Economic Crime and Corporate Transparency Bill

Debate between Lord Agnew of Oulton and Lord Cromwell

Committee stage
Tuesday 18th April 2023 Grand Committee

[Lord Agnew of Oulton (Con)]

My Lords, I support the comments made by the noble Lord, Lord Ponsonby. I will deal with my own suggestions in a bit more detail in a moment but I want to shake the Government out of any sense of complacency in this area. We have a once in a five or 10-year opportunity to sort these problems out easily, as the noble Lord, Lord Vaux, said, without imposing unnecessary costs on organisations. I support the amendment.

[Lord Cromwell (CB)]

My Lords, I rise to speak to Amendment 50A in my name, to which the noble Lord, Lord Fox, and the noble Baroness, Lady Bowles, have kindly added their names. I also thank the noble Lord, Lord Vaux, for his supportive comments a few moments ago. Before I turn to my amendment, I should like to add my support, as others have, for the noble Lord’s Amendments 48 and 54 in this group.

Like the noble Lord, I do not understand why there is any objection to the name of the firm paid to register a company being included by that firm as part of registration. Any product typically has the manufacturer’s name on it; indeed, in some cases, it is a form of advertising. The identification of the firm would enable more efficient contact between the registrar and that firm, and would make visible patterns of registration, which are so important in risk-based analysis of likely fraud and, therefore, the necessary enforcement.

Amendment 50A would mean that any authorised corporate service provider registering companies would be required to make transparent to the registrar their client risk assessment processes; to identify annually in a simple electronic format how many times specific SIC codes have been used and that they are content that these codes are appropriately applied; and to disclose further details of specific company risk assessments to the registrar or other relevant bodies on request. Finally, the registrar would publish annually an aggregated summary of the SIC information.

Before proceeding further, I will say a word about the SIC codes themselves. These codes are in need of an update. I am sure that the registrar is aware of this and will get to it in good time but I am mindful that we cannot remedy everything in one giant leap. The codes are not perfect, but they are the right place to start in categorising companies’ activities. We have been urged by the Minister, in his letter to many of us of 12 April, to give practical assistance to the registrar in a way that is most efficient and flexible.

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[Lord Cromwell (CB)]

I cannot promise to drag the Minister anywhere, but I, too, look forward to those discussions.

[Lord Agnew of Oulton (Con)]

The Minister very comprehensively dismissed my amendments, but earlier in the debate he committed to thinking much more carefully about bringing much more transparency to the regime that oversees ACSPs. I just want to make sure that is the case. I also want to offer a couple more anecdotes about why I believe this is so important.

The former chief executive of HMRC Sir Jonathan Thompson questioned the role of HMRC in regulating these people. He did not understand, or was not prepared to accept, that anti-money laundering duties were part of the core activities of HMRC. I gave earlier examples of the failings of oversight by HMRC. The Financial Action Task Force review stated that there were “significant weaknesses” among all supervisors, and specifically recommended that HMRC should consider

“how to ensure appropriate intensity of supervision”.

My point is that Companies House is going to be relying on what I believe to be a broken regulator at the moment. I am not suggesting that we create a new regulator, but that is why the risk assessment in Amendment 51 is so important. Who is minding the minders? At the moment, nobody seems to be. It is all moving at a glacially slow pace, and we keep being told that everything is okay, but I do not think that everything is okay. I accept that the protocol is that I do not move my amendment, but I would like a slightly stronger commitment from my noble friend that he really is going to kick the tyres on this and lift a few drain covers, if I can mangle my metaphors.

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[Lord Agnew of Oulton (Con)]

My Lords, to build on the comments made by the noble Lord, Lord Coaker, again, this is a wonderful opportunity to do something that will put our enforcement agencies on to a much sounder footing in future. They are very underresourced. For example, we know that 40% of crime in this country is economic crime yet we deploy only about 1% of our crime-fighting resources to combat it. By ring-fencing this, it gives us a chance to solve that problem.

There is currently a scheme called the asset recovery incentivisation scheme—ARIS—where the money goes to the Treasury and the Treasury hands some of it back. However, the amounts that come back have decreased by 34% in the past five years, at a time when we are seeing escalating volumes of economic crime.

I put in my explanatory statement examples of the hypothecation that the Treasury has agreed over the past few years. As noble Lords can see, there are several of them; some of them are very recent. I want to head off the excuse from the Treasury that “We never do it”, because it does do it, and does it regularly. I suggest that this is as good an opportunity as any to do it. I very much hope that my noble friend the Minister will consider this issue carefully over the next few weeks because, if we do not have the resources in our crime-fighting agencies, we will not be able to stamp out a lot of this. Back in 1984, the US introduced a scheme in which all forfeiture proceeds go back into an assets forfeiture fund. I very much hope that we can do something similar.

[Lord Cromwell (CB)]

My Lords, I have added my name to Amendments 69 to 71, which the noble Lord, Lord Agnew, has just described so powerfully. Those of us who participated in what we call ECB 1 will remember that there was a great deal of discussion and many points made around the fact that passing legislation is pointless if you do not resource the enforcement bodies that must then carry it out. Reading that debate back, this was covered in detail; I am simply making the point baldly again.

I have three further points to make. The fund would appear to need no new money. It would be funded and administered through the fines and incorporation fees. There may well be pushback on the hypothecation of funds in principle, but, as the noble Lord, Lord Agnew, just highlighted, his explanatory statement illustrates that there are plenty of precedents for such a fund. I would also suggest that, for the crime-fighting agencies—if I can call them that—being able to access this money swiftly and flexibly, rather than having to fight up hill and down dale with the Treasury in trying to extract the money from it, would be a great leap forward. After all, it will be they who will have achieved these funds through successful prosecutions.

Let me add one small but important qualification. We are going to need transparent processes and procedures, including audit, for how these funds are used and by whom. However, with that small and rather pedantic caveat, I lend my support to those three amendments.

Economic Crime and Corporate Transparency Bill

Debate between Lord Agnew of Oulton and Lord Cromwell

Committee stage
Monday 27th March 2023 Grand Committee

[Lord Cromwell (CB)]

My Lords, if we achieve nothing else today, it will be getting the name of the noble Lord, Lord Vaux, right in future—you take what victories you can. One amends government amendments at one’s peril, as I am sure the noble Lord recognises, but this Bill is about transparency, so I speak in support of his Amendments 7 and 32. Amendment 7 is about who a person is really subscribing for and Amendment 32 is about who they are really holding for. Those surely play directly into the objectives that we were discussing a few minutes ago regarding complete and accurate records and not giving a misleading impression. They could be tied to objective 4 as well. These are not onerous requirements. I note the challenges put down by the noble Lord, Lord Leigh, and others, but they are not onerous; they are a basic feature of transparency. I therefore hope that the Minister will get behind these two amendments.

[Lord Agnew of Oulton (Con)]

My Lords, I will speak to my amendment. The noble Lord, Lord Vaux, has done a lot of the heavy lifting, so I will not repeat all his arguments. I take some comfort that he makes me look moderate in my requests for further transparency—that is not how I am normally referred to by noble friends and Ministers. The title of the Bill specifies “Corporate Transparency” and, as the noble Lord, Lord Cromwell, has just said, it is not an onerous requirement to state whether the shares are owned by the individual or somebody else. The suggestion by the noble Lord, Lord Vaux, of a simple affirmation statement is even more powerful, so that the enabler who is setting up the entity simply has to answer “yes” or “no” to whether the shares are for the beneficial ownership of the name on the share register. My noble friend now has a choice of routes down which he could go if he is minded to take on board either of our amendments.

Economic Crime (Transparency and Enforcement) Bill

Debate between Lord Agnew of Oulton and Lord Cromwell

Committee stage
Monday 14th March 2022 Lords Chamber

[Lord Agnew of Oulton (Con)]

I support the amendment of the noble Baroness, Lady Kramer. I accept that it is unlikely to go into this Bill, but I very much hope that it will go into mark 2.

I do not share the somewhat Panglossian view of my noble friend the Minister that this whole crime issue is a tiny issue. There is a wall of bad money out there trying to get in, and we have been far too complacent. The Transparency International report of 2018 looked at the BVI and found over 1,100 companies involved in 200 major frauds to the value of tens of billions of pounds. This was just one territory.

Whistleblowers are a vital source of information and intelligence. The noble Baroness, Lady Kramer, is right in saying that we do not recognise them nearly enough in this country. I will not go on further, save to ask the Minister replying that she will take back this issue and ensure that it is plumbed into the next Bill.

[Lord Cromwell (CB)]

I rise briefly, in part to support this whistleblower amendment. I have asked questions on this in the House before. They are very poorly treated—this is just a fact. I agree with the noble Baroness, Lady Kramer, that we need to do better, but I also agree with her that it probably does not fit into this Bill. The noble Baroness has been a tireless advocate for an office for the whistleblower, and such a facility needs to be brought forward rather than permanently left to wither on the vine, as has been the case.

When I asked a question about whistleblowers before, a Member of the House, who was sitting behind me and is no longer with us, said, “Don’t you mean snitches?”. That is exactly the kind of culture we face. I hope that the Government, broader than this Bill, will look seriously at an office for whistleblowers.