Sanctions and Anti-Money Laundering Bill [HL]

Lord Beith Excerpts

Wednesday 17th January 2018 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I see the beguiling simplicity of the noble Baroness’s amendment, and after the powerful speech she made in moving it and the graphic examples she gave, I find myself carried along on an emotional tide. But the House needs to be aware of some of the unintended consequences that may flow from this if we are inclined to accept it.

The amendment refers to the Companies House regulatory scheme as being the standard to which we should aspire. Companies House is a recipient of information; its interrogation is pretty limited. Noble Lords may be inclined to look in detail at the amendment and say, “Yes, but this is a higher standard because we are dealing with the section on persons with significant control”. As is shown in the register of your Lordships’ House, I am a person with significant control of a company, and I have never been asked anything at all about my entry. I hope—I intend—that it is accurate, but nobody at Companies House has ever approached me to say, “Is this correct?”; it is just accepted. There is therefore a danger that the seductive idea of a public register means that it is somehow better verified than the situation we now have. That is my first concern about the amendment.

The second relates to a point made by other noble Lords. If you raise the standards or increase exposure and transparency in one area, you merely drive business to another corner of the world. My noble friend Lord Naseby referred to Singapore and Hong Kong but there are other places a great deal less attractive to which business might be driven. As I understand it, each of the overseas territories has already established a proper register of beneficial owners of companies which can be interrogated at all times by our law enforcement agencies. My noble friend Lord Leigh of Hurley referred to the fact that the efficacy of that regime is to be tested in a review which will be put before Parliament in the next couple of years. Really, the question at issue is whether there should be public access to that register. Those are the words that make the difference, but in my view in the present situation that will have little practical effect. At present, our law enforcers can interrogate the register. If the public are also able to access it, the result might be that it will drive people to areas of the world where we cannot have even a vestigial chance of enforcing the proper levels of law.

Like my noble friend Lord Flight, I absolutely understand the purpose behind the noble Baroness’s amendment, but in my view the best should not be the enemy of the good.

[Lord Beith (LD)]

My Lords, I am not wholly persuaded by the amendment of the noble Baroness, Lady Stern, although I am entirely persuaded by her argument that we have to address the grotesque abuses which, for example, came to light in the Panama papers and which involve, among other things, use of the secrecy of jurisdictions and the weakness of law enforcement.

We have to remind ourselves that the primary purpose of the work begun under the UK coalition Government in this area was that law enforcement and tax authorities should be able to gain access to reliable registers in real time. That objective is increasingly being satisfied in relation to the Crown dependencies, which are not the subject of this amendment, and in a number of the overseas territories. That is the primary objective. A strong case can be made for having public, open registers but it has to be recognised that that policy is not accepted in a great many substantial jurisdictions and that business will flow to some of those jurisdictions, including perfectly legitimate business that has nothing to do with the nefarious objectives described by the noble Baroness.

The only way to make a reality of open registers is through some form of international agreement, which would of course also change the constitutional position in relation to the overseas territories because the UK has responsibility for their external relations. However, from a practical point of view, the campaign for greater transparency seems to need to concentrate on securing some kind of international agreement which will drag all but the few most disreputable jurisdictions into agreement.

As it stands, the amendment risks undermining a process which seeks rather more to respect the constitutional development of our overseas territories. Unlike France and indeed even the Netherlands, the United Kingdom does not treat overseas territories as part of the home country—it does not treat them like local authorities in our country. Occasionally, overseas territories have asked to be treated in that way and have been vigorously denied that alternative. We seek to carry out constitutional and democratic development in overseas territories and to encourage a high degree of legislative autonomy that retains certain responsibilities, particularly for compliance with international agreements. I think that I prefer that model. If we can better achieve the objectives which the noble Baroness, Lady Stern, has rightly set out without reverting to a more colonial model of dealing with overseas territories, that will be a preferable route.