Economic Crime and Corporate Transparency Bill

Debate between Damian Hinds and Kevin Hollinrake

2nd reading
Thursday 13th October 2022 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

I support this important Bill, which seeks to tackle this most international of criminal problems. The scale of global financial crime is mind-boggling, accounting for up to 5% of gross world product and, depending on which estimate we look at—we cannot say absolutely for certain—worth between $2 trillion and $5 trillion. On an optimistic view, the confiscation rate runs at around 1%.

Economic crime is sometimes thought of as being in a separate category from other crime but, no, it is part of those other crimes. There is a particularly close link between fraud and cyber-crime. Money laundering, fraud and cyber-crime collectively—distance crime—make up the majority of crime by volume in this country. More broadly, virtually all crime with a financial motivation touches on money laundering at some level. There is a mix of organised crime groups pulling off huge cyber-crimes, down to individually small but cumulatively very large-volume frauds. Some groups have undergone a sort of vertical integration, controlling every part of the chain; others specialise in one particular part of the chain, such as ransomware as a service. There is a merging of criminal actors with a nexus to states. Then, of course, there are the kleptocrats who got filthy rich on plunder from their fellow citizens.

There is a huge amount that needs to be done in this area. Much of it needs to be done globally, but countries such as ours need to be in the lead. The world has made quite some progress in this area, and in key aspects we have been a leader, but we have also had our lacunae. High on that list is transparency about who is really behind and ultimately benefits from corporate structures and economic assets.

For some time, we have had a substantial and, in many ways, effective architecture to tackle money laundering, but there is an important question whether the suspicious activity reports regime is sufficiently efficient, and whether it is focused enough to make the most difference while minimising dead-weight. There is also the question whether we are fully harnessing the power and capabilities of banks, particularly if we compare our legislation with section 314(b) of the American Patriot Act. Should there be more direct intelligence sharing between banks, and if so, how do we manage the competition policy aspects of that? Finally, however much we improve and innovate, the criminals are doing the same, with ever more sophisticated technology, and they are increasingly bypassing the systems that we have been used to in the past by using cryptocurrency and cryptoassets.

The most important thing about the Bill is that it moves to plug the transparency gap, with reforms to Companies House and limited partnerships as its backbone. It modernises seizure by bringing cryptoassets into scope of the civil forfeiture powers, and it moves from a compliance-driven anti-money laundering system to one that is more proactive and intelligence-led, with rationalised SARs and DAML—defence against money laundering—requirements.

I welcome all the aspects of the Bill, but especially the information-sharing provisions, and in particular their broad scope to include all types of economic crime, including, importantly, volume fraud. I ask the Home Secretary and the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Dean Russell), to really test whether these powers go as far as they productively can. I press not just the Home Office and BEIS Ministers we have here today, but the Treasury, regulators and the private sector, to come together to ensure that we link up the different parts of our financial services sector and the wider professional services sector to best effect.

Information and intelligence sharing could be so much more powerful if we reformed the way that payments are made so that in certain circumstances, where suspicious activity is detected, it is possible to slow down or pause payments and use the system not just to track down money laundering payments or fraudulent payments after the fact, but to stop them happening before the fact. That could be a genuine game changer. As I say, I strongly encourage the two excellent Ministers present today to communicate with the Treasury and others about that.

I support the Bill and I wish Ministers well with it. It is of course part of a wider set of reforms that includes the sanctions regime, the creation of the National Economic Crime Centre, the kleptocracy cell, the overall economic crime plan, and, importantly, our international work with like-minded partners, the Financial Action Task Force, and the Crown dependencies and overseas territories. The reform of visas, which came up, is part of this too, and of course we recently passed the Economic Crime (Transparency and Enforcement) Act 2022. There will be more to come, I am sure, including on corporate criminal liability.

[Kevin Hollinrake]

rose—

[Damian Hinds]

On that point, I give way to my hon. Friend.

[Kevin Hollinrake]

I am very supportive of that, as my right hon. Friend knows, but I rise to make another point. He mentioned that putting some friction in the payments system might reduce instances of economic crime. At the moment, banks are refunding a much higher proportion of authorised push payment fraud, but all the onus is on the sending bank. Nothing is reimbursed by the receiving bank, yet it is the receiving bank where the dodgy account is held. Does he agree that we should look at that and create an incentive for the companies that host those bank accounts to tackle it more effectively?

[Damian Hinds]

I do think we need to look at this more closely, although it is even more complex than my hon. Friend suggests, because we get this ping-on system as well, where a body can be both a receiving bank and a sending bank, and so be a sort of transmission mechanism. We certainly need to look at this more broadly. Madam Deputy Speaker might get cross with me if I try to unpack it too much now, because it is a broader subject. However, as my hon. Friend rightly mentioned, we also have to address the questions of who is liable and how much of the liability now sits within the banking sector, full stop, as opposed to other parts of the consumer interface—different channels through which people come—that might reasonably be expected to share some of that burden too and be properly incentivised.

I am going to close my remarks by saying that these reforms are important and they are not in tension with the success of our financial services sector—quite the reverse. These reforms are about enhancing the reputation of both British financial services and, more broadly, the UK and our reliance on and respect for the rule of law. They are about protecting and growing our business; and doing the right thing, ceding no space to the criminals and the kleptocrats. In the unlikely event that we divide this afternoon, I will be proud to vote “Aye” for this Bill.

Oral Answers to Questions

Debate between Damian Hinds and Kevin Hollinrake

Monday 25th April 2022 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

11. What recent steps her Department has taken to tackle economic crime.

[The Minister for Security and Borders (Damian Hinds)]

Tackling economic crime is a key Government priority. We have expedited legislation—the Economic Crime (Transparency and Enforcement) Act 2022—to crack down on Russian dirty money and corrupt elites in the UK. We have also set up a new dedicated kleptocracy cell in the National Crime Agency to target sanctions evasion and corrupt assets hidden in the UK.

[Kevin Hollinrake]

I thank the Minister for that answer. GPT Special Project Management was fined roughly £28 million by Southwark Crown Court last year for bribery offences. The key whistleblower in that case was my constituent, Ian Foxley. He has had 11 years without a single penny in income because he blew that whistle, as nobody will employ him now, of course. Does my right hon. Friend agree that if we want to crack economic crime, we must incentivise whistleblowers to come forward, and protect them when they do? Will he listen carefully what my hon. Friend the Member for Cheadle (Mary Robinson) says tomorrow in introducing her 10-minute rule Bill, when she will set out the case for whistleblower reform?

[Damian Hinds]

My hon. Friend is right about the value of whistleblowers, who should be able to come forward without fear of recrimination. We have continued to improve the whistleblowing framework, including by extending eligibility for protections and introducing a reporting requirement for prescribed persons—the bodies to whom people can make a whistleblowing disclosure. My hon. Friend has campaigned consistently on this matter and is expert in it, and I am keen to meet him to discuss his points further.

Oral Answers to Questions

Debate between Damian Hinds and Kevin Hollinrake

Thursday 19th March 2020 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

5. What steps he is taking to support farmers.

[Damian Hinds (East Hampshire) (Con)]

10. What steps he is taking to support farmers.