Economic Crime and Corporate Transparency Bill

Mary Robinson Excerpts

2nd reading
Thursday 13th October 2022 Commons Chamber

[Mary Robinson (Cheadle) (Con)]

It is a pleasure to be called to speak on Second Reading of this important Bill.

To maintain the UK’s role and reputation as an international banking and business hub, we must have a transparent system with robust defences against money laundering and fraud, backed up by legislation. As we have heard, the Bill introduces vital reforms to Companies House and to limited partnerships. It also brings forward measures to ensure that law enforcement is equipped to handle the modern challenge of cryptoassets. We have to keep pace with the inevitable changes that result from the development and recognition of cryptocurrency as it moves from niche technology to the mainstream. It is a policy area that poses a unique challenge to law enforcement, with constantly evolving technology creating intangible assets that are largely unregulated and increasingly used to hide and move the proceeds of crime and enable malign states.

The value of losses from crypto-related scams reported to Action Fraud more than doubled over the previous year to £190 million in 2021. All fraud costs the UK economy £190 billion annually, with money laundering constituting an additional £100 billion.

This is money from hard-working individuals and businesses taken by criminals and used to perpetrate wars and terrorism, and technology is only making that easier for them. The Bill’s stated objective, which I welcome, is as follows:

“Strengthen the UK’s broader response to economic crime, in particular by giving law enforcement new powers to seize cryptoassets and enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.”

Increased powers will bolster the National Crime Agency and Serious Fraud Office, as well as the regulatory bodies, and are welcome. However, the Bill misses an opportunity to refer to and support the important role of whistleblowers in the fight against financial crime. The impact assessment produced by the Department for Business, Energy and Industrial Strategy references PricewaterhouseCoopers’ global economic crime and fraud survey 2022, which found that the UK has a higher than average proportion of serious fraud carried out by an external perpetrator at 57% versus 39% globally. It notes that fighting external perpetrators is distinct from handling internal fraud, with external forces being “immune” to traditional fraud detection and prevention tools—including workplace frameworks and whistleblowing procedures.

The Government are in the process of reviewing whistleblowing guidance, which is welcome. However, the reality is that existing legislation applies only to employees— not to contractors, trustees, volunteers or many others who might hold vital information. It is estimated that just over 40% of fraud is detected through whistleblowing tips, and only half of those disclosures come from employees.

By their very nature, money laundering and economic crime are more often than not linked to serious organised crime gangs and hostile states. Without adequate protections, the stakes for an informed insider blowing the whistle are simply too high. With cryptoassets existing outside the realm of a centralised or governed system, it is unlikely that anyone with information about financial crime involving them will be employees, and therefore they will not be covered by the provisions of the Public Interest Disclosure Act 1998, which is the one that oversees the protections of whistleblowers.

If protections are not to be afforded in this Bill, I hope the Government will support the aims of the all-party group on whistleblowing, which I chair, to create an office of the whistleblower to provide overarching protection for the very people we need to speak out and uncover the criminal activities that this Bill aims to curtail.

I welcome this important Bill, and I know that it will receive support. There are changes that could be considered, particularly with regards to whistleblowing, so I look forward to seeing the Bill go through to Committee.

Economic Crime and Corporate Transparency Bill

Mary Robinson Excerpts

Report stage
Tuesday 24th January 2023 Commons Chamber

[Kevin Hollinrake]

It sounds like a matter for the Financial Conduct Authority, which does not directly relate to my portfolio, but that would be my first call as a constituency Member of Parliament. The case the right hon. Lady raises sounds very distressing for her constituents. If I can help in any way I will of course be happy to do so.

[Mary Robinson (Cheadle) (Con)]

I congratulate my hon. Friend on bringing this Bill forward and welcome him to his place. He knows of my concern that whistleblowing is not mentioned in the Bill, yet whistleblowers are key to exposing the type of crime we are talking about. In the implementation of the Bill, will he reconsider the role of whistleblowers and recognise how important their role is in this space? Will he also look at examples of good practice from around the world because existing whistleblowing laws—I know he agrees—are not fit for purpose?

[Kevin Hollinrake]

That may not be part of this Bill, but it is part of my portfolio, I am pleased to say. My hon. Friend and I have worked together to further the cause of whistleblowers on many occasions. I am keen to bring that forward quickly. We have work under way now that will lead to a review. I am keen to complete that work quickly and come up with some firm recommendations. I am also keen to look at international examples of best practice. She is keen to have an office for the whistleblower, for example. It is right to look at other jurisdictions to see how that is working elsewhere, which can inform our work. I am keen to make significant changes as quickly as possible.

I shall draw my comments to a close and listen to the rest of the debate. I am interested to hear about the amendments tabled by Members on both sides of the House. I am sure today’s debate will be as well considered and beneficial as those on the Bill thus far. I hope Members on both sides of the House will continue to support the measures in parts 1, 2 and 3, so that we can deliver these much-anticipated and much-needed reforms. They will help to protect our constituents and the country, and ensure that the UK remains a great place for legitimate businesses to thrive.

Economic Crime and Corporate Transparency Bill

Mary Robinson Excerpts

Report stage
Wednesday 25th January 2023 Commons Chamber

[Dame Margaret Hodge]

Indeed, and we considered an amendment in yesterday’s debate to address that specific issue, so that any funds arising from a confiscation order, or other such order, could be enjoyed by the enforcement agencies themselves, which would provide an additional incentive. We discussed last week’s Danske Bank settlement of criminal issues in the United States, from which the enforcement agencies received $2 billion. Just imagine the amount of enforcement activity that could be funded from that fee. We are timid in that regard, so I completely concur with the right hon. Gentleman on that.

The other argument in relation to cost caps is that the fear of facing huge costs if one fails in a case provides a disincentive to the enforcement agents to pursue as vigorously as one would like economic crime prosecutions. The Minister has said to me previously that there is no evidence to back that up, but I just do not buy that. A proper analysis of how people in the NCA, the Serious Fraud Office and other agencies think before they decide to pursue a prosecution would very quickly reveal that there is a disincentive. It is for those two reasons that we considered cost caps. The US is our model. Each party bears its own costs, which is much more effective. We heard figures yesterday—I will not repeat them because I have to get on—that the US gets much more money in and it does not cost as much to its enforcement agencies.

Those are the things that I wanted to cover. I hope that, in summing up, the Minister will please give us some concessions. I urge him to reflect on the degree of unanimity across the House and on the very senior figures on his own Back Benches who have chosen to work, in particular, with members of the two all-party groups to reach consensus. We do argue these things out. We come to a view after an extensive debate on a subject; it is never an open and shut case. Back Benchers are in a better position at present than those on the Front Bench, so I ask the Minister to listen to us because we may just be right and it would be good if there was a concession on something.

[Mary Robinson (Cheadle) (Con)]

I rise to speak to new clause 7, which is in my name, and the names of Members across the House. It would require the Secretary of State to set up an office for whistleblowers within 12 months of the Bill receiving Royal Assent, and as chair of the all-party group for whistleblowers, I wish to register my interest.

The office for whistleblowers would be an independent body, which reports to Parliament and would have three main duties: to protect whistleblowers from detriment resulting from their disclosures; to ensure that these disclosures are investigated; and to escalate information and evidence of wrongdoing that is outside its remit to the appropriate authority, including regulators or, if appropriate, the police.

I thank the right hon. Member for Barking (Dame Margaret Hodge), who introduced this new clause at Committee stage and spoke to it robustly and with the knowledge and passion of someone who has been pursuing this for many years.

Despite a complete lack of reference in the Bill, whistleblowers and whistleblowing have a pivotal role in the fight against economic crime. Indeed, when this proposal was debated at Committee, the right hon. Member for Barking referenced her time as Chair of the Public Accounts Committee and noted that all the work that the Committee did on economic crime came from whistleblowers, and yet, in a Bill that seeks to tackle economic crime, whistleblowers are not referenced.

One statistic that has been shared many times when debating this subject in Parliament is that 43% of economic crime is detected and exposed through whistleblowers. However, in his response to the Committee debate, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) noted that he believed that about 100% of economic crime detection could be attributed to whistleblowing. Once again, that appears to be confirmation that, if we want to know where an economic crime is being committed, it is most likely to be a whistleblower who exposes it.

The objectives of the office I propose in this new clause would be to encourage support and advise whistleblowers, providing a safe place to share information and acting on evidence of detriment to the whistleblower. We simply must protect whistleblowers who speak out, risking retaliation, as we have heard, harassment and losing their job—or, in the case of serious organised crime, possibly a much worse outcome. The office will enhance protections of those who whistleblow, while at the same time incentivising such disclosures by providing a safe space to share information.

There is evidence that an office for whistleblowers does incentivise disclosures. In 2020, the International Bar Association measured countries with whistleblowing legislation against a list of 20 best practices. The UK met just five of the 20. Meanwhile, the United States, where an Office of the Whistleblower sits within the Securities and Exchange Commission, met 16 of the best practices. That office received 12,300 disclosures in 2022, nearly double that of 2020, and, as its chief stated:

“The significant increase in the number of whistleblower tips and awards since the program’s inception shows that the program, with its enhanced confidentiality protections, is effectively incentivizing whistleblowers to make the often difficult decision to come forward with information”.

This is a cross-party, cross-departmental issue. Whistleblowers are to be thanked for, among many things, uncovering waste in our public services, highlighting poor or dangerous medical practices and conduct, and revealing the laundering, funnelling and theft of vast amounts of public and private money. When people steal from the public purse, it is society that suffers and our constituents who pay the price. According to law firm Pinsent Masons, His Majesty’s Revenue and Customs received nearly 14,000 tip-offs regarding misuse of the covid furlough scheme. In just one case, £27.4 million of taxpayer money had been falsely claimed by a fraudster who, despite never having been to the UK, registered four companies in London and claimed furlough for more than 2,700 non-existent employees. Some £26.5 million of public money was recovered as a result, in a case that also reinforces the importance of Companies House reform.

We have heard details of the Danske Bank money laundering scheme in previous debates, so I will not delve into the details again, but in that case we know that criminals took advantage of UK limited liability partnerships. That is why the reforms at Companies House and to limited partnerships are needed. However, once again, it was a whistleblower who brought that $230 billion economic crime to light, halting the stream of illegal Russian money laundering. Without him, it might never have been uncovered and might have continued for years.

That was before Putin’s illegal invasion of Ukraine, but we know that illicit finance helped to fund the war and will continue to fund it, unless it is stopped. I welcome the swift action the Government have taken to tackle the scourge of financial crime, first by passing the Economic Crime (Transparency and Enforcement) Act 2022, then by introducing the Bill we are debating today. However, while the Government have introduced measures that will go far in preventing economic crime, as it stands, neither piece of legislation supports those very people who are key to its detection.

Having spoken to many dozens of whistleblowers over the years, I know that someone who reports wrongdoing can risk jeopardising their reputation, their career, their mental health, their wellbeing and that of their family. It is not a decision made lightly. Whistle-blowers who expose economic crime must balance the risk to themselves in the name of doing what is right. That should not be the case.

--- Later in debate ---

[Tom Tugendhat]

The right hon. Lady knows very well that I would find it impossible not to listen to her. I look forward to seeing how we can return to this issue. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), will no doubt wish to have a strong input as well, so I shall say no more at this stage.

Let me now touch on the question of whistleblowers, and pay enormous tribute to my hon. Friend the Member for Cheadle (Mary Robinson), who has been a friend of many of us for a number of years since she was first elected and who has championed, consistently and clearly, the need for an office for whistleblowers. She is absolutely right: what the country needs is an office for whistleblowers, and what we need to do is ensure that we have the updates to the legislation that she so correctly highlighted. The establishment of such an office would, however, be a significant undertaking. It would have major financial applications owing to its size, it would require significant staffing, and, as matters stand, it might duplicate the role of regulators without the same level of sector expertise. I know that my hon. Friend had the opportunity to meet my hon. Friend the Under-Secretary of State earlier this week to discuss her new clause and plans for the review, which I understand will be set out soon, I hope that the meeting was constructive.

[Mary Robinson]

I have indeed had a meeting with the Under-Secretary to discuss this. There is a long way to go on it and I am steadfast about setting up the office for whistleblowers. However, the conversations have been constructive, I am grateful to Ministers and I will not be pressing my new clause to a vote.

[Tom Tugendhat]

I am grateful to my hon. Friend for that and to the Under-Secretary for having had those conversations. He knows my support for her interest in this important matter.

Clearly, many amendments have been tabled today. The last point I wish to make before we move on to Third Reading is that the Government listened an awful lot on this Bill. Many of us, including myself and the Under-Secretary, who have been taking it through this place, have been listening extremely carefully, for many reasons. One of those reasons is that we picked this up, as many people do, a long way down its process of drafting and through its progress through this House. No doubt there are areas where all of us could tweak, adjust, test and push, but we think that the Bill offers major progress on the situation where we began; I am delighted that that point was shared across this House. So although there are areas where we could have further discussion—I am sure the other place will have criticisms and comment, and we will have improvements and additions—we feel that this Bill, as it stands, is a vast improvement on where we are. Although there is progress to be made, and there always will be, we believe that the Bill marks a useful point of progress for our country in fighting economic crime.

Question put and agreed to.

New clause 14 accordingly read a Second time, and added to the Bill.

New Clause 3

Home Office review of the Tier 1 (Investor) visa scheme: publication

“Home Office review of the Tier 1 (Investor) visa scheme: publication

Within a day of the passage of this Act, the Secretary of State must publish in full the findings of the Home Office review of the Tier 1 (Investor) visa scheme which relate to economic crime.” —(Layla Moran.)

Brought up, and read the First time.

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

Economic Crime and Corporate Transparency Bill

Mary Robinson Excerpts

Consideration of Lords amendments
Monday 4th September 2023 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

This business is protected for up to three hours and I am expecting multiple votes at the end of the debate, which could go on until 9.50 pm. The votes would not eat into the next business, which could go on for two hours. I hope that Members will therefore reflect on whether their speeches could be briefer than they had perhaps anticipated, as that would be helpful to everyone concerned, including the staff of the House.

[Mary Robinson (Cheadle) (Con)]

It is a pleasure to rise in support of Lords amendments 146 and 147, which introduce the power to strike out SLAPPs claims in relation to instances of economic crime. SLAPPs—strategic litigation against public participation claims—are described as

“legal actions typically brought…with the intention of harassing, intimidating and financially or psychologically exhausting opponents via improper use of the legal system.”

In essence, people who have such a claim brought against them are threatened into silence. They are a tool of intimidation and censorship, often used by wealthy individuals such as Russian oligarchs or by corporations against individuals such as journalists who rarely have the financial means to fight back.

SLAPPs are not brought with the intention of participants having their day in court; they are based on the power of inequality of arms and are intended to stifle free speech, with the allegations never seeing the light of day. For the purposes of this Bill, SLAPPs claims are defined as one where the claimant’s behaviour in relation to the matters concerned has or intends to have the effect of restraining the defendant’s freedom of speech, and that any disclosures they seek to restrain have to do with economic crime or would be made in the public interest to fight economic crime.

These amendments seek to give people more protection when facing a SLAPP claim in relation to economic crime only. They will be able to use a new early dismissal mechanism and, where a case does proceed, they will have the umbrella of a new cost protection regime. This matters because costs can be prohibitive when fighting legal cases, and indeed the financial risks are intended to deter people from fighting back. However, we cannot let people who seek to silence and intimidate win.

We should be concerned that, in 2022, the Coalition Against SLAPPs in Europe found that the UK was the top European destination for cross-border litigation, with 15 of 62 known transnational cases over a decade being filed here. Who knows, there may be more. One of the reasons we are in this position is that the UK has no anti-SLAPP legislation, and I therefore welcome the measures that are being introduced here.

Although the Bill concentrates on economic crime only, I encourage Ministers to make it the first step in bringing a stop to SLAPPs altogether. SLAPPs are not just a threat to freedom of speech and freedom of expression, they seek to stop so many other disclosures that are in the public interest.

As chair of the all-party parliamentary group for whistleblowing, I am committed to protecting and empowering people who speak out. I have been pushing for legislative change to ensure that people feel able, safe and supported to make disclosures that are in the public interest. Whistleblowers, as my hon. Friend the Minister knows, are pivotal in the fight against economic crime and fraud, with almost half of all fraud detected by whistleblowers. Because economic crime is often well hidden and difficult to trace, discovering it requires insiders to speak out and share their knowledge.

Take, for example, the £178 billion Danske Bank money laundering scheme, which was exposed only as a result of a whistleblower who had worked in the bank’s trading unit and who raised concerns about breaches of anti-money laundering procedures in its Estonian branch. His internal reports ignored, he turned to the US Securities and Exchange Commission. Once allegations made the news headlines, Danske Bank itself ordered an investigation that confirmed the whistleblower’s claims.

Although a worker may seek protection at an employment tribunal, journalists, who are often the target of SLAPPs, are not recognised as whistleblowers under UK law, and they are therefore afforded no protection. Yet due to the investigative nature of their work, they are among the most likely to acquire inside information and evidence of wrongdoing. At the moment our whistleblowing legislation, the Public Interest Disclosure Act 1998, applies only to workers and is meant to protect them from unfair dismissal or detriment at work that may result from their whistleblowing. Whistleblowers such as journalists, who fall outside our current laws and are prey to SLAPPs, will find support with these amendments where their disclosure relates to economic crime.

[Sir Chris Bryant]

I completely agree with everything the hon. Lady has said about SLAPPs and the importance of journalists effectively acting as an additional regulator, but they need the information. Does she also support the amendments that would ensure trusts cannot be a means of hiding information from journalists and others who might want to be able to reveal it?

[Mary Robinson]

I am grateful to the hon. Gentleman for bringing that point forward. As we know, this is about investigative journalists who want to get in there and get the information. Transparency is in the name of the Bill, which may answer his question.

[Sir Chris Bryant]

The Government are insisting that we should keep the real ownership of trusts secret, and the problem journalists have is that there is not a proper exemption to enable them to find out the ownership that lies behind a trust.

[Mary Robinson]

I am grateful to the hon. Gentleman for that clarification. The important thing is that journalists do not find themselves called before the courts through SLAPPs and this type of litigation, and that is the point we are trying to make here. I am sure the Minister has heard the hon. Gentleman.

As has been said, SLAPPs are used to silence and cover up. To effectively root out economic crime, it is right that we address their use, but I think the Government can go further still by reforming the UK’s whistleblowing laws. In doing so, we could encourage more people to come forward with evidence of economic crime, secure in the knowledge that the system is on their side. We must have a system that recognises any person as a potential whistleblower, not just an employee, as our current legislation does. We must have a system that values whistleblowers, not one that ignores or punishes them. We must have a system that makes whistleblowers feel supported and valued.

I know the Government are currently reviewing the UK’s whistleblowing framework, and I will continue to push for the reform we need. Meanwhile, these amendments are an important step forward, and I am pleased to support them.

[Alison Thewliss (Glasgow Central) (SNP)]

I welcome the moves the Government have made on this Bill. It is important that they have done so, but they could still go much further.

I pay tribute to the work of the right hon. Member for Barking (Dame Margaret Hodge) on the all-party parliamentary group for whistleblowing, and to the organisations in this sector that do so much to bring light to what can be a very complex and detailed issue.

The Minister talks about the UK having a reputation for allowing legitimate businesses to thrive, but we are here this evening to challenge the other reputation that has built up over the years. The UK has now become a hub for dirty money, which is funnelled through the UK’s financial system by an army of enablers. This Bill is an opportunity to dam that flow and to stop this dirty money, but as the excellent “Catch me if you can: Gaps in the Register of Overseas Entities” report, published by the London School of Economics and CAGE Warwick, says,

“there is no point building a dam halfway across a river.”

Without closing the loopholes and the gaps, that is what this Government are doing.

The Minister has promised consultations and further things to come in the future. It is fine to dangle these things before us, but we all know that we are heading towards an election and the Government cannot promise to deliver on any of the consultations he hopes to bring forward. Whatever happens, there will be an election. This House is almost out of time, and we should take the opportunity tonight to do this Bill right.

I will run through the Lords amendments, given the time constraints you mentioned, Mr Deputy Speaker. The Lords amendment on nominee shareholders was tabled by Lord Vaux, and as other Members have said, there is an awful lot more we could do on that. It is not enough for the Government just to say, as they did in their letter to Members, that such a measure would most likely be ignored by illegitimate actors and would be difficult to enforce. That is not much of a reason not to legislate and not to try. There is a real issue with how complex structures have been brought about, and the Government need to grab hold of it. This Bill is an opportunity to close a loophole before it is further exploited.

Enforcement is a big part of this, and the Government do not enforce the current rules. Saying a measure would be difficult to enforce when they are not enforcing the rules to begin with does not give us great confidence. Between 2012 and 2022 only three fines were issued for false filing to Companies House. As of October 2022, only one fine of £210 has been issued for not filing the person with significant control of a Scottish limited partnership. If the Government do not enforce the rules they have brought forward, they cannot really ask for more rules. They need to get real about enforcement. They need to make sure the laws we pass this evening are effective.

Updates to the register of overseas entities are a significant gap in the system. As others have said, updates can take almost an entire year, in which time other things could happen. Event-driven updates would hold companies to account. If we think about it, there will be paperwork when companies make any change, so they might as well do the update at the same time. That would be logical.

Lords amendment 117 in the name of Lord Agnew, on the transparency of trust data on the register of overseas entities, makes a critical point. We must deal with trusts without further delay, without further consultation and without kicking the can further down the road. Here is the opportunity to do that. As Transparency International and the BBC showed in February, trusts are being used to hide the ownership of thousands of overseas entities under the current regime. They estimate that more than 7,000 overseas entities on the register, about a quarter of the total, are hiding the ownership of roughly 20,000 properties. Why would the Minister not want to close that loophole? Why would he not want to improve this system right now?