Oral Answers to Questions

Peter Dowd Excerpts

Monday 22nd May 2023 Commons Chamber

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

2. What steps her Department is taking to help tackle antisocial behaviour.

[Peter Dowd (Bootle) (Lab)]

17. What steps her Department is taking to help tackle antisocial behaviour.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

19. What steps she is taking to reduce antisocial behaviour.

--- Later in debate ---

[Peter Dowd]

According to a joint letter I received from the Home Secretary and the Levelling Up Secretary on 27 March 2023:

“Tackling antisocial behaviour is an absolute priority for this Government.”

In the real world, how can 450 fewer police officers in Merseyside since 2010, and 69p per person invested in the immediate justice pilot, be classed as anything approaching tackling antisocial behaviour?

[Suella Braverman]

I am pleased that, thanks to this Government’s commitment, Merseyside has received millions of pounds of increased funding compared with previous years, but, most importantly, there have been seven rounds of safer streets fund projects in Merseyside, with 2.9 million in total provided over four rounds. I am glad that Merseyside has been chosen as one of our pilot areas for our immediate justice scheme, which is one way we will kick antisocial behaviour.

HM Passport Office Backlogs

Peter Dowd Excerpts

Wednesday 27th April 2022 Commons Chamber

[Kevin Foster]

I thank my right hon. Friend for his comments. We have increased the capacity of the counter service, which is similarly seeing much-increased demand. We certainly accept the point that there need to be significant improvements in the performance of the advice line and the MPs’ line, and we are already engaging with Home Office teams about how we can get more resources in so that people can have their queries answered, particularly when Members of Parliament raise issues on behalf of those with compelling and compassionate reasons for travel and therefore need their application to be expedited.

[Peter Dowd (Bootle) (Lab)]

I have a passport office in my constituency; may I say gently to the Minister that his rather transactional and at times nonchalant approach will not go down well with constituents throughout the country? I have had queries from all over the country because of this situation, and delays have been reported for months on end. Will the Minister confirm whether the backlog is reducing or increasing and how significant that might be? Will he consider compensating those who may have lost holidays outside the times allowed, or the people who have even lost jobs as a result of the problems at the Passport Office?

[Kevin Foster]

I am disappointed to hear the hon. Gentleman’s comments and the tone of them. We have not been nonchalant. Although others have not shown too much interest until now, the teams—including those in the hon. Gentleman’s constituency—have been working hard. In some cases, they have been working extra hours over weekends—for which I pay tribute to them—to produce a record output that is far above any other Passport Office output on record.

What the hon. Gentleman says sounds rather odd when we are recruiting extra staff and making sure that cases can still be expedited if there are urgent demands. We were clear last year that we put the service standard at 10 weeks to make sure people knew that they may need to allow extra time. Last year, we sent 4.7 million texts to those who had not renewed their passport to try to encourage more people to get their passport applications in. Far from our being nonchalant or uninterested, a lot of work has been done. It is a shame that the passport teams working hard in the hon. Gentleman’s constituency are perhaps not getting some of the credit they deserve.

Economic Crime (Transparency and Enforcement) Bill

Peter Dowd Excerpts

2nd reading
Monday 7th March 2022 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

The Bill is a first step, but the proof of the pudding will be in the eating. It should not have taken the tragic and brutal invasion of Ukraine to see Government action on economic crime. For too many years, we have heard only warm words from the Conservatives. Our British overseas territories are often at the centre of these networks of dodgy financial flows, depriving citizens everywhere through tax avoidance and evasion. We have become the No. 1 safe harbour for criminals and kleptocrats the world over, and that is a shameful record. Despite this, part 1 of the Bill, on the registration of overseas entities, has sat on the statute book in draft form since 2018. Why? Indeed, only a couple of weeks ago, the Government had pulled their economic crime Bill from the legislative calendar altogether.

Because they have avoided this matter for years, the Government are now forced to rush this complex legislation through in a day. Over that same period, Labour Members have repeatedly requested for today’s register to be introduced, along with several other corporate transparency measures proposed in our tax transparency enforcement programme. We have also called repeatedly for the introduction and strengthening of Magnitsky provisions. No one knows quite what has influenced the Government’s dither and delay on economic crime. Coincidentally, lawyers at the Good Law Project surveyed Russian donors to the Conservative party at the weekend and found that not a single one has been included on the sanctions list. Perhaps that is pure chance, but perhaps not.

The register is crucial to demonstrating how UK property is still used to stash illicit wealth. Transparency International has identified that £1.5 billion-worth of property in the UK has been bought by Russians accused of corruption. The glaring hole in part 1 of the Bill was the 18-month transition period for the full register, which has been reduced to six months. Nevertheless, six months is plenty of time for people to dispose of assets through their army of lawyers—we have called for 28 days. Does the Minister accept that six months is untenable?

A coalition of organisations including two all-party parliamentary groups, Transparency International and Tax Justice UK suggest amending the money-laundering regulations to strengthen due diligence on property transactions in the interim. This is one way of limiting the obvious get-out offered by a six-month compliance timeframe.

The sanctions for failing to comply with the register are not sufficient either, given the plentiful resources of those who wish to avoid the spotlight. The Government have again sought to address this via amendment. One wonders why they sought to introduce such a lax framework in the first place.

Clause 18 gives wide powers to the Secretary of State to exempt individuals from the register. In particular, the exemption

“in the interests of the economic wellbeing of the United Kingdom”

seems pretty dubious. Can the Minister give examples of circumstances in which such exemptions will be applied? After all, many of the people who will hopefully be targeted are ostensibly in this country because it is in the interests of the economic wellbeing of the UK. What has changed?

Clause 4 allows for a statement to be provided to the register that does not identify the beneficial owner of an entity. Why? Little guidance is given in the schedules on the circumstances in which such a move would be appropriate. I cannot think of many such circumstances, so will the Minister enlighten the House? Allowing lawyers to submit excuses in place of a beneficial owner will surely be a major stay-out-of-jail-free card, almost literally, for anyone hoping to maintain their secrecy. This provision should be removed or much more narrowly defined.

Finally, there is the matter of our Crown dependencies and overseas territories. While serving as shadow Chief Secretary to the Treasury, I was among the many calling for public country-by-country reporting by multinational companies, to ensure they are not engaging in tax avoidance. Public reporting has still not been brought forward by the Government, despite the clear support of this House. We cannot allow the Crown dependencies and overseas territories to be used to undermine stronger rules on beneficial ownership in Britain.

I hope hon. Members think hard about this, and that this has not just been a Damascene conversion at the last moment. This awful war shows that the Conservative party can no longer dither and delay. The time for half measures has long passed. We must now act fully and decisively to end the UK’s reputation as a sanctuary for economic criminals.

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[Paul Scully]

I am thinking of the word bailiwick rather than bivouac, but I hope the hon. Lady will agree that our being able to reflect on that legislation and align it with the broader reforms of Companies House that we have subsequently announced has enabled the broader legislation to work together and be more effective. That has been absolutely essential in ensuring that the new requirements are workable and proportionate and the register strikes the right balance between improving transparency and minimising burdens on legitimate commercial activity.

[Peter Dowd]

On Second Reading of the Sanctions and Anti-Money Laundering Act 2018, the Prime Minister, who was then Foreign Secretary, said:

“The aim of the Bill is to grant Her Majesty’s Government full power over British sanctions policy after we leave the EU and, in a memorable phrase, to take back control.”—[Official Report, 20 February 2018; Vol. 636, c. 77.]

Does the Minister think we have used the full power in the fullest way to take sanctions against those we think are a threat to us in economic terms?

[Paul Scully]

I thank the hon. Gentleman for raising that because the now shadow Chancellor boasted afterwards how she managed to weaken the Government’s approach during the passage of that Bill. I believe we have gone as far as we can, but we need more measures, which is what today is all about. This is the first half of those measures to make sure we can introduce the remaining economic crime Bill, which includes Companies House reform.

We have tabled an amendment to reduce the transition period from 18 months to six months, but I will outline a little further how we can make this work effectively to ensure that people cannot just move money out of this country.

Delivering Justice for Victims

Peter Dowd Excerpts

Thursday 9th December 2021 Commons Chamber

[Tom Pursglove]

I thank my right hon. Friend for his question. We had a good debate on Tuesday evening, at the end of business, on these matters, and I look forward to meeting him to discuss this in greater detail. One key issue that I raised in responding on Tuesday night is that there are always needs that we need to look at. It is important that these matters are considered on a cross-government basis and that the support in place for individuals in the many different circumstances they find themselves in, particularly the mental health support, is kept under constant review. I encourage him to take part in the consultation and makes his views known.

[Peter Dowd (Bootle) (Lab)]

I welcome the Minister’s statement today and I hope that we are able to deliver more justice for victims, because being a victim is for life. It is important to bring personal circumstances to the House, in order for people to understand the situation. In my case, the person who was responsible for the death of my daughter in a hit-and-run accident was sentenced to prison, and so got a custodial sentence, but of course they are eligible for home detention curfew. So this is not just about what happens before and after; it is about what happens throughout the whole process. We got a phone call from the probation service about this home detention curfew process, but it was transactional. I am not criticising the people involved or the system per se, but it was a transactional process. We got no guarantee that we would be listened to, as we were in relation to a victim statement—we got no guarantees that we would be taken into account at all. So it is important that that point is incorporated in this: that victims do have the formal right to be heard even after the actual court process itself.

[Tom Pursglove]

I am grateful to the hon. Gentleman for bringing his personal experiences to the House this afternoon. That must have been incredibly difficult to talk about, and I can only imagine the impact that that whole experience has had on him and his family—it is truly heartbreaking. I wonder whether he might be willing to meet me to discuss this in greater detail. The point I would make is that I always expect the criminal justice agencies to be engaging with people in an incredibly sympathetic and understanding manner. I would appreciate the opportunity to understand a little more about his experience, so that we can try to make sure that that never happens again and that any issues are dealt with properly. I look forward to meeting him to discuss it.

Cyber-Fraud in the UK

Peter Dowd Excerpts

Tuesday 25th May 2021 Westminster Hall

[Peter Dowd (in the Chair)]

I remind hon. Members that there have been some changes to normal practice to support the new hybrid arrangements. Timings of debates have been amended to allow technical arrangements to be made for the next debate. There will also be suspensions between each debate.

I also remind Members participating physically and virtually that they must arrive for the start of debates in Westminster Hall, and that Members are expected to remain for the entire debate.

I must also remind Members participating virtually that they are visible at all times, both to each other and to those of us in the Boothroyd Room. If Members attending virtually have any technical problems, they should email the Westminster Hall Clerks’ email address, which is [e-mail]. Members attending physically should clean their spaces before they use them and as they leave the room. I also remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall.

Birmingham Attacks and Extinction Rebellion Protests

Peter Dowd Excerpts

Monday 7th September 2020 Commons Chamber

[Kit Malthouse]

I welcome my hon. Friend’s unequivocal support for the police, and she is quite right that Hertfordshire police did a good job outside the printworks in freeing up that fundamental liberty. We perhaps sometimes take for granted the fact that a newspaper giving us information from across the world will drop reliably on to our doormat. It would be treasured across the world to have such a vigorous and efficient press as we do.

I give my hon. Friend my commitment that we are in constant conversation with police forces and the National Police Chiefs’ Council about honing our response to protests in the light of new and emerging tactics. Over the last couple of years, we have seen those tactics from XR, and we will have to think hard about how we can ensure that her liberties and those of her constituents are maintained, while their right to protest is facilitated.

[Peter Dowd (Bootle) (Lab)]

I understand that some of my constituents were victims of the brutal attack in Birmingham on Sunday, so above all I want to join in passing on my condolences to the family of the young person killed in that attack. I cannot possibly imagine the distress, grief and disbelief they are feeling; they must be inconsolable and bereft. I also want to say to the families of the seven other people attacked, some very seriously, that I hope their loved ones will make the fullest recovery, both physically and psychologically.

The responsibility for this attack lies solely with the person who did it, but we all have a responsibility to support those affected by the attack. I welcome the Minister’s assurances that the necessary resources will be given to West Midlands police to investigate this particular matter. In addition, will he assure Members of his commitment to victims and their families being given all the support they need in the coming weeks, days and months?

[Kit Malthouse]

I welcome the hon. Gentleman’s remarks. He is right: all killings are senseless, but there is something particularly tragic about people being killed and injured who had gone into a city centre to have fun—to enjoy the night-time economy post-lockdown, never expecting to encounter this kind of awful tragedy. So I join him in extending our sympathies, and I know that West Midlands police has deployed significant family liaison resources to support families both from the city and who were visiting from outside who got embroiled in this awful tragic act.

Preventing and Combating Violence Against Women and Domestic Violence (Ratification of Convention) Bill

Peter Dowd Excerpts

Report stage: House of Commons
Friday 24th February 2017 Commons Chamber

[Mr Speaker]

Well, the Government Whip says from a sedentary position, “Shame.” I have a sufficient burden, which I am very happy to seek to discharge to the best of my ability, but responsibility for Government explanatory statements is not part of that burden. Moreover—if I can bring a glint to the eye and a spring to the step of the hon. Member for Christchurch (Mr Chope)—it might be my observation that he, too, is not responsible for the content of Government explanatory statements. They are intended to try to help the House and to facilitate debate, but they enjoy no formal status whatever, so I do not think the hon. Gentleman should be troubled by the matter, although it may be something on which he will wish to expatiate at a later stage. We shall see.

[Peter Dowd (Bootle) (Lab)]

Not really.

[Mr Speaker]

Well, we shall see.

We begin with new clause 6—and I hope we can now begin with new clause 6—with which it will be convenient to consider the new clauses and amendments listed on the selection paper.

Criminal Finances Bill (Sixth sitting)

Peter Dowd Excerpts

Committee Debate: 6th sitting: House of Commons
Tuesday 22nd November 2016 Public Bill Committees

[Peter Dowd (Bootle) (Lab)]

This morning I was indicating that the Government also need to tackle the facilitators of corruption—by that, I mean those institutions that fail to conduct due diligence on their clients. The UK anti-corruption summit committed countries to pursuing and punishing those who facilitate corruption, and the new clause reaffirms Britain’s commitment to do so.

The failure to include such measures in the Bill will lead to many of our partners accusing us of hypocrisy and double standards; it will severely damage our prestige abroad, or will have the potential to damage our prestige abroad; and it will undermine our reputation. I find it perplexing, as do many others, that not a single bank has yet been criminally prosecuted for handling the proceeds of corruption, despite the fact that they may have been fined for doing so. This is not just about banks, but about some of the people in the banks—that is the important thing to take away. My constituency is similar to those of other Members, in that as well as having lots of local branches, Santander has 2,000 people based there. I am certainly not in the business of pointing the finger at everybody in the banking sector—it is important to make that point.

In March 2012, Coutts was fined £8.75 million by the Financial Conduct Authority for serious systemic failings that resulted in “an unacceptable risk” that Coutts had handled the proceeds of crime, yet despite that fine, in April 2016 Swiss authorities investigated whether money from the 1Malaysia Development Berhad scandal had ended up in Coutts’ bank accounts, which suggests that regulatory action alone is an insufficient deterrent against laundering corrupt proceeds. From that instance, it is clear that an extension of a failure to prevent money laundering offence would significantly enhance the scope for criminal sanctions.

We should not forget that the cost of fraud and money laundering greatly exceeds the cost of tax evasion. In 2016, Her Majesty’s Revenue and Customs estimated the tax gap to be £36 billion, of which tax evasion accounted for £5.2 billion. Some witnesses last week believed it to be higher. In May 2016 the annual fraud indicator put the cost of fraud to the UK economy at £193 billion. The cost to the public sector is £37.5 billion, with procurement fraud costing as much as £10.5 billion a year. We are talking about significant figures, which is why we need significant action. I am pleased that the Government are taking significant action but we want to push them further. The National Crime Agency estimates that billions of pounds of suspected proceeds of crime are laundered through the UK every year. That money, if accounted for, would be more than enough to help fund a whole range of services in the country.

The Crime and Courts Act 2013 specifies that certain economic crimes, which include fraud, money laundering and false accounting, as well as bribery and tax evasion, can be dealt with by way of a deferred prosecution agreement. The absence of an extension to a failure-to-prevent offence to the other economic crime offences listed in the Act results in a disparity in how different economic crimes, which all cause significant damage to the taxpayer, can be dealt with by prosecutors.

New clause 6 would also improve corporate governance. Companies are already subject to criminal law for all the additional offences listed in the amendment, although currently on the basis of the “directing mind” test. In addition, companies are required under FCA regulations to have effective systems and controls in place to prevent themselves being used to further financial crime, including money laundering.

At the end of the day, we are trying to get the message across to the Government. Mostly, in broad terms and in specific situations, the Government have got that message, but it is the duty of the Opposition to push the boundary a bit more where we feel that the Government have not acted as forcefully as they could, in the light of what I have just said about scale, and in the light of the comments we heard from our witnesses last week.

[Richard Arkless (Dumfries and Galloway) (SNP)]

We broadly support new clause 6, tabled by the Opposition, which seeks to extend corporate financial crime beyond the provisions in the Bill as drafted—beyond tax evasion and bribery. We are generally supportive. It is worth mentioning the point made by the hon. Gentleman that the provisions in new clause 6(4) defining a criminal financial offence are at the moment corporate offences that require the directing mind to be present. To my mind, the new clause would merely remove the directing mind provision from those offences.

We broadly support the new clause, but I question subsection (2)(b), which states that a defence could be that

“it was not reasonable in all the circumstances to expect B to have any prevention procedures in place.”

Although the provision seeks to catch other offences, it strikes me that the bank or organisation would merely need to demonstrate that it was not reasonable to have prevention procedures in place. To my mind, that defeats the purpose of extending the offence so widely. Nevertheless, we broadly support the new clause, and I would like to hear from the Minister about the Government’s inclination, if not to accept new clause 6, then to recognise that, at some future point, corporate financial crime could be extended beyond the provisions agreed in the Bill.

Another way of framing new clause 6 would be to codify specifically the exact offences within the three Acts. That might have negated the need for subsection (2)(b), which strikes me as a direct negative that might defeat the purpose. I would be interested to hear what the Minister has to say about the thought process, but generally speaking we support extending corporate financial crime, and are provisionally minded to agree to and support the new clause.

[The Minister for Security (Mr Ben Wallace)]

New clause 6 highlights an issue raised on a number of occasions when we heard from interested parties about the Bill last week. I am pleased that the Opposition have tabled it, because it allows me to restate that the Government appreciate those concerns and agree that the damage caused by economic crime facilitated by those working for major companies is serious and affects individuals, businesses and the wider economy, and indeed the reputation of the United Kingdom as a place to do business.

As the hon. Member for Ealing Central and Acton is aware, the Labour Government took action in the Bribery Act 2010 in respect of bribery committed in pursuit of corporate business objectives. The Act is widely respected as both a sound enforcement tool and a measure incentivising bribery prevention as part of good corporate governance. We have already debated the new corporate offence of failure to prevent tax evasion created in the Bill. The provisions followed a process of extensive consultation, as did the Bribery Act 2010. I trust that hon. Members will agree that such an approach is necessary when considering the adequacy of the existing legal framework in matters involving complex legal and policy issues.

In respect of the current law governing corporate criminal liability for economic crime, the Government announced that a consultation would take place in May this year. I confirm that we will publish a call for evidence on the subject. In keeping with the considered and methodical approach adopted for the reforms on bribery and tax evasion, the call for evidence will form part of a two-part consultation process. It will openly request and examine evidence for and against the case for reform and seek views on a number of possible options. Should the responses that we receive justify changes to the law, the Government will then consult on firm proposals. The Government believe that it would be wrong to rush into legislation in this area for the reasons I have given. In the light of my assurances and the forthcoming publication of the call for evidence, I invite the hon. Gentleman to withdraw the new clause.

[Peter Dowd]

As I have said, the job of the Opposition is to push the issue as much as we can. As to what the hon. Member for Dumfries and Galloway said about subsection (2), the reality is that we are building into the new clause the capacity for someone to defend themselves, but not stating categorically, “Someone commits an offence if this happens.” There is room for manoeuvre, which is only right. However, in the light of what the Minister has said and the assurance he has given, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 11

Unexplained wealth orders: reporting requirements

‘In Chapter 2 of Part 8 of the Proceeds of Crime Act 2002, after section 362H insert—

“362HA Unexplained wealth orders: reporting requirements

(1) The Secretary of State must make an annual report to Parliament setting out the number of unexplained wealth orders applied for by enforcement agencies under section 362A of this Act (and by Scottish Ministers under section 396A of this Act) during the previous 12 month period.

(2) The report must also provide information in respect of each unexplained wealth order about—

(a) the value of property subject to the order,

(b) whether the respondent was—

(i) a politically exposed person,

(ii) a person involved in serious crime (whether in a part of the United Kingdom or elsewhere)

(c) whether the order was granted,

(d) the value of the property reclaimed as a result of the order.

(3) For the purposes of this section “enforcement agencies” has the same meaning as in subsection 362A(7).”’—(Tristram Hunt.)

This new clause would require the Secretary of State to make an annual report to Parliament about the number of unexplained wealth orders made each year.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

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The UK property market is attractive to overseas investors and we must ensure that it remains so for legitimate investment. I thank the hon. Gentleman for his comments, his earlier support and the meeting we had last week. I joined him in reading his article in The Observer over the weekend—that makes two readers of The Observer, a double demerit of the readership in that respect—

[Peter Dowd]

Three!

[Mr Wallace]

It is getting higher—we will be getting into double figures for The Observer’s readership if we are not careful.

The best time to examine the register is when we have had a full consultation. We have worked closely with the Scottish Government and the Northern Ireland Executive to ensure that we get it right. As the Scottish National party has pointed out, things such as Scottish limited partnerships were set up often for landowners to avoid ownership obligations way back in 1907, if I am not mistaken. Therefore, legislating is easier said than done, and we want to ensure that we get it right so that there are no loopholes or areas in which people can hide in the shadows, which might happen if we rushed it. We want to ensure that public means public. I therefore urge the hon. Gentleman to withdraw his new clause.

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[Mr Wallace]

I am grateful to the hon. Gentleman for tabling his new clause because it allows us to cover another important element of the tax evasion offence we debated earlier. I also thank him for meeting me to discuss those proposals.

New clause 15 would create mandatory exclusion from public contracts of a relevant body convicted of an offence under part 3 of the Bill. I fully agree that, where an organisation has been convicted under the new offences and grave professional misconduct has taken place, it should be possible to exclude that organisation from public contracts.

I am pleased to say that existing law already allows for that by virtue of the Public Contracts Regulations 2015, which allow for the exclusion of a body from a public contract

“where the contracting authority can demonstrate by appropriate means that the economic operator is guilty of grave professional misconduct, which renders its integrity questionable”.

That is quite a low threshold if you ask me; nevertheless, it allows us to do it. I know the hon. Gentleman will be interested in this part, because it is a European angle to his proposal. I am advised that it is not possible lawfully to include a new mandatory exclusion under regulation 57, as proposed by the amendment. Regulation 57 contains a list of offences based on the six categories set out in the EU public contracts directive. The categories outlined in the directive are exhaustive. Case law indicates that member states are not free to add new additional grounds for exclusion to those set out in the directive.

[Peter Dowd]

Not yet.

[Mr Wallace]

I hope the Committee is satisfied that, where there has been grave professional misconduct by an organisation convicted under the new offences, contracting authorities will have the discretion to exclude them from public contracts.

Criminal Finances Bill (Fifth sitting)

Peter Dowd Excerpts

Committee Debate: 5th sitting: House of Commons
Tuesday 22nd November 2016 Public Bill Committees

[Mr Wallace]

Perhaps I may clarify for the hon. Member for Ealing Central and Acton that I said she used the word “neo-imperialism”—I never implied that she wanted to be neo-imperialist, but some people could describe it as that if we were to impose our will on Parliaments in some of our overseas territories.

Clause 38 creates a new offence that will be committed by relevant bodies that fail to prevent persons associated with them from criminally facilitating evasion of taxes owed to a country other than the United Kingdom. We have seen that criminals seeking to provide services to further their clients’ tax evasion will try to operate between the gaps between the legal systems of different countries. The measure will ensure that the UK is not a safe harbour for professional facilitators or the businesses for which they work. The new overseas tax evasion offence can be committed by relevant bodies that are formed or incorporated in the UK, or which are carrying out a business activity in the UK, or where the criminal act of facilitation occurs within the UK.

There is a necessarily broad scope for the new offence. It holds corporations that carry out a business in the UK, or the representatives of which are acting in the UK, to operate to the same high standards as UK businesses. The message is clear. Tax evasion is a crime. It is wrong. It is no less wrong where the revenue loss is suffered by another country. If a body is part of UK plc, or sends people to the UK, it is not okay to allow people to criminally facilitate the evasion of taxes, wherever they are owed.

The offence requires a dual criminality. Essentially, that means that, for a relevant body to be liable, the criminal law of the country suffering the tax loss must recognise tax evasion and the facilitating of tax evasion as criminal offences in their jurisdiction, and the laws must be broadly equivalent to those in the UK.

The offence does not require relevant bodies to have a thorough understanding of the tax laws in each jurisdiction, but rather to ask itself the question, “If we were providing these services to a UK taxpayer client, would this be legal?” If the answer is yes, there is no question of criminal liability under the new overseas fraud offence.

The offence is not about the UK policing the world’s tax affairs. We envisage that a prosecution for the overseas tax evasion offence will take place only where there would otherwise be a failure of justice—for example, where the country suffering the tax loss was unwilling or unable to take action because of an inability to handle a complex international fraud trial, or was unable to investigate and prosecute because of corruption concerns. I will leave my explanation of the clause there and allow the hon. Member for Ealing Central and Acton to speak to her new clauses before I respond.

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mrs Main. The Minister referred to this as the Criminal Finances Bill and the clue is in the name. People who commit an offence and go to prison come out and go on probation. New clause 7 would create a similar thing—a sort of corporate probation order that would allow courts to require bodies found guilty of a UK or foreign tax evasion facilitation offence to take steps to improve their internal procedures and minimize the chance of a person working for that company committing the same offence in future. That would be an important step in encouraging large organisations to take responsibility for those they hire and the actions they undertake, and more importantly in ensuring that financial crime and misconduct is not repeated by others in the organisation.

Before making an application for a probation order, the prosecution would have to consult enforcement agencies. Once a corporate probation order had been issued, any organisation that failed to comply with it would be subject to a fine. Currently, the only remedies a court may impose upon a company convicted of an offence is a fine, disgorgement of profit and compensation. Corporate probation orders would be an additional tool that prosecutors could seek. Courts could impose conditions requiring companies to undertake remedial action to their management and compliance procedures to ensure that the offending is not repeated.

Under the Corporate Manslaughter and Corporate Homicide Act 2007, courts can impose remedial orders on companies to require them to remedy any management failure that led to an offence occurring. This provides a workable pre-existing model for such orders. Under the Crime and Courts Act 2013, if a company is offered a deferred prosecution agreement, or DPA, a prosecutor can require a company to implement a compliance programme or make changes to an existing compliance programme. There is no equivalent power in relation to convictions. DPAs are reserved for companies that self-report their misdemeanours and co-operate with enforcement authorities.

Although prosecutors could, theoretically at least, use financial reporting orders to require a company to provide financial information, under the Serious Organised Crime and Police Act 2005, it is not clear that that would include information on compliance procedures. Additionally, such orders are heavy-handed, require separate court proceedings and require a prosecutor to prove that the risk of reoffending is sufficiently high.

The effect of that discrepancy is a ridiculous imbalance: companies that self-report and co-operate may be subject to greater monitoring of their compliance programme than companies that do not and are convicted. The result is that the companies that most need monitoring of their compliance procedures—those whose procedures did not pick up the wrongdoing in the first place—get none, which is a huge deterrent to self-reporting, and puts a greater burden on enforcement agencies.

The Opposition believe that corporate probation orders are required to remedy that clear anachronism. Companies and defence lawyers have noted the more stringent compliance programme monitoring requirements under DPAs as one factor, among others, that puts companies off self-reporting wrongdoing to the Serious Fraud Office. The discrepancy between what happens under DPAs and what happens on conviction is creating a disincentive for companies to self-report.

At the end of the day, we need to encourage self-reporting in a framework in which companies feel that they are able to work with enforcement agencies to deal with rogue elements or individuals. The alternative would see the continuation of a culture of secrecy in which those at the top deliberately turn a blind eye to what those at the bottom do, and in which financial misconduct is not limited to an individual, but instilled and passed on to others in an organisation.

[Richard Arkless]

The Scottish National party is broadly in support of the new clauses. In particular, a corporate probation order would give an opportunity for an offending company to have its processes meticulously examined to ensure that they are fit for purpose going forward. We support new clause 8 on the potential disqualification of directors, which goes beyond the relevant body offences in the Bill. As a matter of principle, we think it will concentrate minds and ensure the protocols are fit for purpose if the directors at the top of the organisation feel the liability could be at their heels, as it were. I am interested to hear what the Minister has to say.

[The Chair]

Order. I gather that Mr Dowd wants a second bite at the cherry on new clause 8.

[Peter Dowd]

I apologise, Mrs Main. I was going to deal with new clause 8 and was pre-empted, I am afraid. New clause 8 relates to the facilitation of tax evasion offences and the disqualification of directors.

It will be pretty apparent to hon. Members that a central theme to proceedings so far, as promulgated by virtually everybody, is the notion of transparency in the actions of those in positions of stewardship, such as directors of companies. Opaqueness has its advantages, I have no doubt, but when it leads to illegality there must be action to deal with it. Given that, the new clause would require the Secretary of State

“to investigate the directors of a company found guilty of a UK or foreign tax evasion offence to establish whether the directors should be subject to a disqualification order for the failure to have proper procedures in place to prevent agents of that company facilitating tax evasion.”

Under the new offences covering the facilitation of tax evasion, a company could be criminally held to account if an employee commits such an offence. That is a huge step forward. However, there is a danger that senior executives, who are ultimately responsible for ensuring the company has in place the procedures to prevent its involvement in the facilitation of tax evasion, will escape any individual accountability under such an offence. The purpose of new clause 8 is to ensure that, where a company is convicted, the director of that company should be investigated with a view to disqualification, as happens currently when a company is held to have breached competition law, for example.

A perfectly legitimate question is whether new clause 8 is taking a hammer to crack a nut. That has been alluded to in past debates. I contend that it is not, because tax evasion has huge implications for the public purse, not just in lost revenue but in relation to public confidence in the tax system.

--- Later in debate ---

[Mr Wallace]

I thank the hon. Gentleman for his kind words. As the son of a Fifer, I know that one always does well to listen to a Fifer—or one faces the consequences.

I am also grateful to the Scottish National party and The Herald newspaper for raising this issue. It is a genuine issue of abuse, as they have rightly pointed out. We have taken important steps to prevent the misuse of corporations for money laundering, corruption and tax evasion. The UK’s public register of company beneficial ownership went live this year—we were the first G20 country to put such a register in place. At the London anti-corruption summit, we committed to going further and creating a register of the beneficial ownership of foreign companies that own real property or wish to be involved in public sector procurement contracts in the UK.

However, we must not be complacent. Hon. Members have rightly raised the issue of Scottish limited partnerships a number of times. I hope they are assured that I take it very seriously. The stories in The Herald and the intelligence assessments that I have received from our law enforcement agencies are very concerning.

As I committed to do on Second Reading, I have spoken on this subject to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stourbridge (Margot James), who is responsible for small business, consumers and corporate responsibility, and she shares my concerns about the abuse of SLPs. We agreed that we need to get the balance right between ensuring that the UK remains a good place to do business for the law abiding and cracking down on abuse. Her Department recently published a discussion paper that invites views on a number of questions about transposing corporate transparency requirements under the fourth anti-money laundering directive. The catchy name is “Implementation of the Fourth Money Laundering Directive—Discussion paper on the transposition of Article 30: beneficial ownership of corporate and other legal entities”.

[Peter Dowd]

Too pithy.

[Mr Wallace]

I can repeat it for those who want to write it down. That was launched on 3 November. I think that it is a six-week consultation. As a starting point, I strongly urge the Scottish National party to make a submission.

--- Later in debate ---

[Dr Huq]

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 3

Annual reporting: Adequacy of resources

“(1) In Part 12 of the Proceeds of Crime Act 2002 (miscellaneous and general), after section 455, insert—

“455A Annual reports on resources

(1) A relevant authority must, no later than 1 June in each calendar year, prepare an annual report on the adequacy of the resources available from money voted by Parliament for the exercise of any functions of that authority—

(a) under this Act;

(b) in connection with investigations into terrorist financing offences under the Terrorism Act 2000;

(c) under Part 3 of the Criminal Finances Act 2017.

(2) In this section, “a relevant authority” means—

(a) the National Crime Agency;

(b) the Director of Public Prosecutions;

(c) the Director of the Serious Fraud Office, and

(d) Her Majesty’s Revenue and Customs.

(3) The reports prepared in accordance with subsection (1) shall be sent—

(a) in the case of the National Crime Agency, to the Secretary of State;

(b) in the case of the Director of Public Prosecutions and the Director of the Serious Fraud Office, to the Attorney General, and

(c) in the case of Her Majesty’s Revenue and Customs, to the Chancellor of the Exchequer.

(4) The person receiving annual reports in accordance with subsection (3) must lay those reports before each House of Parliament in the form in which they were received no later than 30 June in the same calendar year, together with a statement on plans for future resources to be provided from money voted by Parliament.”.”.—(Peter Dowd.)

This new clause would require the National Crime Agency and other agencies to report annually to Parliament on the adequacy of its resource to fulfil its functions relating to combating financial crime.

Brought up, and read the First time.

[Peter Dowd]

I beg to move, That the clause be read a Second time.

This is not a technical clause. It goes to the heart of transparency of resources for the enforcement agencies concerned. It is crucial that they are adequately funded, given the nature of the task that they are dealing with. They are chasing billions of pounds of evaded tax in relation to crime, with a particular emphasis on concerns around terrorism, and it is therefore perfectly legitimate for Parliament to be directly reported to on the adequacy of resources. That is the starting pitch.

In the evidence session, I, along with other Members, in particular the hon. Member for Portsmouth South, as I recall, asked many questions of witnesses about the resources available to law enforcement agencies. To Detective Superintendent Harman, who heads the national terrorist financial investigation unit at the Met, the hon. Lady asked:

“Are you confident that the enforcement agencies will have sufficient resources to make full use of the new powers in the Bill?”––[Official Report, Criminal Finances Public Bill Committee, 15 November 2016; c. 9, Q8.]

“Yes” was the response from the police officer and the witness accompanying him. I have to say, it is a pleasure to have the police helping us with our inquiries, rather than the other way around.

Clearly, the adequacy of resources goes to the heart of the ability of enforcement agencies to stamp out and tackle abuse within the financial sectors, particularly that which is linked to crime and terrorism. It is self-evident that, if the resources are not there, or if they are not used forensically and wisely, the agencies concerned will certainly not fulfil the intention of the Bill. It is worth reminding hon. Members of the intention of the Bill, as set out in the explanatory notes—I alluded to this in the evidence sessions last week—namely,

“to give law enforcement agencies, and partners, the capabilities and powers to recover the proceeds of crime, tackle money laundering and corruption, and counter terrorist financing.”

It is fair to say the Government could not be any more plain on this matter. The measure is, after all, the Criminal Finances Bill, so the clue is in the title. Given that we all agree with the Government’s intention as set out in the overview of the Bill—in the section relating to its mission—it is incumbent upon us to establish whether the resources are available to effect that good and laudable intention, notwithstanding the view expressed by the superintendent and his colleagues that they felt that they had enough money.

One way of holding the Government to account is to ensure that those intentions are backed up with the wherewithal to carry them out through a parliamentary annual review, given the crucial nature of these issues. All those who were asked about the adequacy of the resources to do the job agreed that the intention of the Bill was sound, and I do not dispute that. However, aside from the enforcement agencies themselves, which felt that they had enough to do the job—I am not sure whether that was in hope rather than in expectation—it is fair to say that most of the other witnesses’ enthusiasm for that element of the equation was not quite as clear-cut, although I would stand corrected and am challengeable on that.

For illustration purposes, Members may recall that when I asked the witnesses representing the Centre for Financial Crime and Security Studies at the Royal United Services Institute, Corruption Watch, Global Witness and Transparency International a question about whether they felt that—in their experience—the resources were available to do the job, there was a bit of a tumbleweed moment, with sideways looks at one another. I read the clear body language—and you do not have to be an experienced psychologist to have spotted it—that in their experience they felt that there clearly were not enough resources, and that they felt that that would hinder the enforcement agencies in doing their job. In response to the question from my hon. Friend for Ealing Central and Acton about the adequacy of resources, the director of the Centre for Financial Crime and Security Studies Mr Keatinge said:

“Resourcing is clearly a major issue. Cynically, one of the reasons for involving the private sector is to harness it to do some of the work…I do not believe we have the resources that we need.” ––[Official Report, Criminal Finances Public Bill Committee, 15 November 2016; c. 69-70, Q150.]

I accept that that is a view, but it is a view that has been reached after asking expert witnesses. We at least have to listen to them and take on board some of the concerns that they had. Moreover, when I followed up with the representative from the Metropolitan Police Authority, the National Crime Agency and the National Police Chiefs Council earlier the response to the hon. Member for Portsmouth South, I felt that they had begun to row back a little on their unequivocal answer to the hon. Lady.

That is why it is paramount that the professionals, and those whose day to day job is to tackle financial crime adequately, are adequately equipped with the resources to do the job. That is why we have to challenge them, and it is our responsibility to challenge them. In a sense, it is Parliament’s responsibility to challenge the Government and the Executive, and one of the best ways of doing that is for the information to be reported directly, rather than articulated through some sort of pontifical process to Parliament. I can inform Members now—I do not think I have to, but I will—that the people the law enforcement agencies are trying to catch are ahead of the game in relation to the crimes that they are committing, and we need to ensure that the enforcement agencies have the resources to do the job.

A clear example of where annual reporting would be effective is in the oversight of the IT system for SARs, which I know the Minister has referred to as being revamped or changed. As far as I am aware, ELMER is designed to process up to 20,000 suspicious activity reports; it is currently processing up to 381,000 of them. Of those, only 15,000 are looked at in detail, as was noted in the Home Affairs Committee’s fifth report of the 2016-17 Session, “Proceeds of crime”. That raises the question of whether reporting that many SARs is simply over the top, and borne out of caution on the part of banks. If so, then that approach wastes a good deal of time for those doing the reporting, and for the receiving agencies, who have to search through the haystack. Alternatively, if the reporting numbers are, to all intents and purposes, a reasonable reflection of concern that has reached a mutually agreed threshold, that raises another question: why are so many reports being ignored, brushed aside or not acted on? The Minister has reassured us that they are not under his office carpet.

--- Later in debate ---

[Peter Dowd]

I started by talking about Parliament being able to have reports from the agencies concerned, given the seriousness of the issue facing us. The Minister, reasonably, told us that 100% of the proceeds will go to the appropriate agencies and be divvied up as appropriate. I completely accept that, in good faith, and repeat the point made earlier: that he is a reasonable man. I do not challenge the Minister’s reasonableness; my challenge is based on the fact that Parliament, given the nature of this issue, is perfectly entitled to receive reports from agencies—no doubt articulated through the Departments in some fashion—on their resources. A definition of “adequacy” is that something is proportionate, or sufficient for its purpose. That is a matter for Parliament to discuss. It will not necessarily be able to do anything other than discuss it, but the discussion may produce views and experiences for the Minister to consider.

As to the Minister’s point that this is not something to go into primary legislation, about this time last year I was on the Committee that for 17 sittings considered the Housing and Planning Bill. There were all sorts of things in that Bill far less important to the health and integrity of the nation. Indeed, in the past, local government Acts—primary legislation—have even included provisions on how many hours off a person in one local authority can have, compared with a person in another. Primary legislation can be used in a range of ways. It is for the Government of the day to say, “We have nothing to fear from the reports coming before Parliament, from openness and transparency, or from challenge.”

[Mr Wallace]

Anyone who is a victim of financial crime takes that crime incredibly seriously; the same goes for victims of violent crime. The National Crime Agency has a number of threats to deal with, including drugs, firearms, child sexual exploitation, financial crime and foreign national offenders. Our police forces deal with a range of threats. Are we to say, on the principle that the hon. Gentleman has set out, that primary legislation should require our law enforcement agencies to produce a report every year, under each heading across the whole range of crime, on whether they believe they have adequate funding to do their job? If so, I envisage that our law enforcement agencies will be full of people doing reports all year, arguing about whether resourcing is “adequate”, and submitting them to Parliament, rather than getting on and prosecuting the people we need prosecuted.

[Peter Dowd]

That is a fair point, but we know that, every day, Parliament debates issues that are far less important for the body politic, security and the safety of the country. The point that I am trying to make is that the issue is of great importance and significance. It is so different in degree as to be different in kind. My hon. Friends and I therefore say that Parliament should have this opportunity. This is not a technical proposal. I repeat that, given the nature of the threat to the country, and the importance that people place on the safety of the country, we would like the report to be made to Parliament.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Peter Dowd]

I beg to move, That the clause be read a Second time.

The new clause would create a corporate offence of failing to prevent financial crime. It would compel the financial services industry to take greater steps to stamp out financial crime, and to tackle tax evasion and other economic crimes. At the heart of the new clause is the need for a level playing field, and to end the impunity that many large global organisations have enjoyed, whereby directors have plausible deniability if they are not involved in decisions taken at a lower level by employees.

The 2015 Conservative party manifesto stated:

“We are...making it a crime if companies fail to put in place measures to stop economic crime, such as tax evasion, in their organisations and making sure that the penalties are large enough to punish and deter.”

At the UK anti-corruption summit on 12 May this year, the Government announced that the Ministry of Justice would consult on an extension of

“the criminal offence of a corporate ‘failing to prevent’ beyond bribery and tax evasion to other economic crimes.”

They acknowledged that law enforcement struggles

“to prosecute corporations for money laundering, false accounting, and fraud under existing common laws.”

As far as I am aware, no consultation has been announced; it appears that the consultation is likely to have been downgraded to a call for evidence, bringing further delay and sending the wrong message.

The Opposition are always willing to assist the Government where it is sensible and in the interests of the country to do so. The new clause would enable the Government to fulfil their manifesto promise, which I know is dear to the hearts of every Government Member; I know that they recite the manifesto with catechistic fervour before, during and after meetings of the 1922 committee. The Minister will sleep easier knowing that he has delivered his part of the schedule ahead of time. I expect Government Members will want to fulfil the UK summit’s commitment before the parliamentary calendar becomes clogged up with Brexit-related measures. The Prime Minister has promised to deliver an economy in which everybody plays by the same rules.

UK corporate liability laws rely on a “directing mind” test, which requires prosecutors to prove that senior board level executives intended misconduct to occur. This moves the focus of attention away from the bigger fishes, and on to small and medium-sized enterprises, where directors are more involved and can therefore be more easily prosecuted—quite rightly, if appropriate. This was a concern of some of the witnesses. The system undermines corporate governance by creating perverse incentives to keep boards in the dark about decisions that may lead to misconduct. Several recent major scandals, including LIBOR and Euribor, have resulted in no prosecutions against companies owing to the current corporate liability regime.

Where individuals have been prosecuted under conspiracy to defraud, they have argued that their actions were condoned and encouraged by their employers. However, the Serious Fraud Office has not charged any of the employers concerned, which include Barclays, UBS and Deutsche Bank, and not a single UK financial institution faced criminal charges as a result of the 2008 financial crisis. A “failure to prevent” offence for fraud and conspiracy to defraud would have enabled such prosecutions. Similarly, in 2015 the SFO was forced to drop its case against Olympus after the Court of Appeal found that it was not illegal under current corporate liability laws for companies to mislead their auditors. This was also the case in 2015, when the CPS stated that because of corporate liability laws, it could not mount a successful prosecution against the companies in the phone hacking scandal, which included some of the largest tabloid newspapers in the UK. Although the new clause would not specifically address the phone hacking case, it highlights the urgent need for broader corporate liability reform.

The Government also need to tackle the facilitators of corruption.

Criminal Finances Bill (Second sitting)

Peter Dowd Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 15th November 2016 Public Bill Committees

[Victoria Atkins]

It involves an element of dishonesty. So any member of your profession or any other business who is conducting tax evasion is liable to be prosecuted in the criminal courts. I am slightly concerned about that distinction, that tax evasion conducted by small companies is not quite as bad as tax evasion conducted by large companies.

Amy Bell: No, I do not mean that. I am talking about the implementation of the provisions and the requirement to have reasonable procedures in place. Absolutely, tax evasion already is a crime. Picking up on what you were saying about the implementation of measures, I am talking about whether preventing corporate tax evasion is prohibitive for smaller businesses. But that is about guidance, and it is our role at the Law Society to help our members understand what is necessary.

Anthony Browne: I would like to make it clear, lest there is any question about my response, that although we want to ensure that there is as much competition in the banking industry as possible, the point I made about proportionality in terms of conduct being problematic is exactly that. Tax evasion is tax evasion; it does not matter how large the firm is that is doing it. Mis-selling to customers is mis-selling; it does not matter how big the firm is. The sort of protections you need against misconduct apply to all sizes of firm.

[Peter Dowd (Bootle) (Lab)]

Q This question is not specifically directed at you, Ms Bell, but I notice that you are the head of compliance and training at the Jackson Canter Group. One of the new clauses we have before us relates to the National Crime Agency making a report to Parliament about the training it provides to its staff on financial investigation and the operation of the Proceeds of Crime Act 2002. In a more general sense, what is your view about the whole question of training within, let us say, the finance sector, in relation to the issues before us? Do you think there is enough training? Too much? Give me a view about that.

Amy Bell: In relation to anti-money laundering?

[Peter Dowd]

Yes, take that for a start.

Amy Bell: We are fortunate to have the Solicitors Regulation Authority recent thematic review, which looked at that in some detail in relation to the legal profession. The authority visited 250 firms of varying sizes that it considered to be high on its risk rating, either because they were very large or because they already had some identified issues. In those firms it saw good levels of training and that people understood their obligations under the regulations—that systems were in place to enable people to do that—and about suspicious activity. So we have some qualitative data from the Solicitors Regulation Authority that show that in the legal profession training is taken very seriously and is effective.

[Peter Dowd]

Q May I ask the other two witnesses their view about training in general? By training I might mean awareness and the extent of trying to prod that awareness within the industry.

Nausicaa Delfas: My observation, from our work through supervision, is that firms take the matter very seriously and devote a lot of resource to anti-money laundering controls and related training.

Anthony Browne: I have not had a direct conversation with my members about the amount of training in terms of financial crime, but they put a huge amount of time and effort into it. There is absolutely no point in having regulations on anti-money laundering or anything else unless staff are properly trained to be aware of it and know what to do and when. The banks expend a lot of effort in ensuring that their staff are competent in carrying out those roles.

[Peter Dowd]

Q Do you think that the amount of training within the system fits the Bill, so to speak? Is there enough there?

Anthony Browne: There are certainly a lot of training providers. I should declare an interest here in that the BBA provides training, although we are a tiny part of the whole. Larger banks tend to do in-house training. There are a lot of third companies, external to banks, that provide training. There could be an almost unlimited supply of training, so I do not think that that is a constraint.

Nausicaa Delfas: We have talked about training in firms but there also is training for investigators exercising the powers in the Bill and other legislation. There is accreditation and monitoring of them, so the system is robust.

[The Minister for Security (Mr Ben Wallace)]

Q Thank you very much for your input into the formation of the Bill. It helps the Government, and hopefully the Bill reflects some of that. I am keen to find out from the regulated sectors and the professions what you envisage could or would happen to any one of your members should they be convicted of the offence of corporate tax evasion or money laundering. What penalties are available to you to deal with either law firms or the individuals who could be convicted?

Amy Bell: In relation to law firms, while the Law Society is the named supervisor, we delegate enforcement responsibilities to the Solicitors Regulation Authority. Its powers are incredibly wide and include restricting or stopping a firm from practising, intervening in a firm, closing the firm down, stopping the individual solicitors involved from being able to practise and ultimately referring them to the solicitors disciplinary tribunal, where they can lose their right to practise and be removed from the role. Quite serious options are open to the SRA.

--- Later in debate ---

[Nic Dakin (Scunthorpe) (Lab)]

Q From the evidence we had this morning I formed the opinion that there is a view that banks are pretty good at spotting irregularities and bringing them forward to the authorities but other parts of the regulated sector are less proactive in that way. That seemed to be what was coming through the evidence this morning. Does that ring true to you? Are the measures in this legislation likely to improve the performance of other parts of the regulated sector?

Anthony Browne: We think it is important that the Government and law enforcement authorities use all the tools that they can to combat financial crime and not just rely on banks. I would agree with the assessment that banks do an awful lot; we certainly do an awful lot. It is important that you do not underplay or pay too little attention to other sectors—not just lawyers but accountants and estate agents. There are lots of different groups that get involved with this. They can all play their part against financial crime. We should all play our full part in that way.

Nausicaa Delfas: I agree with that. I obviously cannot speak for the other professions but we are aware that there are about 400,000 suspicious activity reports filed with the NCA each year. The vast majority of those, I understand, come from the financial sector. Obviously, perhaps more could be done. I go back to the point that that is a huge number. It is a quantity issue and we would urge any changes that could be made to improve the quality of those so that there are better leads for law enforcement.

Amy Bell: We have to be careful in judging the numbers of suspicious activity reports. The Financial Action Task Force and the NCA’s predecessor, SOCA, were both clear that there is no right number of reports. It is fair to say that the vast majority of reports do come from the financial sector. They see patterns of financial activity that we do not see. I do understand that there is criticism levelled at the professions in relation to reports about clients that banks report but maybe the professions are not reporting, but that is because we see different parts of the transaction. That should not be underestimated.

Although I think we should continue to be vigilant, we need to be very careful about drawing any conclusions from the disparity in the numbers. I think the information sharing will help because that means that the bank can communicate with the regulated sector where they see things that will give data to the professions to be able identify suspicious activity.

[Peter Dowd]

Q This morning we had evidence from the National Crime Agency, the National Police Chiefs Council, the Met police SO15 counter-terrorism policing, Her Majesty’s Revenue and Customs, the Serious Fraud Office and the Crown Prosecution Service. To a man—they were all men, by the way—I would say that they looked at the Minister, gulped and said that they had enough resource to do their job. Will you give me a view from outside, so to speak, as to whether you get the sense that those agencies have sufficient resource to do their job, given that you presumably have pretty close relationships at points in the investigatory process?

Nausicaa Delfas: Every organisation has constraints around resources. The question is how best to deploy them. The more precise the information, powers and so on that can be given, the better, but there are constraints in all cases.

Anthony Browne: Clearly it is important that they are properly resourced. We submit about 80% or 90% of the SARs that are submitted—360,000 last year. One of our concerns as an industry is that they are not all followed through, and we get very little feedback about what follow-through there is. A huge amount of SARs are put in, but we have concerns about whether there is sufficient resource to follow up that suspicious activity.

As you know, there is a whole Home Office programme to reform the SARs regime to make it more intelligence-led and less of a tick-box exercise, and to improve the quality of the SARs rather than just the numbers. We totally support that but it will only work if there are enough resources to follow through. That is why one thing that we have proposed in a submission to the Government is a forfeiture for the proceeds of crime in bank accounts such that the money raised is used to add resource to the SARs regime.

Amy Bell: The well known difficulty with the SARs regime—the reporting system—is one of resource. I echo what my colleagues say in relation to the numbers of SARs that go in and the feedback we get, and I believe that is a resourcing issue.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

Q This question might not quite fall within your competencies but I will ask it anyway, given your knowledge of law, finance and the City. It seems that one of the challenges in the current legal set-up is a kind of fear among statutory and investigative authorities about the cost of pursuing certain lines of inquiry, with all the legal ramifications if those who are pursued for unexplained wealth orders and so on are found innocent. How does it affect the culture of investigation within the City when there is a fear about reputational and financial impact on those pursuing those lines of inquiry? Do you have any thoughts on that either from a legal or financial stance? There is a chance to think about an amendment regarding capping the reimbursement of costs or not allowing for the costs.

Nausicaa Delfas: We are aware of the costs but I suppose we regard it as part of the discipline of litigation, so it is not exceptional. The capping idea is certainly interesting.

Amy Bell: I do not think we have a view on it, but we are happy to take it back and get in touch with the Committee if we have any views.

--- Later in debate ---

[Tristram Hunt]

Q Could the Committee have some examples from Global Witness of case studies of that three-way process—the extraction of wealth, often from developing nations, the facilitation via London and the hiding of that wealth in overseas territories or Crown dependencies? It would be good to have some narrative examples. Secondly, one issue that has been put to the Committee and on which I will pursue a probing amendment is the fear among enforcement agencies that, if they use unexplained wealth orders or go after those who have allegedly hidden wealth and committed crimes, they will be liable for the costs involved. That has serious ramifications for the culture of risk within an organisation. I am interested in whether you think either that those costs should not be borne by the state or that they should be capped.

Chido Dunn: I will speak briefly to the narrative examples point, but I am happy to provide more. One of the case studies we worked on, which was covered on the BBC last week in anticipation of the Bill, was a case that arose in Kyrgyzstan. The former President was overthrown in a coup and he and his family were accused of widespread corruption and violence. His son fled and arrived in the UK on a private jet and claimed asylum. At Global Witness, we identified him living—we have no proof of who owns the property—in a mansion in Surrey. It was purchased for £3.5 million six or seven years ago, so it is worth a lot more than that now. The home is owned offshore and no one can prove exactly who owns it or where the money came from.

At the time when the Bakiyevs were in power, Kyrgyzstan was ranked by Transparency International as one of the 20 most corrupt countries in the world. Since then, we have seen the Kyrgyz authorities trying to rebuild their courts and their systems and not receiving the assistance they would like from foreign powers. They are finding themselves coming up against a lot of legal hurdles around issues of mutual legal assistance, extraditions and things of that nature. That is just an illustration of the extent of plundering that can happen overseas, the fact that London in particular is seen as a safe haven by corrupt officials and their families, and some of the practical difficulties in trying to seize those assets or identify the people involved. In that case, we identified UK estate agents and lawyers involved in the deal.

That is one of the best case studies that shows how a Bill such as this could help. It would allow the police to have more time to conduct their investigations. It would lessen the burden on them in identifying who owns a property and whether the money came from legal sources. There are many, many other examples that we could give, but generally it is the same pattern of behaviour that we see time and time again.

Duncan Hames: It is not initially clear from the Bill what the degree of exposure in relation to costs for law enforcement would be. It may be that the investigatory order of the UWO is less exposed to action to recover costs than other asset recovery actions and the interim freezing order, for example. Perhaps in the course of the Committee’s consideration, you will be able to get some clarity on that. We would like you to bear in mind that there will be a great backlog of established illicit wealth already in this country for law enforcement to address when awarded this power, should the Bill become law. We would not want them to be impeded from making full use of this law because of potentially intimidatingly large costs being incurred by those against whom they are using either the unexplained wealth order or the interim freezing order.

[Peter Dowd]

Q The Home Office set out the intentions of the Bill, which are about giving

“law enforcement agencies, and partners, the capabilities and powers to recover the proceeds of crime, tackle money laundering and corruption and counter terrorist financing.”

The Bill also aims to make the UK a more hostile place for those seeking to move and hide proceeds and so on. Do you think the Bill is a game-changer in terms of that aim?

Witnesses: Yes.

Tom Keatinge: Yes, if it is implemented and if we have the resources to use the powers to make this a hostile environment.

[Peter Dowd]

Q The second thing is this: you mentioned the key element of resources, and you almost intimated earlier that you were not convinced about the capacity and resources of the enforcement agencies. Is that a fair assessment? What would you say to that? Do you think the capacity and the resources are available to the agencies to make the Bill a game-changer?

Tom Keatinge: It remains to be seen. There are resourcing issues. In theory, some of the powers—the UWOs—could be used relatively swiftly. If we use them swiftly and roll out the deterrents quickly, we have the resources.

Duncan Hames: You make the case for having strong accountability on whether the powers are being used. That may contribute to being able to understand the case in relation to your question after the powers are brought into law.

[The Chair]

Order. I am afraid that that brings us to the end of the session. We are very grateful to the witnesses for coming here. We assure you that if you want to provide any further advice, the Committee would welcome receiving it. There are no further questions, so I invite the Whip to move the Adjournment.

Ordered, That further consideration be now adjourned. —(Andrew Griffiths.)