Global Human Rights Sanctions Regulations 2020

Lord Browne of Ladyton Excerpts

Thursday 24th June 2021 Grand Committee

[Lord Browne of Ladyton (Lab)]

My Lords, I too thank the noble Lord, Lord Clement-Jones, for securing this helpful debate.

I accept that this human rights sanctions regime marks a major positive step in our ability to identify and punish human rights violators. Along with the more powerful US Global Magnitsky Act, it amounts to an ability to cut off those targeted from two of the most important financial systems in the world. Dominic Raab rightly described it as having the potential to prevent human rights violators from being

“able to launder … blood money in this country”.—[Official Report, Commons, 6/7/20; col. 663.]

It is the role of your Lordships’ House continually to remind the Government of this potential and to point out where, against that ambition, more needs to be done.

I agree with the advocacy of other noble Lords, particularly my noble friend Lord Collins of Highbury, who argue that obvious human rights violators from Xinjiang, Myanmar and Belarus, for example, should be added to the list of those punished by these sanctions. Otherwise, human rights violators will be able to launder blood money in this country.

However, my main point is that these measures are less effective than they could be in respect of those targeted by them already. They were announced on 6 July 2020. Within days, parliamentarians and anti-corruption campaigners, drawing on research by openDemocracy, were warning that their full potential would be impeded by known and unaddressed deficiencies in the existing anti-money laundering regulations on which they rely.

Data from openDemocracy revealed that the UK’s AML systems were insufficient to prevent financial crime in the UK, and have enabled around 400,000 companies to evade declaring their “persons of significant control” and thus concealing their ownership structures. Those involved in illicit activities can structure their companies to take advantage of the 25% PSC ownership threshold to avoid declaring their interest at all. At the same time, others rely on a reported lack of enforcement of the requirement to disclose their PSCs.

So, while the Magnitsky laws are a useful power in the fight against human rights abuses, if the system that supports them allows beneficial owners to maintain their anonymity, the sanctions in many cases will be of no effect. An upgrade of the UK’s AML regime to ensure transparency and to prevent those engaged in illicit activities from exploiting this weakness in the UK’s system is required and long overdue.

I am aware that a review of anti-money laundering legislation is being carried out as part of the Economic Crime Plan 2019-2022. Specifically, actions 42, 43 and 44 of the plan are about transparency of ownership. To what extent will those actions address these specific criticisms? My sense is that they will not. Was this a deliberate omission, and if so, are the Government content to allow the problems identified to persist?