Criminal Finances Bill

James Berry Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 25th October 2016 Commons Chamber

[James Berry (Kingston and Surbiton) (Con)]

I rise to support the Bill—not to complain about what is not in it, but to praise the Government and agree with them on what they have put in this bold Bill.

I should declare I am a barrister and have represented a number of police forces across the country. That experience has taught me two things. The first is a genuine admiration for the men and women of our fantastic police service for their dedication to the task of keeping us safe. Thanks to their excellent work, led by Chief Superintendent Glenn Tunstall, Kingston is now the safest borough in London. However, as I learned at our recent police awards, even in London’s safest borough, there are humbling examples of everyday heroism and compassion by our police officers. We do not hear enough about them, but we are truly grateful.

I pledged at the election to do what I could to give the police the tools they need to do their job. That leads me on to the second thing my experience with the police has taught me: there are a number of powers in this Bill that the police have been, and still are, hamstrung without —where they are powerless to act in the face of wrongdoing.

Before talking about those powers, I want to make a broader point. I am proud to serve as a London MP, representing those who live and work in the best city in the world. London is the world’s financial services capital and I know the Government are working as hard as they can to ensure that that remains the case after Britain’s exit from the EU. But over the last few years there have been reports that London is becoming the capital of something rather more insidious—money laundering.

Following the global financial crisis, property in London has become one of the safest investments in the world. Rich criminals and money launderers are attracted to it in the same way as people who make their money legitimately. Put shortly, Londoners want this stain removed from their city. The Bill will help to do that.

It is not just London: the National Crime Agency assesses that billions of pounds in proceeds of international corruption are laundered into or through the UK every year. Her Majesty’s Revenue and Customs estimates that £4.4 billion was lost to the Exchequer last year alone due to tax evasion in the UK. Globally, laundered money is estimated to amount to 2.7% of GDP, or $1.6 trillion. To put that in perspective, there are only nine countries in the world with GDPs greater than that.

As the leading nation in the world for soft power, and as a nation that is trying to lead the global debate on anti-corruption, we need to ensure that our house is in order. The Bill is part of the Government’s wider efforts to ensure that that is the case. I want to touch on a few aspects of the Bill.

The first is unexplained wealth orders. We have seen many cases in the press where individuals suspected of grave criminal offences are living lavish lifestyles well beyond what any legitimate income they could evidence could possibly support. It is insulting to the many hard-working people in the UK who play by the rules and go to work day in, day out to earn an honest living to support themselves and their families to see this happening. It creates a feeling of impunity in the upper echelons of criminality.

Unexplained wealth orders will require those suspected of being involved in, or associated with serious criminality to explain the origin of assets of over £100,000 that appear disproportionate to their known income. A failure to provide a response, or a satisfactory response, could lead to a presumption that the property in question is recoverable in civil proceedings.

Unexplained wealth orders will have to be made by a High Court judge on application by a relevant law enforcement officer. Even with those protections, as might be expected of a lawyer, I ask the Minister to give a little more assurance about the nature of the protections in place, given that the measure does reverse the burden of proof that normally rests on the Crown. I am sure that he will be able to provide that reassurance, and I entirely agree with the hon. Member for Dumfries and Galloway (Richard Arkless) that that appears to be proportionate in this case, given the severity of the situation that law enforcement officers face.

Secondly, on enhanced forfeiture powers, I have spent many mornings in magistrates courts up and down the country making applications under the Proceeds of Crime Act 2002. I have some familiarity with this area. The current powers under the POCA apply to cash. The police may seize it when they have reasonable grounds to suspect that it is the proceeds of crime. They may then apply to the magistrates court to forfeit that cash. A classic example is a shoebox found in a house containing some drugs and rolls of cash. However, the provisions apply to cash alone. The more sophisticated criminals do not have rolls of cash and a little bit of cannabis or cocaine in a shoebox. They have their money in bank accounts and in high-value items of personal property, which are much harder to trace and much easier to move around, domestically and internationally. Such items include precious metals and jewels—and indeed betting slips. I am grateful to the hon. Member for Dumfries and Galloway for drawing those to the Government’s attention. His information appears to be being acted on. The seizure and forfeiture provisions in the Bill extend the cash seizure powers in POCA to bank accounts and high value-items. That will mean that the law and the police’s powers are keeping up with the ways in which crimes are being committed. That is a welcome move.

I now turn to part 3 and the new offence of corporate failure to prevent tax evasion. This is another manifesto commitment that the Government are delivering on today. It is already the case that a taxpayer who fraudulently evades a responsibility to pay tax commits a criminal offence. A person such as a banker, accountant or tax adviser who knowingly assists a taxpayer to fraudulently evade a responsibility to pay tax is committing a criminal offence, but the company employing that banker, accountant, tax adviser or other professional who criminally facilitates tax evasion does not commit any offence. The company is outside the reach of the law. The Bill aims to bring those companies within the reach of the law, not to duplicate the criminal liability of their employee or agent but to criminalise a failure by the company to prevent those acting on its behalf from facilitating tax evasion. It will criminalise the company for allowing an atmosphere to be created in which that tax evasion is possible.

That might seem draconian, but it is absolutely necessary. Companies will have a defence, much as they do under health and safety legislation, if they can show that they had reasonable prevention procedures in place. The new offence will be the stick that will drive up companies’ efforts to ensure that their internal procedures do the utmost to prevent their employees from facilitating tax evasion. It will drive up standards in the whole sector, and that is long overdue.

[Richard Arkless]

I am listening with great interest to what the hon. Gentleman is saying. Does he agree that there is a real case to be made for extending the provisions on corporate economic crime beyond the tax evasion issues covered by the remit of the Bill?

[James Berry]

That is certainly something that could be looked at and consulted on, but the Bill is achieving a manifesto commitment to do exactly what it says on the tin. That is what the Government are trying to deliver today.

[Richard Arkless]

rose—

[James Berry]

I will carry on, if I may.

[Mark Tami (Alyn and Deeside) (Lab)]

Will the hon. Gentleman give way?

[James Berry]

No.

I hope that this provision will have the same effect that health and safety legislation has had, with companies taking the lead in rooting out bad practice to avoid being liable themselves for incidents caused by their employees. Some businesses might dismiss this as red tape, but if it is red tape, it is important red tape that is focused on the aim that it is trying to achieve. It is important to ensure the integrity of our world-leading financial services sector in London, and these measures have been welcomed by many in the industry, including the chief executive of the British Bankers Association, even though I do not necessarily support the utterances he made earlier this week.

I have touched on just a few of the provisions in the Bill. It also contains many tidying-up provisions that are extensions of existing laws and that are based on feedback given to the Government by the police and law enforcement agencies on the deficiencies in their current powers. That approach is to be warmly welcomed, because when it comes to the fast-moving world of criminality that our police are trying to prevent and detect, we in this House must be fleet of foot. I believe that the Government are achieving that today. I am sure that hon. Members on both sides of the House will welcome the aims of the Bill unreservedly, and I hope that by the time it has been through its Committee stage, all its clauses will have been accepted.