Baroness Northover (LD)
My Lords, I too thank the Minister for bringing us this Statement. I welcome the introduction of this new sanctions regime and pay tribute to the extraordinary courage of Sergei Magnitsky, after whom these sanctions are named. I also pay tribute to Bill Browder, who is not resting until liberal democracies put these into place, whatever the clear risks to himself.
As the Statement says, corruption has an extremely “corrosive effect”. It undermines development and traps the poorest in poverty; we have all seen extensive evidence of that. I am glad to see sanctions on the 14 individuals involved in the tax fraud in Russia that Magnitsky uncovered. Surely, though, we need to sanction those at the very highest levels in Russia, who have raided its economy to create their extraordinary wealth while most Russians live in poverty. I am pleased to see the sanctions on the Guptas in South Africa, and I am sure that the noble Lord, Lord Hain, will be very pleased—he has fought a doughty campaign against them.
It is clearly vital that we work with others if these sanctions are to be most effective. We had been working on this area with our EU partners before we left the EU, so I ask: what progress is being made in this regard given our departure and, therefore, the reduction of our influence within our continent?
The Statement notes that the UK is a leading “financial centre”, and we certainly hope that this will continue, but that means that there is a risk of money laundering here. Last year, Transparency International said that it had identified more than £5 billion of property in the UK bought with suspicious money, one-fifth of which came from Russia; in its view, half of all the money laundered out of Russia is laundered through the United Kingdom. What of the Russia report and political donations, as the noble Lord, Lord Collins, has just mentioned? Much more clearly needs to be done here.
The Statement notes the UK’s public register of “beneficial owners”, but does not address the situation in the overseas territories or the Crown dependencies. Can the Minister comment on the vital need for progress here? Efforts will also need to be made to ensure that cryptocurrencies are not a new route to hide corruption—could he comment on this? Does he agree that it would make sense if the Government set up an independent commission to consider where and against whom sanctions should be used? This would be less likely to be swayed by the political considerations of any Government and to be fair, effective and transparent.
Talking of transparency, the Government need to make much progress themselves in relation to donations and influence. The Statement notes the importance of the National Crime Agency’s international corruption unit and its predecessors, and that the NCA has, over the last 15 years, stopped £1 billion from going astray. Although I am glad to hear that, does the Minister agree that this is a paltry sum when we consider the funds washing around corruptly?
I am not overly impressed by the International Anti-Corruption Coordination Centre in London, which has helped to freeze only about £300 million of suspected corrupt assets worldwide. In 2017 alone, the then head of the Angolan sovereign wealth fund channelled £500 million through London, which was intercepted and returned to Angola, with the head being held to account. These figures therefore indicate that we are simply scratching the surface. The UK Anti-Corruption Coalition, whose work in this area is hugely to be welcomed, is surely right when it says that the Government must ensure that corruption and human rights sanctions regimes are “properly resourced”, including by providing significant additional resources in this area.
This brings me to my last point. I trust that the Minister is aware—I am sure he is—that ODA funding has gone into supporting such work. Can he tell us whether it will be affected by the ODA cuts? The Statement says that the department “continues to provide funding”, but does not say if this will now be reduced. The integrated review has been undermined by the actions of the Government, particularly through their cuts to ODA. Are we in the same situation here? We clearly need to beef up enforcement agencies, not cut them back. Which are the Government doing?
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con) [V]
My Lords, I thank the noble Lord, Lord Collins, and the noble Baroness, Lady Northover, for their support of the Government’s steps. They will both recall that we have often debated the importance of bringing forward global anti-corruption sanctions. I am pleased that we have been able today to bring forward the first set of such designations. Equally, I am grateful to the noble Lord and the noble Baroness for their support regarding the individuals who have been sanctioned.
The noble Baroness rightly mentioned Magnitsky, and if one looks back at recent history, through those tragic events we have seen a strengthening of action in this area, not just by the United Kingdom but by other key partners. I am sure that, in the coming months, we will see further evolution of the work we do in this respect. Therefore, the 14 individuals sanctioned, within the Russian scope of the sanctions, are particularly poignant at this moment. On Bill Browder’s work, I fully align myself with the noble Baroness’s remarks.
The noble Baroness also mentioned the noble Lord, Lord Hain. I pay tribute to his tenacity and persistence in the particular areas and the names that he often raised—such as the Gupta family who have been sanctioned within the South African scope of these sanctions—and I am sure he will be pleased to see that progress has been made.
The noble Lord, Lord Collins, talked, as did the noble Baroness, of the kind of support the Government are extending in challenging the whole issue of economic crime capacities. Last year’s spending review allocated an additional £63 million for the Home Office to fund the continued expansion of the National Economic Crime Centre and other initiatives. Companies House has also been allocated £20 million to support register reform and transformation work. The Government have further announced proposals for an economic crime levy on firms regulated for money laundering purposes, which we hope will raise up to £100 million per year for money laundering prevention and law enforcement efforts.
The noble Lord and the noble Baroness both mentioned the agencies that are responsible for the enforcement of sanctions. This includes the NCA and the Office of Financial Sanctions Implementation, which enforces financial sanctions. We should also acknowledge the work of HMRC in enforcing trade sanctions in particular. Let me assure both the noble Lord and the noble Baroness that there are robust mechanisms in place to ensure that sanctions are adhered to. These include financial and custodial penalties and other powers, such as the seizure and forfeiture of goods.
The noble Lord and the noble Baroness mentioned the importance of law enforcement and due process. Of course, the UK uses sanctions to change unacceptable behaviour, such as constraining and coercing as a means of sending political signals. The purpose of these sanctions is to prevent and combat serious corruption. The Sanctions Act, as the noble Lord and the noble Baroness will recall, contain rigorous due process protections and, in this regard, safeguards as well.
The noble Lord, Lord Collins, asked about parliamentary scrutiny. Of course, I welcome Members’ interest. There is an important role for your Lordships’ House, as well as for Members of the other place and various committees of the House, in scrutinising UK sanctions. We are open to receiving information and evidence in relation to possible future designations; I am sure that that has been demonstrated from the Government’s actions over the last year or so, since we brought in the global human rights sanctions regime. We have sanctioned over 78 individuals and organisations, and we will continue to remain focused in this respect.
The noble Lord and the noble Baroness also raised issues around the Russia report. As I have said before from the Dispatch Box, the Government have published their response immediately on publication of the ISC’s Russia report on 21 July 2020. We have taken multiple actions against the Russian threat. We have, for example, already repeatedly exposed the reckless and dangerous activity of Russian intelligence services. We have called out Russia’s malicious cyberactivity, and sanctioned individuals responsible for hostile and malign activity against the UK and our allies. Specifically, we have also introduced a new power in the Counter-Terrorism and Border Security Act 2019 to stop individuals at UK ports and the Northern Ireland border area to determine whether they have been involved in hostile state activity.
As I have said before, we are going further. We are introducing new legislation to provide security services with additional tools to tackle the evolving threat of hostile activity by foreign states, including a complete review of the Official Secrets Act. The Bill will also modernise existing offences to deal more effectively with the espionage threat and create new offences to criminalise other harmful activity conducted by, and on behalf of, states. We have already implemented the NSC-endorsed Russia strategy and established a cross-government Russia unit that brings together our various equities. I note the noble Baroness’s important point about the evolving nature of cryptocurrencies. I think we are all seized by the importance of how this currency is emerging, and issues of the lack of regulation.
The noble Baroness also raised the issue of the UK overseas territories. Let me assure her that we are working very closely, as we have done previously, with our overseas territories on the importance of transparency and effective access for both tax authorities and crime agencies such as the NCA. We have received very good co-operation already. As the noble Baroness and the noble Lord will be aware, all overseas territories have committed to establishing public registers by 2023.
The noble Baroness talked of funding and support through the ODA. We will continue to support the important work of the NCA, in part through the ODA contributions that the noble Baroness referred to. She raised the importance of working with partners, including the European Union. Indeed, when it comes to specific designations in this area of anti-corruption sanctions regimes, just ourselves, the United States and Canada have such regimes. The European Union have some specific regimes for particular countries. However, we will continue to work across the scope, with our colleagues and friends in the European Union, as well as the United States and Canada, in strengthening our work on our sanctions policy to ensure the maximum impact on those who are sanctioned under these different regimes. As we all agree, the best impact is when we work in tandem with our key partners.
The noble Lord referred to a few additional matters, including ministerial interest. I know that that is due for publication shortly. I am sure that all Members of Her Majesty’s Government who hold ministerial responsibility have duly complied. I am sure that that will be published in the very near future. He raised some specific matters on individuals and Russia. If I may, I will go through the detail of that and respond accordingly to the noble Lord.
Finally, I am seeking in advance, as I normally do, to arrange an appropriate briefing with some of our key officials. I will certainly seek to convene such a meeting at the earliest opportunity.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
My Lords, we now come to the 20 minutes allowed for Back-Bench questions. I ask the Minister and the questioners to be pithy, if they can.
Baroness Altmann (Con) [V]
My Lords, I congratulate the Government on this Statement to fill the gap in the UK sanctions regime. I join in tributes to the noble Lord, Lord Hain, and Bill Browder. Sadly, victims of corruption rarely receive any justice, so I congratulate the Government on introducing the global anti-corruption sanctions. I encourage my noble friend to consider clamping down on cryptocurrencies, particularly given the environmental damage involved. I ask him specifically: what plans do the Government have for reform of Companies House and the foreign property ownership register?
Lord Ahmad of Wimbledon (Con) [V]
My Lords, first, I thank my noble friend for her support. I agree with her, and have already made the point about cryptocurrencies. As these currencies emerge, there is a need to evaluate both their regulation and their impact. I know that people across the piece are being impacted by this evolution. As I already indicated in my original answer, we have provided extra money to Companies House for register reform and transformation work. This will continue to be a key focus in strengthening our work. But I accept the premise of my noble friend’s question and that there is more to be done to strengthen the environment in which we operate, including here in the United Kingdom. We will continue to act, both domestically and internationally, to strengthen regulation in this respect.
Baroness Stuart of Edgbaston (Non-Afl)
My Lords, I very much welcome this Statement. The regulations specifically allow for the designation of those associated with those engaged in serious corruption. Could the Government make clear that this includes family members if they benefit from the corruption? In that context, would it be worth reviewing Section 25 and including schools and universities in the list of firms?
Lord Ahmad of Wimbledon (Con) [V]
On the second question, I will need to take that back and will write to the noble Baroness on the scope. On the specific actions we have brought forward, there are two key elements: bribery and misappropriation. They relate specifically to individuals, whether it is a person who is working to the advantage of a foreign public official or a foreign public official receiving such an advantage. Misappropriation of a property occurs where a foreign public official improperly diverts property entrusted to them in their official role. This may, in answer to the noble Baroness’s question, be intended to benefit them or a third party. “Property” can include anything of value. As to the scope and how that would be seen, each individual case will be assessed on its individual merits and considerations.
Lord Chidgey (LD) [V]
My Lords, I declare my interest as a member of the advisory board of Transparency International UK, which, together with Global Witness, is part of the UK’s anti-corruption coalition. A stand-alone global anti-corruption regime in the UK will be welcomed, and an active sanctions regime will be a powerful tool in supporting democracy, the rule of law and good governance. The Statement mentions the improvement of the UK’s position in Transparency International’s Corruption Perceptions Index, from 20th to 11th. It points out that the system to prevent dirty money from entering the UK is failing, with an excess of £100 billion in illicit funds impacting the UK each year. Will the Government take note of and act on Transparency International’s recommendations for reforming the anti-money laundering supervisory regime?
Lord Ahmad of Wimbledon (Con) [V]
My Lords, we take the recommendations seriously and will ensure that, as has been suggested, they are fully evaluated to see how we can further our own domestic regime to ensure that the issue of money laundering can be tackled head on.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I congratulate the Minister on the Statement being open in acknowledging the attraction of the City of London to
“corrupt actors who seek to launder their dirty money through British banks or through businesses.”
As welcome as the individual sanctions announced on Monday are, they are very much one-sided. They target those who take the money, robbing poor communities and global south nations. But of course the ultimate robber barons in the sadly common case of bribery, and those who profit most from the transactions, are those who pay over the money for the favours purchased —they would not pay unless it paid them, often handsomely. So will the Government be actively seeking to identify and sanction those on both sides of these transactions?
The noble Lord, Lord Collins, asked about parliamentary nominations of possible sanctions. Beyond that, will the Government implement a system whereby non-governmental actors, be they from civil society, the private sector or beyond, can submit information about potentially listing targets for consideration, including by creating a secure portal and adequate safeguards to mitigate any risk for those submitting that information?
Lord Ahmad of Wimbledon (Con) [V]
The noble Baroness makes some practical suggestions, which I will of consider. On her second point, we are already working with civil society organisations, as well as other actors beyond Parliament. If people put forward the names of certain individuals who should be designated under either the global anti-corruption sanctions regime, which we have just introduced, or the global human rights sanctions regime, we will give them due consideration.
I note what the noble Baroness says about creating portals. The challenge will remain, with increasing cyberthreats and cyberattacks, to ensure not just the robustness of the system provided but that, for anyone being looked at to be designated, an early warning does not result in them being able to abscond or avoid being subject to the sanctions that are intended to be applied to them. Therefore, we keep quite a tight rein on individuals or organisations that will be sanctioned in the future. But I note the noble Baroness’s practical suggestions and will take those back.
I add that we are going through an evolutionary process on the whole concept of sanctions. Two years ago, we did not have anything in this space on the specifics of the framework of sanctions. We now have two distinct sanctions regimes, and I am sure we will see the strengthening of both over the coming months and years.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
My Lords, that was indeed pith incarnate. All questions have now been asked.