsky elements and make a commitment to having the highest standards in the Bill, rather than following others.

Bambos Charalambous Portrait Bambos Charalambous (Enfield, Southgate) (Lab) - Hansard
20 Feb 2018, 9:10 p.m.

As most hon. Members have stated in this debate, money laundering and corruption are huge issues worldwide. Although I welcome some of the measures in the Bill, I do not believe that it goes far enough.

The Minister for Europe and the Americas has already been made aware—it was mentioned in an intervention—that, as part of the recently agreed fifth EU anti-money laundering directive, all EU member states will be required to have public beneficial ownership registers by 2019. I am sure he will confirm that, whether or not the United Kingdom is part of the EU at the time of the directive’s implementation, the United Kingdom would not want any measures that are weaker than those in the directive.

This raises the question of what should happen in the overseas territories. The UK has made a start on a public beneficial ownership register, but more needs to be done in the overseas territories. As my right hon. Friend the Member for Barking (Dame Margaret Hodge) pointed out, the problem is that many overseas territories are tax havens and as such they are home to many offshore companies willing to offer complete anonymity to their clientele, with very few questions asked.

We should note that, despite overseas territories having small populations, half of all global trade passes through them because they are tax havens, and the vast majority of the transactions are carried out by offshore companies. Let us, for example, take the British Virgin Islands. Despite having a population of only 28,000, it is home to an estimated 500,000 offshore companies, which is 40% of the total number of offshore companies in the world. Many of these offshore companies have complete anonymity and are shell companies working with nominees and powers of attorney to move around vast amounts of money. Most people faced with that information would conclude that there is something dodgy going on.

My right hon. Friend gave examples of corrupt and illegal practices that have occurred in overseas territories tax havens, all of which are because of the opaqueness of the systems that they operate. A fully functioning central, public beneficial ownership register in the overseas territories would be no cause of concern to companies carrying out legitimate business activity. As more and more countries agree to adopt a public beneficial ownership register, it is inevitable that the overseas territories should follow.

We need to make sure that money offshore in these tax havens is not being used for illegal purposes. If there is an issue, it is that overseas territories have built their wealth on secrecy. If that is the case, the Government should support the overseas territories to make sure activity is based on a legitimate and transparent model of business. The Government should give support to the overseas territories as they transition from financial secrecy to openness.

There is no reason why corporate ownership transparency should cause any problems in the provision of legitimate financial services, especially considering that many other countries will be adopting the principles of transparency registers. The people who are losing out the most are those in developing countries. They are in the greatest need and the billions being diverted away from them could literally be costing lives.

I will conclude by saying that a fully operational public beneficial ownership register in the overseas territories will greatly help to curtail money laundering, corruption and criminal activity, but much more needs to be done than is set out in this Bill.