Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021

Lord Chidgey Excerpts

Tuesday 27th April 2021 Grand Committee

[Lord Chidgey (LD) [V]]

My Lords, I also thank the Minister for his introduction to this debate. It was very precise and to the point. I declare an interest as a member of the advisory board of Transparency International UK.

The Explanatory Memorandum to the SI makes clear that it is intended to update the provisions of the fourth money laundering directive and the Money Laundering Regulations 2007. A principal policy objective is to update and enhance European legislation in line with international standards on combatting money laundering and terrorist financing. Billions of pounds of suspected proceeds of corruption are laundered through the United Kingdom each year. Money laundering is a key enabler of serious and organised crime. Over 100,000 businesses covered under the regulations are required to know their customers and manage their risks.

The UK Anti-Corruption Coalition believes that in terms of perceived gaps in the Government’s approach, they should bring forward economic crime legislation at the earliest opportunity to implement the reforms, together with the foreign property register. I understand that the legislation for this is now waiting to be put through Parliament, having originally been committed to be completed and in operation by 2021. Perhaps the Minister could provide us with an update in his reply. There is also a call for legislative reform to the Criminal Finances Act to ensure that loopholes in it exposed by the latest unexplained wealth order judgment are addressed urgently.

There is a sense that too many professional body supervisors have no appetite to enforce the regulations and are riven with conflicts of interest. There is also the concern that the money laundering supervisors do not meet the specific criteria for effective supervision laid out by the Committee on Standards in Public Life in 2016. Overall enforcement of the money laundering regulations appears, at best, to be patchy.

Transparency International points out that the United Kingdom banking sector acts as an entry point into the UK economy, with leaked banking data showing the movement of billions of pounds in criminal and suspicious funds. Analysis revealed that clients at 72 UK banks and branches sent or received over £750 million in suspicious funds, mostly between 2005 and 2015. Clients at just 10 banks were responsible for sending or receiving more than 90% of these funds. These transactions involved more than 3,100 British bank accounts. However, more than £575 million was paid into just five bank accounts. Surely, this is a clear, transparent case of money laundering on a grand scale. When questioned, all these banks insisted they had strict anti-money laundering measures in place.

The United Kingdom’s anti-money laundering supervision system is disjointed, with real issues regarding conflicts of interest, the quality of supervision, and insufficient and inadequate civil sanctions. Will the Government take note and act on Transparency International’s recommendations for reforming the anti-money laundering supervisory regime? I asked that question in an earlier debate. In particular, will they strengthen the ability of supervisors to provide a credible deterrent, protect the independence of anti-money laundering oversight and remove conflicts of interest, remove weaknesses in the supervisory regime, and ensure that police and supervisors pursue breaches of money laundering regulations through prosecution?

Finally, an overhaul of the United Kingdom’s anti-money laundering regime is vital for preventing money laundering and protecting the United Kingdom’s international reputation. Revelations in the latest FinCEN files leaks, including that the US Treasury considers the UK a high-risk jurisdiction, should serve as a wake-up call.

Covid-19: Economy

Lord Chidgey Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Chidgey (LD)]

My Lords, since the start of the UK lockdown, the construction industry has been united in supporting the Government with advice and guidance assembled in a Green Paper for consultation. The paper identifies three phases: restart, after three months; reset, in the next year; and reinvent in 12 months- plus. Various construction industry sectors have been identified, including housing, social infrastructure and economic infrastructure, together with the bodies to take the work forward.

The UK Infrastructure Client Group, which includes all the major economic infrastructure clients, will lead the infrastructure strand of the reinvent programme. This work will be delivered by a secretariat provided by the Institution of Civil Engineers, in which I declare an interest as a fellow of that august body.

The Green Paper is the first stage and provides the vehicle on which to gather evidence. Realistically, the lockdown has had a major impact on the UK’s economy, with the potential for that impact to endure for many years, but it will also throw up opportunities to rationalise by making efficiencies and to implement measures that would have been brought in many years ago through a Keynesian need for economic stimulus to reboot the economy.

There will be a real temptation to turn the infrastructural lever in an unsophisticated way, but the overriding issue will be how we produce a plan that allows us to do both. In that regard, the Green Paper calls for evidence in several areas, including what other factors will determine attitudes to public life as we transition to a new normal. What other system changes driven by lessons from the lockdown can we expect to be important in the new normal? Are our assumptions of the new priorities for infrastructure correct and what other changes to infrastructure provision will be needed when based on those assumptions? Can we anticipate the Government’s response to these questions by 14 June, the date on which the consultation closes?

Income Equality and Sustainability

Lord Chidgey Excerpts

Wednesday 6th May 2020 Lords Chamber

[Lord Chidgey (LD)]

My Lords, I, too, congratulate the most reverend Primate on bringing this debate to us this afternoon. I shall make two points, the first looking at the impact of Covid-19 on the economic patterns experienced by different groups of workers and the second looking at the implications further afield on reaching sustainable development goal 16 on peace, justice and strong institutions.

Everyone’s health is at risk from the virus, which is causing workers’ lives to be altered across the country, some more than others depending on the work that they do. I reinforce the words of my noble friend Lady Tyler. The Resolution Foundation has identified four main groups of workers with similar experiences. Of these, key workers are the most exposed to harmful effects, as they are working in jobs where social distancing is very difficult. On the other hand, people working in shut-down sectors are most likely to be feeling the economic effects of the crisis. The other groups—those who can work from home and those who continue to go out to work—can continue with some sense of normality. Key workers and shut-down workers are suffering the most acute consequences, with lower-paid people, particularly the young and women, being the hardest hit. The virus does not discriminate between the rich and the poor, but the economic impact does. It is important for the Government to recognise the challenges and the sacrifices that some groups are more likely to be making than others.

Even before the devastating impact of Covid-19, only 18% of fragile states were on track to meet the sustainable development goal, and violence and conflict was on the rise. Mercy Corps will be debating this in a virtual discussion on 12 May—particularly the influence of weak governance, weak health systems and often significant displaced populations—in response to the virus. As Covid-19 spreads, the risk of violent conflict may increase, locally at first, and at multiple levels in the medium and long term.

Queen’s Speech

Lord Chidgey Excerpts

Tuesday 24th May 2016 Lords Chamber

[Lord Chidgey (LD)]

My Lords, I would like to speak to the anti-money laundering issues raised in the Queen’s Speech. I begin by mentioning the Government’s recent anti-corruption summit, which was welcome, if belated. Noble Lords may recall that some years ago, with the help of Transparency International UK, I introduced a Bribery Bill to the House. Although generally welcomed, it failed to progress in the other place. In the next Parliament, however, lo and behold, it reappeared as a government Bill, passing into law in 2010 and generally proving a major success. As a member of the advisory board of TI-UK, I want to place on record my congratulations to Robert Barrington, director of TI-UK, and his team on their work over the past 20 years. At the end of the anti-corruption summit, it was heartening to see, as the Prime Minister said in his final speech, an idea whose time has come. To quote Robert Barrington:

“Well, TI started 20 years ago, so it’s certainly good to see realisation dawn”.

The communique at the end of the summit confirmed that several countries had signed up to public registers of beneficial ownership. Yet there is still a whole raft of UK overseas territories and dependencies that have yet to agree to make registers of beneficial ownership open to public scrutiny.

The Government have announced a new anti-corruption strategy and support for a wide range of international institutions and initiatives. However, what we now need to hear is the plan of action to end:

“The misuse of companies, other legal entities and legal arrangements, including trusts, to hide the proceeds of corruption”.

How can we be taken seriously when the City of London is considered by many to be the money laundering capital of the world? London is the destination of choice, for example, for billions of dollars whisked out of the Crimea and the proceeds of the diamond fields of Zimbabwe and the bauxite mines of Guinea.

I turn to the second issue that I would like to raise, and another area that is perhaps more complex. It concerns the soon-to-be-realised economic partnership agreements between African nations and the European Commission—the trading agreements between developed Europe and developing Africa. The noble Lord, Lord Bridges of Headley, may not be able to answer my comments at the end of this debate, but we can and we will return to them.

At the invitation of Dr Carlos Lopes of the United Nations Economic Commission for Africa—UNECA—I was able to attend its conference in Addis Ababa for AU Finance Ministers, representing the Association of European Parliamentarians with Africa as their UK director. The EC has negotiated EPAs with five sub-regions in Africa after the concept of the reciprocal trade agreements established in the Cotonou agreement of 2000. These were to cover trade in goods and services, and rules on investment, competition and procurement. But in spite of the high ambitions of these policies, in the course of establishing the EPAs some negotiators claim that a number of concerns have arisen. Those concerns include the fact that the removal of trade barriers on manufactured goods from the EU could lead to deindustrialisation, contravening policy coherence development policies. If EU agro-food exporters were able to flood growing African markets, undercutting and squeezing out local farmers and their suppliers, this could undermine African agriculture. These are the very things that we are trying to stop happening. With EU and African states at very different stages of development, reciprocity may not work. This is compounded by increasingly important non-tariff barriers to African exports to the EU and the growing insistence by the EC that African Governments abandon non-tariff policy tools, which are routinely used to support agro-food development programmes.

Against this background, the visit to Addis Ababa was arranged to attend the Finance Ministers’ meeting in April. The objective was to hold consultations with Finance Ministries likely to play a central role in negotiations with the EU over the implementation of concluded EPAs and the reciprocal EPA agreements; in particular, with regard to the use of agro-food sector trade policy tools and how the EC seeks to interpret and apply contentious EPA provisions.

Five bilateral meetings with Finance Ministers from three EPA regions were arranged over two days. With a focus on the Southern African Development Community member states, meetings were held with Ministers from Lesotho, Namibia and Swaziland. Other meetings were held with Ministers from Ghana and Uganda. The key outcomes were as follows. There was a new EC deadline for ratification and entry into force of the Southern African Development Community group EPA. Apparently, this did not allow sufficient time for the Namibian Parliament to go through its examination and approval cycle. The arbitrarily established deadline left a stark choice of either curtailing this process or missing the deadline and facing suspension of Namibia’s trade tariff preferences, with serious effects on beef, grape and fisheries product exports to the EU. This was not what was intended. The Swaziland Minister for Economic Planning told a similar story, and there were other examples by other delegations from the regions of how difficult it was becoming to work through the EPA process with the EU.

We really do have to look at this. Whatever the reality, the UK, with its close, historic and frequently Commonwealth connections with so many African countries, should be taking the lead in the EU for maintaining the balance between developing their economies and opening markets to the EU.

Sudan and South Sudan

Lord Chidgey Excerpts

Monday 8th December 2014 Grand Committee

[Lord Chidgey (LD)]

My Lords, I, too, must congratulate the noble Earl on securing this short debate to question the Government on whether they are taking the lead in the response to the conflicts in Sudan and South Sudan.

It is hard to believe that more than three years have passed since I travelled with the noble Earl as part of a parliamentary delegation to Juba in Southern Sudan, as it then was, and then to Khartoum in the north. In the south there was great excitement over the referendum on the creation of a new and independent South Sudan and the prospect of self-determination. Meetings with President-elect Salva Kiir and his team of Ministers were full of promise and reasonableness, of welcoming the expertise of aid and development NGOs, and of deploying teams of volunteers to train teachers, nurses, technicians and administrators to help rebuild the economy shattered by decades of war.

Less than three years after gaining independence, South Sudan finally degenerated into civil war. Negotiations in Addis Ababa continue in their tortuous fashion, holding out the possibility of a peace agreement but, more likely, a power-sharing arrangement between the warring parties. The danger here is that many in South Sudan would see this as rewarding the aggressors without resolving the underlying issues. Of course, talks continue in Tanzania between the three factions of the governing Sudan People’s Liberation Movement—the SPLM—attempting to overcome the tensions that led to the civil war.

Many commentators take the view that a genuine national reconciliation process will be needed to bring together the different communities set against each other by this conflict. Notwithstanding the tension and outsize egos at the top of the SPLM, there is an ethnic dimension, too. President Salva Kiir is a Dinka, the largest of some 60 ethnic groups in South Sudan, many of whom are his supporters. The rebel leader and previous deputy, Riek Machar is a Nuer, the second largest group, of which many support him. When fighting broke out in December in Juba, hundreds of Nuer were killed on suspicion of loyalty to Machar. This provoked Nuer military units to defect and Machar’s rebels responded with ethnic massacres in Bor, Bentiu, Malakal and elsewhere.

The ethnic power bases of each leader are a significant part of their strength, and many believe the hardest task will not be to stop the fighting but to restore trust between the different communities in South Sudan. Meanwhile, UN Secretary-General Ban Ki-moon has said that the international community has grown impatient with the failure of South Sudan’s leadership to stop the fighting. Last Wednesday, the United States warned South Sudan’s Foreign Minister that UN sanctions could be the punishment for people who stand in the way of peace.

For the past three years, the Government of Sudan have denied international aid organisations and the media access to non-government controlled areas in South Kordofan and Blue Nile states, as the noble Lord, Lord Alton, made clear. According to the US NGO the Enough Project, which campaigns against crimes against humanity:

“Taken together, the desperate situation of the people in rebel controlled areas, the Sudanese Government’s aid blockade, the indiscriminate attacks on civilians, and statements attributed to senior commanders in the government forces, lay the foundation for a case of crimes against humanity”.

While Sudan expert Eric Reeves considers the Government of Sudan’s military campaign,

“unique, presently and historically. Never has a recognized government, and a member of the United Nations, over many years deliberately and extensively bombed, strafed, and rocketed its own citizens—with almost complete impunity”.

The ICC has issued an arrest warrant for Sudan’s President Omar al-Bashir on the charge of genocide, yet he travels without hindrance throughout the region.

The United Kingdom is one of the troika of nations appointed to oversee the comprehensive peace agreement process, yet our observer status apparently carries no enforcement powers. What, therefore, as a permanent member of the Security Council, is the UK doing to deliver on its responsibilities in the humanitarian and diplomatic fields? What measures is it taking within the UN to strengthen sanctions and other measures to tackle impunity, as practised in Sudan? What actions is the UK taking within the UN to hold the UN mission in Darfur to account for the accusations, so graphically described by other Members, of mass rape criminality? What further measures is the UK taking within the FCO to strengthen the UK’s response to the tragedy that is South Sudan and Sudan?

This month, South Sudan marks one year since the return to brutal conflict. The humanitarian impact has been catastrophic, with at least 1.9 million being displaced. The UK Government have responded accordingly, spending more than £143 million on humanitarian relief. However, if short-term relief is to translate into long-term recovery, emergency humanitarian aid must be accompanied by a wider focus on the risks to the development of a fair and democratic state in the long term.

Sudan: War Crimes

Lord Chidgey Excerpts

Tuesday 9th July 2013 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, the noble Lord asked about six questions, and I am not sure that I can answer all of them. The UN is extremely heavily engaged both in Sudan and in South Sudan, with three UN missions and a number of other UN operations. We and other Governments make entirely clear to the Government of Sudan our horror at what is taking place. However, as the noble Lord knows, access to the areas of conflict is extremely difficult for diplomats at present.

[Lord Chidgey]

My Lords, more than 18 months ago, Matthew LeRiche found that civilians in the Blue Nile State were living in constant fear because of indiscriminate terror campaigns aimed at rendering the population unable to provide even the basics of daily life. Those perpetuating these crimes with impunity had the backing of President al-Bashir and six other ICC indictees. Does my noble friend agree that unless the ICC arrest warrants are implemented, there is little or no deterrence for the present crimes? Will the Government therefore press this case with the international community with absolute vigour to see a result?

[Lord Wallace of Saltaire]

The question of what is the international community for these purposes is very delicate. Arresting an active head of state in his own capital is not the easiest thing to do without going to war. We are deeply concerned about the current situation, but I should stress that the fighting which broke out in South Kordofan and Blue Nile two years ago was in fact sparked by the SPLM-N and it is the Government of Sudan who have responded in a particularly brutal and indiscriminate fashion.

Sudan

Lord Chidgey Excerpts

Tuesday 22nd January 2013 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, we are well aware that the situation in Darfur is also unresolved. There are, of course, outbreaks of conflict in Jonglei in South Sudan. Part of the problem is that neither of the Governments in Sudan or in South Sudan entirely control their own territories or necessarily entirely control their own Governments and armed forces. There have been two agreements between the heads of Governments and state of Sudan and South Sudan in the past four months: whether or not they will be accepted and implemented by those who are asked to do so is not entirely clear.

[Lord Chidgey]

Is my noble friend aware that both Sudan and South Sudan and the AU High-Level Implementation Panel are less than convinced that they made any progress in their negotiations last week in Addis? With the UN now describing the humanitarian status in Abyei as truly appalling, with thousands dying from hunger and disease, will the Government make it clear that without progress the UN will be called on to reconsider Security Council Resolution 2046 for more robust and effective action when it meets on 25 January—this Friday?

Mali

Lord Chidgey Excerpts

Tuesday 18th December 2012 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, there has to be a regional resolution to this problem. The northern borders of Mali are artificial lines drawn on maps in largely uninhabited areas and these groups clearly go across them with a great deal of ease. The Tuareg, one of the main sets of tribes involved in the conflict, live in southern Algeria, south-western Libya, northern Mali, and so on. Therefore, there has to be a regional solution. This cannot be resolved by one or two states alone.

[Lord Chidgey]

My Lords, what plans do the Government have to develop stability and security throughout a unitary Mali by advocating that the grievances of the Tuareg should be addressed en route to a democratic unified Mali and by providing succour to the probably 400,000 refugees expected to result from a proposed military intervention by ECOWAS forces?

[Lord Wallace of Saltaire]

My Lords, the figures I have show that there is something approaching that number of displaced people—those who are internally displaced or who have moved across the borders already. Therefore, we already have a rather desperate situation. Reinstating a unified Mali is not entirely easy. Mali armed forces as they currently exist are small, weak and underequipped. Nevertheless, some of them are in effect in charge of the Government and have just replaced the Prime Minister.

Sudan

Lord Chidgey Excerpts

Wednesday 5th October 2011 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, I am well aware of the situation. A member of my family was working at a food station in South Sudan and saw children dying in front of her, so I am very well aware of what is going on. Apparently some 400,000 people have been displaced from South Kordofan and Blue Nile, some from Blue Nile into South Sudan and some into Ethiopia. It is very difficult to get NGOs into Blue Nile or to get food into Blue Nile. Various agencies—some governmental, some non-governmental and some international—are doing their best. The Government of Sudan have protested that there are cross-border efforts to provide food into the region. This is not an easy situation; we are doing all that we can.

[Lord Chidgey]

Given his earlier remarks, is the Minister aware that Edward Luck and Francis Deng, the UN advisers on genocide prevention, have highlighted the grave concerns about the air attacks made by the Sudanese air force on civilians? Is he also aware that the International Crisis Group reports that conflict in the Blue Nile region could well trigger a renewed civil war—a war in which everyone would be losers, but most particularly the Sudanese people? Given the failure of the international community to resolve these conflict issues in the CPA, does not the United Kingdom have a particular responsibility to take the initiative and mobilise international political intervention as a matter of extreme urgency?

[Lord Wallace of Saltaire]

My Lords, perhaps I should say that China has a particular responsibility in trying to improve relations between Sudan and South Sudan. Oil has been part of the cause of the long conflict—60 per cent of Sudanese oil is exported to China. We need the assistance of the Chinese in bringing pressure to bear on Khartoum to stop using its forces for what to some looks very much like ethnic conflict, but which is certainly an attempt to impose order on these border regions without consideration for local conflicts and to override local wishes and local governments.