Banks: Money-laundering

Debate between Baroness Williams of Crosby and Lord Sassoon

Tuesday 18th December 2012 Lords Chamber

[Baroness Williams of Crosby]

To ask Her Majesty’s Government whether they are satisfied that sufficient steps have been taken to prevent money-laundering by United Kingdom banks.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the UK is internationally recognised as having one of the most robust anti-money-laundering regimes in the world. However, no Government should ever be satisfied that sufficient steps have been taken to prevent money-laundering by those who handle money in the UK. It is an ongoing multi-billion pound threat to the financial system. However, the Financial Services Authority is taking an increasingly robust approach to supervision, demonstrated by recent enforcement actions against banks and their staff.

[Baroness Williams of Crosby]

I thank the Minister for that reply but last year alone the amount of fines paid to the United States regulatory authority from British banks alone came to no less than £6.4 billion, in comparison to the amount paid to the Financial Services Authority from the same banks, which came to £140 million. The discrepancy is clear.

These were not minor crimes. They included not only money-laundering but fixing the LIBOR rate, breaking the sanctions regimes against Iran and other countries and, not least, money-laundering that included drugs cartels in Mexico and Colombia. Does the noble Lord therefore agree with Andrew Bailey, the CEO of the prudential authority that is shortly to be established, that it is impossible to prosecute major banks on grounds of confidence? Does he take that view or the view that I hold, which is that unless we prosecute major banks that commit crimes of this kind, we will find ourselves with a City that no longer has its traditional reputation for integrity and fair dealing, which is absolutely crucial to its future and which many of us recognise must be re-established, if necessary with radical measures?

[Lord Sassoon]

My Lords, I agree with the numbers that my noble friend shared with us. However, the traditional approaches in the UK and US towards fines have been very different. I believe that my noble friend’s numbers go wider than the narrow question of money-laundering. As I said, the FSA has levied much larger fines in recent years. Prosecutions are, of course, possible and should be pursued where appropriate, whether against bank staff or potentially against the banks. However, Mr Bailey is also correct that there are circumstances in which the prosecution of a bank could have the consequence of putting the future of that bank in jeopardy. Therefore, considerations may arise in extreme cases regarding the stability of the system if a major bank was closed down. Those considerations have to be taken into account.

FSA Investigation into LIBOR

Debate between Baroness Williams of Crosby and Lord Sassoon

Monday 2nd July 2012 Lords Chamber

[Lord Sassoon]

My Lords, on my noble friend Lord Higgins’ first point, there were two distinct periods during which Barclays was found to have attempted its manipulation. The first period was before the financial crisis, when its traders appear to have been driven by pure greed and tried to drive rate up. The second period was during the financial crisis when the preservation of Barclays’ reputation seemed to be the main driver and it was attempting, it seems, to move the interest rate down. I think there were those two distinct motivations.

Regarding the committee chair, notwithstanding the suggestion that the chair of the Treasury Committee chairs the Select Committee, I would guess that the formal position is that the committee itself will decide who the chair will be. I imagine that this will be taken up either in the Motion itself, in which case your Lordships will have a chance to take a view on it, or the committee will decide who the chair will be in due course.

[Baroness Williams of Crosby]

My Lords—

--- Later in debate ---

[Baroness Williams of Crosby]

My Lords, I want to pursue for a moment the sheer seriousness of the situation that the noble Lords, Lord Eatwell and Lord Blair, and my noble friend all pointed to. I can think of nothing more likely to undo the prospect of this country’s return to prosperity from the crisis than the present, huge doubts about the trustworthiness of the financial system. When I extensively read newspapers from the United States, what comes out very loud and clear is the view that as a result the major beneficiaries will be countries that are in direct rivalry and competition with the City and that hope to gain from what they regard as an extremely dangerous problem that we have brought upon ourselves.

I am satisfied with the prospect of a parliamentary inquiry and I accept what the noble Lord said about the necessity for speed and getting on with it. The noble Lord, Lord Eatwell, and my noble friend Lord Higgins asked about the terms of reference. The missing term of reference that troubles me is the inquiry’s relationship to the role of the regulators. The Daily Telegraph may not be a very good source, but it is becoming completely clear that there were seminars, discussions, meetings and debates throughout 2007 and 2008 about LIBOR, and if anything is likely to be true about those rumours and suggestions it is vital that we explore whether our present regulatory structure is adequate to deal with an issue as serious and as far-reaching as this one. I therefore, with great respect, suggest to the Minister, probably with the support of the Opposition, that the terms of reference should at least extend to the roles of regulators, to the reasons why they failed to probe into this matter at an earlier stage and to what steps could now be taken to give them the confidence and the resources to enable them to do better in future.

[Lord Sassoon]

My Lords, I certainly agree with my noble friend that these are all relevant and important questions. It is equally important that the proposed Joint Committee’s terms of reference should be clear and should focus on transparency, culture and professional standards. The role of the regulators is rather different, but I am sure that the Treasury Select Committee, in the normal course of its business, will want to ask questions about those matters in due course. However, I take on board what my noble friend has to say.

Currency Markets

Debate between Baroness Williams of Crosby and Lord Sassoon

Wednesday 2nd February 2011 Lords Chamber

[Baroness Williams of Crosby]

Have the United Kingdom Government had any discussions with the German Government about coming into the European bond market, which, as my noble friend will know well, would have a very favourable effect on yields?

[Lord Sassoon]

I shall not comment on individual discussions about market matters, but I again note some of the positive developments in Europe collectively as well as the auctions since the beginning of the year by Portugal, Spain and Greece. However, we must recognise that the currency situation remains very fragile.

Banking: Liability.

Debate between Baroness Williams of Crosby and Lord Sassoon

Tuesday 7th December 2010 Lords Chamber

[Lord Sassoon]

My Lords, I am sure that the FSA will take note of the noble Lord’s suggestions about how it goes about its business. But I can only, as he does, read the conclusion of a report by the FSA that follows an investigation that began in May 2009 and out of which has come one enforcement case.

[Baroness Williams of Crosby]

My Lords, does the Minister agree that this might be a case for a WikiLeak? Will he also assure the House that, in looking at the proposals that are emerging with regard to the regulation of banking, a heavy emphasis will be put on transparency and openness in future?

[Lord Sassoon]

My Lords, I am happy to confirm that in everything the Government do, we put a major store on openness and transparency. Indeed, we will bear that in mind in our approach to financial regulation in future.

Banking: Bonuses

Debate between Baroness Williams of Crosby and Lord Sassoon

Monday 1st November 2010 Lords Chamber

[Lord Sassoon]

My Lords, what I said was that we have indeed taken action, including, among other things, requesting the Financial Services Authority to take certain factors into account in its consultation on the remuneration code. We have said that we will look at—and we are looking at—the costs and benefits of a financial activities tax, consistent with, among other things, not driving banks abroad. The banking sector remains an extremely important part of this country’s economy.

[Baroness Williams of Crosby]

Does the Minister agree that, while undoubtedly a commendable degree of restraint has been shown by small businesses in the past year, the position of FTSE 100 company executives is very different, with, we now learn, a 55 per cent increase in bonuses last year? Will he consider, first, adopting the proposals in the Walker report on the buying out of bonuses, which is an increasing and troubling practice? Secondly, does he agree that we should consider taxing share-based bonuses, even if they are delayed for a couple of years, to be paid at the same rates that the rest of us are obliged to do?

[Lord Sassoon]

My Lords, the Walker report, which was commissioned by the previous Government and reported in November 2009, made a number of important recommendations, some of which have already been incorporated by the Financial Reporting Council in its governance code. Sir David Walker made other recommendations on disclosure which remain to be considered. As for taxation, I have already said that we are considering the costs and benefits of a financial activities tax in relation to banks and remuneration. We are doing that by working with our international partners to make sure that, if we produce proposals along those lines, they are consistent with international practice and with keeping the banks operating in this country.