Criminal Finances Bill

Lord Rosser Excerpts

Committee: 1st sitting (Hansard): House of Lords
Tuesday 28th March 2017 Lords Chamber

[The Deputy Chairman of Committees (Viscount Ullswater) (Con)]

I must advise the Committee that if this amendment is agreed to, I shall not be able to call Amendment 59.

[Lord Rosser]

My Lords, I have Amendment 72 in this group. The Bill provides for extensions to the suspicious activity reports regime under which private sector companies report suspected money laundering—or, at least, they are meant to. The extensions or enhancements enable the moratorium period during which the relevant law enforcement agencies can gather evidence to be extended and provide a power enabling the UK Financial Intelligence Unit in the National Crime Agency to obtain further information from suspicious activity reporters. The enhancements also create a legal basis for sharing information between companies in order that they can build up a clearer picture of suspected money laundering.

Amendment 72 would provide for a procedure, through the National Crime Agency, for prioritising the most serious suspicious activity reports to target effectively the use of scarce law enforcement resources. Private sector companies and professionals, such as accountants, are required by law to make a suspicious activity report every time they become aware that a person might be in possession of the proceeds of crime, and that applies equally even if the amounts involved are small or if the information is far from conclusive or far from being considered fully reliable. The same duty to report applies whether the suspicion relates to a theft of a few pounds from petty cash or to what could be serious organised crime.

At present there appears to be no means by which information may be quickly screened or sifted to determine which are likely to prove the most significant or important reports requiring full investigation. There were just over 380,000 individual suspicious activity reports in 2015, and considerable time must be spent processing essentially very minor crime reports, which can only be at the expense, resource-wise, of the investigation and detection of crimes at the serious end of the scale. This amendment seeks to address that situation by providing for priority levels based on the intelligence value of each report, or a similar kind of categorisation, which would give an appropriate risk-based approach to determining which economic crimes should be tackled as a matter of urgency.

At Second Reading, the Government said that the issue raised in this amendment on suspicious activity report reform was lacking in the Bill, even though reform of the SARs regime was a crucial part of the Government’s own action plan for anti-money laundering and counterterrorist finance. The Government went on to say that they had established a programme to reform the SARs regime, and were seeking improvements in the short, medium and long term. They then went on to say that, during the review of the SARs regime that the Home Office ran in 2015, a number of regulated-sector companies suggested that suspicious activity reports should be prioritised, which is what this amendment is about. Despite this, they went on to say at Second Reading:

“We will consider this as part of the SARs reform programme”.—[Official Report, 9/3/17; col. 1518.]


However, the review was two years ago, in 2015, and a number of companies affected raised the issue addressed in this amendment in response to the review. Why, two years after the review, cannot the Government make a decision to do something to address this matter of prioritising reports rather than continue to put off making a decision? Surely, in all the discussions that would have taken place on this Bill before it was brought to Parliament and during the debates on the Bill so far in Parliament, prioritising SARs reports, which had after all been raised in the 2015 review, could and should have been considered, since it is directly relevant to the content of the Bill?

I hope that the Government will recognise this reality, and give a positive response to this amendment and, if that is not possible—and I would like to know why, if that is the case—accept that Report is now likely to be another four weeks away, with Third Reading being five weeks away, and agree to bring back a government amendment on Report or at Third Reading to address the issue raised in the amendment.

[Lord Brown of Eaton-under-Heywood]

I want to address only Amendments 58 and 59, both of which I oppose, to new Section 336B on page 28 of the Bill. That section deals with an application under the previous section to extend the moratorium period, which has to be dealt with as soon as is practicable. New subsection (3) says that the court,

“may exclude from any part of the hearing … an interested person”,

or “anyone representing that person”. We see that formulation again in new subsections (4) and (6). They are the people whose presence or otherwise at the hearing is in question.

New subsection (4) allows for a particular application, that certain specified information may be withheld from the interested person or representative, but that order can be made only under new subsection (5), if the court is,

“satisfied that there are reasonable grounds to believe that if the specified information were disclosed”,

something bad would happen—that either,

“evidence of an offence would be interfered with or … the gathering of information …would be interfered with”,

or somebody would be injured, or,

“the recovery of property … would be hindered, or … national security would be put at risk”.

In that situation, new subsection (6) comes into play. Unlike new subsection (3), which we looked at earlier, where the court “may exclude”, in this instance—because it relates to an application under new subsection (4)—the court inevitably “must” direct that the interested person or his representative be excluded. With the best will in the world, I cannot see how we could sensibly leave out new subsection (6), which puts a requirement on the court which is not to be found in new subsection (3), which deals with the general position. Nor would it make any sense whatever to substitute “may” for “must”. You have already got “may” in new subsection (3), but for this situation, “must” is the appropriate direction to the court for the order to be made. I respectfully oppose those amendments.

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Finally, Amendment 72, tabled by the noble Lord, Lord Rosser, proposes that the National Crime Agency should be required to designate a qualifying report as a high-priority investigation. This was, of course, an issue that the noble Lord raised at Second Reading. A suspicious activity report, or SAR, is not in itself an investigation, but can help to inform a decision on whether to initiate such an investigation, when taken with other sources of intelligence. In 2015, the Home Office reviewed the SARs regime. One of the issues raised in that review, and mentioned by the noble Lord, was whether the regime could be focused more effectively, including through the prioritisation of SARs. A number of regulated sector entities made this suggestion, and we have been considering it carefully, as part of the ongoing SARs reform programme. This programme has been set up to improve the regime as a whole, and it will actively consider this issue. As the noble Lord knows, the SARs regime is complex and changes to it would affect a significant number of sectors. It is therefore right that we consider the changes very carefully.

[Lord Rosser]

Is the noble Baroness satisfied that this matter has been dealt with as expeditiously as possible bearing in mind that the review was in 2015 and we now have a Bill in front of us to which the SARs regime is directly relevant? However, when we put forward proposals to try to make the regime more effective by prioritising matters, we were told that the Government were still considering the situation. The difficulties in finding space for legislation over the next couple of years have already been raised, so could the noble Baroness address that point and reflect further that we are four weeks away from Report? If the Government really put their mind to it, surely they could come forward with an amendment of their own on this issue.

[Baroness Williams of Trafford]

My Lords, I recognise that the issue was considered in 2015. It is now 2017. I totally take on board what the noble Lord says. This issue is complex but I will go back to the department to see what is in the art of the possible before Report. I cannot promise anything at this stage other than that I will try to expedite it if possible.

Prioritisation and the allocation of resources are operational matters. The NCA already has processes in place to take tasking decisions and allocate its resources. It is very unlikely that a SAR would be the only factor taken into account when deciding whether to open an investigation. Putting this matter into legislation could, if anything, impose additional restrictions on law enforcement agencies, which already have the type of flexibility to prioritise cases that the noble Lord’s amendment seeks to achieve.

I hope that he is at least partly satisfied with my explanation. I invite the noble Baroness, Lady Hamwee, to withdraw her amendment.

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[Baroness Hamwee]

My Lords, this amendment would provide a new clause on anti-money laundering supervision, requiring supervisory authorities to publish certain information. When the Bill started its passage through this House, briefings to noble Lords from a number of organisations made similar points about supervision, including that there are too many supervisors, there is inconsistency, and there are conflicts of interest since enforcement does not lie very comfortably with promotional activity. The term “a dysfunctional system” also was used. There was also quite a lot of comment about lack of transparency and accountability in the supervisory system, a matter which formed part of Transparency International UK’s analysis of the weakness in the rules. Its report was entitled Don’t Look, Won’t Find.

I am aware of the Treasury’s work and the current call for information but it seemed to me that it was worth pausing particularly on transparency and accountability. As Transparency International explains, these are,

“fundamental components to an effective supervisory regime”.

TI also quotes the Macrory report:

“Transparency is something that the regulator must provide to external stakeholders, including both industry and the public, so they have an opportunity to be informed of their rights and responsibilities and of enforcement activity. However, it is also important for the regulator itself, to help ensure they use their sanctioning powers in a proportionate and risk based way”.


My Amendment 70 is based directly on Transparency International’s report in the light of the recent government announcements.

The supervisors do not necessarily seem comfortable with the system. The Solicitors Regulation Authority comments that the draft regulations—the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017—fall short of requiring the supervisors of anti-money laundering to be fully independent of any representative body. The authority is keen to see where the weaknesses in the system can be addressed ahead of the Financial Action Task Force review next year. It asks us to raise in the context of the Bill the issue that the underlying legal position is in need of clarification to ensure explicit recognition that supervisory bodies should be fully independent from representative ones. I dare say that the Minister, or at any rate her officials, will have seen that briefing. Having focused on transparency and accountability, I beg to move.

[Lord Rosser]

We have Amendment 73 in this group, which is on not dissimilar lines to the amendment moved by the noble Baroness, Lady Hamwee. Amendment 73 would require the Secretary of State to,

“lay before each House of Parliament an annual statement on the money laundering supervision regime and any plans the Government has to amend it”.

At Second Reading, we raised questions about the effectiveness or otherwise of our anti-money laundering system in the light of the billions of pounds in corrupt money that comes into this country each year. Reference has already been made to that point in our earlier debate on the London property market. According to the National Crime Agency, the figure could be as high as £90 billion. The Government’s impact assessment says that this country is unusually exposed to the risks of international money laundering, which is made even more serious by the reality that money laundering is also a key enabler of serious and organised crime, including terrorist financing. The social and economic costs of this are estimated in the Government’s impact assessment at some £24 billion per year. However, despite this far from satisfactory state of affairs, there are, as I understand it, some 27 supervisory bodies in the relevant sectors, which must surely lead to a fragmented approach in the identification and mitigation of risks, and in the approach to enforcement.

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[Baroness Williams of Trafford]

That is correct.

I now turn to Amendment 70, moved by the noble Baroness, Lady Hamwee, and Amendment 73 in the name of the noble Lord, Lord Rosser. I can update the Committee on the significant action that the Government are taking to improve the effectiveness of anti-money laundering regulation by strengthening the obligations on all supervisors through the new Money Laundering Regulations 2017. The Treasury published a consultation on these regulations shortly after Second Reading and it is open until 12 April.

The Government set out in a Treasury publication earlier this month their proposals for the new office for professional body anti-money laundering supervision. However, it would not be right for the Government simply to legislate without proper public consultation on the detail of this proposal, and I hope the noble Lord will recognise that that is the appropriate way forward.

We have also recognised the need for more co-ordination between regulators and supervisors of the regulated sector in relation to tackling money laundering. The new office for professional body anti-money laundering supervision will therefore work with professional bodies to help, and ensure, compliance with the regulations. The office will be hosted by the FCA and will liaise with other bodies across the regime to discuss and share best practice to help ensure consistent high standards across supervisors—especially where statutory and professional body anti-money laundering supervisors monitor the same sectors—and to strengthen collaboration between professional body anti-money laundering supervisors, statutory supervisors and law enforcement agencies.

The Government will consult on the draft regulations that will underpin the office over the summer, and they will be finalised and laid before Parliament in the autumn. The Government expect the office to be fully operational by the start of 2018.

The new arrangements will also support the enforcement capability of the supervisors. The supervisors can take a range of actions in relation to failings identified in the areas they supervise. Professional bodies have sanctions specific to their supervisory population—for example, the ability to expel firms from membership. The removal of professional accreditation in this way can incentivise compliance.

HMRC and the FCA have powers under the regulations to require information, enter and inspect premises, and administer monetary civil penalties to their supervised population. The UK is leading the way in improving transparency and accountability in anti-money laundering supervision by publishing an annual report on money laundering supervision on GOV.UK.

The Treasury’s annual report, which is now in its fifth year, sets out how the UK’s supervisors are contributing to the fight against money laundering and terrorist financing. The most recent report shows that supervisors are increasingly focusing on educating businesses on how to meet their anti-money laundering obligations, and ensuring that systems and controls are effective and proportionate to the risks. The actions that supervisors are reporting help to ensure that the UK’s financial system is a hostile environment for illicit finance.

The report shows the positive collaboration between the Treasury and the supervisory authorities, which include the FCA, HMRC, the Gambling Commission and the professional bodies. As set out in the Government’s response to the review of the supervisory regime, the annual report will be strengthened with a new requirement for supervisors to provide relevant information to inform the annual report. This will be expanded to include two new questions on enforcement activity.

I hope that noble Lords will recognise and commend the considerable government activity in relation to the anti-money laundering regime. On that basis, I hope that the noble Baroness will withdraw her amendment.

[Lord Rosser]

For clarification, the Minister referred to the Government’s intention to create a new office for professional body AML supervision, hosted by the FCA. If my memory serves me right, she said that it would be in existence in early 2018. That of course is still out for consultation, is it not? That is the document where responses were called for by 26 April. It may be that all the responses about the proposed body were negative, in which case presumably the Government may wish to think again. Does that mean that setting up this new office will not require any legislation and that there will not be a need for legislation, for example, to define its powers and responsibilities?

[Baroness Williams of Trafford]

It may be helpful to the noble Lord if I reiterate the point that I made. The Treasury published the outcome of the review on 22 March and is now conducting further consultation on the creation of the new body, which will be overseen by the FCA and will be up and running by the start of 2018.

On his question of whether legislation—secondary or otherwise—will be required, perhaps I may write to him. I think that it will be secondary legislation but I cannot be certain.

[Lord Rosser]

Is the Minister saying that setting up a new body that will have powers over other bodies can be done through secondary legislation—by a statutory instrument?

[Baroness Williams of Trafford]

I do not know, which is why I will write to the noble Lord, if he is happy with that.

Criminal Finances Bill

Lord Rosser Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Tuesday 28th March 2017 Lords Chamber

Moved by

[Lord Rosser]

109: After Clause 20, insert the following new Clause—
“Report to Parliament on impact on enforcement authorities
(1) The Secretary of State must, within 18 months of the day on which this Act is passed, lay before both Houses of Parliament a report on the implementation of this Act and the impact on enforcement authorities.(2) The report must include an assessment of—(a) what, if any, additional resources are required by enforcement authorities in order to carry out their functions and powers under this Act;(b) what, if any, additional resources have been provided to enforcement authorities to support them in carrying out their functions and powers under this Act;(c) what additional training has been provided by enforcement authorities to staff members in order to allow them to effectively carry out their functions and powers under this Act;(d) to what extent enforcement authorities have used the powers provided under this Act.(3) In this section “enforcement authorities’’ means—(a) the National Crime Agency;(b) Her Majesty’s Revenue and Customs;(c) the Financial Conduct Authority;(d) the Serious Fraud Office; and(e) the Director of Public Prosecutions (in relation to England and Wales) or the Director of Public Prosecutions for Northern Ireland (in relation to Northern Ireland).”

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[Lord Rosser (Lab)]

This amendment requires the Secretary of State, within 18 months of the day on which this Bill is passed, to lay before both Houses of Parliament a report on the implementation of the Act and its impact on enforcement authorities.

At Second Reading, it was pointed out that, if the measures provided for in the Bill are to be made to bite, the necessary resources will need to be provided. New offences and powers are created in the Bill, together with extensions of existing powers, which will require further resources, both financial and staff.

In response at Second Reading, the Government referred to the sums of money that have been invested in law enforcement agencies since 2006 and under the asset recovery incentivisation scheme over the past three years. I am not sure that that response really addressed the potential concern that had been expressed about the future and the implications for resources if the changes in the Bill in respect of new offences, powers and enhanced powers were to be effectively introduced and applied.

One’s concerns were not helped by the response from the Government to the question asked at Second Reading about the few unexplained wealth orders that were predicted—20 per year. The response was to the effect that it was a conservative estimate—presumably in more senses than one—as opposed to being a definitive indication of how often the unexplained wealth orders would be used. Has that been the basis on which other new and enhanced powers in the Bill have been assessed by the Government, and has it been done in this way to try to dampen down calls for additional resources in the quest to save money?

The Government said at Second Reading that they were already engaging with law enforcement authorities and prosecutors to encourage the use of all the new powers being introduced by the Bill. However, they went on to say that ultimately it would be for the enforcement authorities, which are operationally independent, to decide when and how often to use the new powers in the Bill. That may be true but the extent to, and thoroughness with which, enforcement authorities use the new and enhanced powers in the Bill must ultimately be determined by the level of resources they are given to carry out their new and enhanced role and responsibilities. The issue of the resources that are going to be made available to implement the provisions in the Bill, and about which we have heard very little, is a matter for government.

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[Baroness Williams of Trafford]

My Lords, I thank the noble Lord, Lord Rosser, and my noble friend Lord Hodgson of Astley Abbotts for speaking to the amendment. As with all powers introduced in legislation, it is crucial that the necessary resources are available to law enforcement and prosecution agencies so that they are used effectively. As he mentioned, ARIS is essential to this work. Under this scheme, half of all assets recovered go back to the law enforcement and prosecution agencies involved. Put simply, the more they recover, the more they get back. I am pleased to say that £764 million has been raised since 2006, and over £257 million in the last three years has been invested in law enforcement agencies under this scheme. The new powers will ensure that there are even more efficient ways of recovering assets and that they will be cheaper. Indeed, senior law enforcement officers gave evidence to the Commons Public Bill Committee that the powers will help agencies achieve more with the resources that they have. We have not downplayed the estimates in the impact assessment. These are provided subject to all the standard guidance based on input from law enforcement, the banks and others.

In addition, the Home Office share of ARIS is invested in front-line capabilities, including the regional organised crime units, which have received over £100 million in direct funding from the Home Office since 2013-14. Further to this, £5 million has been set aside from ARIS every year until the end of this Parliament to fund key national asset recovery capabilities, and we are fulfilling a manifesto commitment to return a greater percentage of recovered assets back to policing by investing all the Home Office share of the scheme’s money—above a certain baseline—in the multiagency regional asset recovery teams.

All the agencies listed in this amendment already report on their resources and results through departmental annual accounts and reports. As my noble friend said, this is about what they have achieved. They are subject to examination by the National Audit Office and Public Accounts Committee. The Criminal Finances Board, which is co-chaired by the Security Minister and the Economic Secretary to the Treasury, closely monitors resourcing, performance and support mechanisms such as training, to ensure that agencies are achieving results with the powers that Parliament imparts to them.

Finally, the Government have protected the NCA’s budget. In addition, new capital investment of over £200 million will be available over the period 2016 to 2020, to transform the NCA into a world-leading law enforcement agency, with new digital and investigative capabilities to tackle cybercrime, child exploitation and the distribution of criminal finances. The noble Lord, Lord Rosser, asked how many UWOs would be used and why so few were predicted. I said before—and the noble Lord said—that it was a conservative estimate, but we will encourage their use from day one. We are already actively engaging with law enforcement and prosecutors to encourage the use of all the new powers being introduced by the Bill. I hope with those words that the noble Lord is satisfied with my response. I know that we will keep an eye on this in the future but, for now, I hope that he will feel happy to withdraw his amendment.

[Lord Rosser]

I thank the Minister for her response and the noble Lord, Lord Hodgson of Astley Abbotts, for his contribution. The noble Lord’s main criticism of the amendment—not the only one—was that it did not provide for the authorities mentioned to say what they had achieved. I would have thought it was for the Government to say what they expected the authorities concerned to achieve in the light of the provisions of the Bill and the new offences and enhanced powers that they were giving the agencies. As yet, however, I have not heard anything from the Government about what they expect the agencies to achieve as a result of the Bill. There is some difficulty in requiring the agencies to report when the Government have not set them any targets that they are meant to attain. I do not know whether it is the Government’s intention to tell noble Lords at some stage what they think the agencies should be able to achieve in respect, for example, of a reduction in money laundering or the number of people who are arrested as a result of carrying it out. What do they expect the agencies to achieve in relation to the additional powers in the Bill? I do not know if this is something on which the Minister is prepared to write and tell me. What are the goals that the Government think these additional powers, and the resources that they say they are going to put in, will be achieved by the agencies? That is what is missing.

We have been having debates about the new powers and the noble Baroness has reminded us of the amount of money that has been provided so far, but what we are not getting is what the Government think the Bill will achieve to improve the situation. Is the Minister, either now or at some stage in the future, able to give me any idea of what the Government are expecting as a result of the new and enhanced powers in the Bill?

[Baroness Williams of Trafford]

My Lords, as the noble Lord will know, the Government have not been fixated on targets, but we most certainly will have expectations of what can be achieved and they will be laid out in due course.

[Lord Rosser]

How will they be laid out? Are they to be set out in regulations or will the Government be making a Statement?

[Baroness Williams of Trafford]

I would guess that they will be laid out in regulations and they will be revealed in due course.

[Lord Rosser]

We await the regulations with interest.

[Baroness Williams of Trafford]

Perhaps I may intervene once more. I will confirm in writing to the noble Lord that they will be laid out in regulations. I do not want to make misleading statements at the Dispatch Box, but I can let him know in due course.

[Lord Rosser]

I would be happy for the noble Baroness to write to me, but whether the letter will set out what she has just said remains to be seen. However, I am happy for her to write to me on this issue; it would be very helpful. With that, I beg leave to withdraw the amendment.

Amendment 109 withdrawn.

Illegal Imports: Dangerous Materials

Lord Rosser Excerpts

Monday 13th March 2017 Lords Chamber

[Baroness Williams of Trafford]

The British Government do take it very seriously; in fact, I was watching last night, as I am sure that the noble Baroness was, the programme that is on at teatime on Sunday, which I think is called “Countryfile”. It was about the death of wildlife and some of the wildlife crime that goes on. Yes, the Government do take it very seriously indeed.

[Lord Rosser (Lab)]

During Oral Questions just over a month ago, I suggested that figures on the number of firearms illegally imported into the United Kingdom that are seized each year were not very meaningful without an estimate of the percentage of firearms illegally imported into the UK that are seized each year. I also asked whether we were seizing most firearms that are illegally imported, or only a very small percentage. On behalf of the Government, the Minister has since written to me to say that the information that I was seeking was,

“operationally sensitive and not suitable for release”.

Why is it operationally sensitive? I hope that it is not operationally sensitive because of the low percentage of firearms illegally imported into the UK that are seized each year. Certainly, withholding information is very helpful to the Government, since it means that they cannot easily be held to account for their failures, which were identified by the Metropolitan Police Commissioner last September, and to which my noble friend Lord Harris of Haringey has already made reference. Will the Minister look again at the figures and information that the Government can provide on this issue? Governments should be able to be held to account.

[Baroness Williams of Trafford]

I agree with the noble Lord that Governments should be held to account, but I cannot give him the figures. I hope that he will understand that I simply cannot give him the figures. I was going to suggest that we meet, at some point, the noble Lord, Lord Harris, given his sustained interest in this subject. Perhaps we could talk through some of the issues that he is concerned about.

Criminal Finances Bill

Lord Rosser Excerpts

2nd reading (Hansard): House of Lords
Thursday 9th March 2017 Lords Chamber

[Lord Rosser (Lab)]

My Lords, I thank the Minister for setting out the purpose and provisions of the Bill and for her earlier letter which covered the same ground. The Government’s Explanatory Notes on the Bill state that it makes,

“the legislative changes necessary to give law enforcement agencies, and partners, capabilities and powers to recover the proceeds of crime, tackle money laundering and corruption, and counter terrorist financing”.

The notes go on to say:

“The measures in the Bill aim to: improve cooperation between public and private sectors; enhance the UK law enforcement response; improve our capability to recover the proceeds of crime, including international corruption; and combat the financing of terrorism”.


This Bill has already been through the House of Commons, where we supported its aims and objectives but pursued points which reflected our feeling that the Bill did not go as far as it could have done in providing statutory and other backing for investigating and combating money laundering, tax evasion, corruption and the financing of terrorism in this country and overseas. Our approach in this House will be very similar.

As the Minister has said, the Bill provides for new orders and powers and enhancements to existing orders and powers: in particular, a new unexplained wealth order; increasing the scope of disclosure orders to cover money laundering investigations; an extension of existing seizure and forfeiture powers; a strengthening of suspicious activity reporting; a widening of investigatory powers into the funding of terrorism; and an extension of facilitating tax evasion offences to companies involved in such activities.

In her letter to which I referred, the Minister said that this Bill had been described by Transparency International UK as,

“one of the most significant pieces of anti-corruption legislation in the past few decades”.

However, unless I am mistaken, Transparency International, in expressing its concerns about the UK’s role as a safe haven for corrupt assets, has also said that,

“The UK’s Overseas Territories should require company beneficial ownership information to be made public, in a format that is free and searchable”—

an issue that this Bill does not address. The United Kingdom publishes a central register of beneficial ownership—why not our overseas territories as well? Surely we have a responsibility to ensure transparency in our tax havens.

The British Virgin Islands was by far the most widely used tax haven in the Panama papers, with over half of the 214,000 corporate entities that came to light in the Panama papers being registered in the British Virgin Islands. More than 75% of corruption cases involving property investigated by the Metropolitan Police’s proceeds of corruption unit involved anonymous companies registered in secrecy jurisdictions, 78% of which were registered in the UK’s overseas territories or Crown dependencies.

Three years on from the first request from then Prime Minister to our overseas territories to consider public registers, only Montserrat has so far committed to introducing such a register. The only agreement so far has been to create central registers of beneficial ownership and provide UK law enforcement agencies with access within 24 hours. Yet, in 2014, the then Prime Minister wrote to the overseas territories stating that,

“beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion”.

What do the Government intend to do about this situation?

Unfortunately, the Government have confirmed in the letter of 6 March sent to Members of this House that they have significantly changed and weakened their previous stance to which I have just referred. Their stance now, as the letter says, is simply:

“It remains our ambition that public registers become a global standard. If and when they do, we would expect the Overseas Territories and Crown Dependencies to follow suit”.


The United Kingdom, along with its overseas territories and Crown dependencies, is the biggest secrecy jurisdiction in the world, and yet there is no question now, as far as the Government are concerned, of expecting our overseas territories and Crown dependencies to follow us and establish public registers of ownership. Instead, the Government’s approach is that if public registers become a global standard, they would expect our overseas territories and Crown dependencies to follow suit. If public registers do not become a global standard, then that presumably is the end of the matter as far as the Government are concerned.

As long ago as 2011, a World Bank study found that 70% of over 200 corruption cases involved the use of anonymous shelf companies to launder funds and conceal the identity of corrupt politicians. Anonymous companies are also used to launder corrupt and illicit funds into the UK, and transparency about the beneficial owners of these companies—companies which can be created in a matter of hours—has been identified as an important part of the solution to tackling the laundering of such funds.

The OECD has estimated that tax havens may be costing developing countries a sum of up to three times the global aid budget. Corruption hits developing countries very hard: around $1 trillion flows out of developing countries via illicit financial flows every year. Africa is a net creditor to the world. Private registers of beneficial ownership will not be accessible to people in developing countries, which is where people suffer the most from the financial secrecy that tax havens offer. The reality, surely, is that, as more registers of beneficial ownership become public—as has happened in this country—the quicker that will become the norm and universally accepted. The EU Parliament has now voted for public registers of beneficial ownership to be in place across the EU.

Maybe there is some overwhelming reason why action cannot be taken in regard to our overseas territories. If so, no doubt the Government will set that out in responding at the end of Second Reading. It certainly does not appear that there is a bar in legislating, because, as I understand it—perhaps incorrectly—as a matter of constitutional law the UK Parliament has power to legislate for the overseas territories.

While this Bill addresses the issue of corporate liability, amendments were nevertheless tabled in the Commons to extend the application of a “failure to prevent” approach in the Bribery Act 2010 to other forms of economic crime, such as fraud and money laundering. The Government have called for evidence on this issue, but there needs to be sufficient deterrence to corporate misconduct, and arguments have been put forward that there should be a strict, direct corporate liability offence, along the lines of, I believe, Section 7 of the Bribery Act 2010. Perhaps the Minister can respond to that point when she replies to the debate.

A case can also be made for saying that the ability to prosecute companies should be extended not only to economic crimes but also to cases of severe harms caused to individuals, including those overseas. The Business & Human Rights Resources Centre recorded over 300 allegations of human rights abuses made against 127 UK-linked companies between 2004 and 2014. Despite evidence that some companies were potentially repeat offenders, there have been no corporate criminal prosecutions. Nearly half of the allegations were made against extractive companies. Are the Government looking to extend the terms of this Bill to enable prosecutions to be made more feasible against companies, as opposed to individuals, for crimes of this kind?

Billions of pounds in corrupt money comes into this country every year. The National Crime Agency has indicated that the amount of money laundered in this country each year could be as high as £90 billion. It is not clear, though, what provisions in this Bill are intended to address the effectiveness, or otherwise, of our anti-money laundering system. There are a large number of supervisory bodies in the relevant sectors, which leads to a fragmented approach over identification of risks and their mitigation and the approach to enforcement. It also raises the question of whether some of the 27 supervisory bodies have conflicts of interest when 15 are also lobby groups for the sectors they supervise, for example. Once again, it would be helpful if the Minister could address this point about the need to overhaul our anti-money laundering system if we are to stop billions of pounds of corrupt money coming into this country each year, and indicate how this issue is addressed in the Bill.

On the enhancements to the suspicious activity reporting regime, will there also be, for example, a system for prioritising suspicious activity reports in order to help ensure that the resources of the law enforcement agencies are deployed to maximum effect and benefit? There were over 380,000 suspicious activity reports in 2015, ranging from the theft of small amounts of petty cash to suggestions of serious organised crime. What are, and will be, the procedures for ensuring that scarce resources are not spent processing minor crime reports coming via the suspicious activity regime at the expense of investigating more serious activity reports?

If the measures provided for in the Bill—which we support, albeit that they could have gone further—are to be effective and made to bite, the necessary resources will need to be provided. Whether we are talking about the new offences and powers in the Bill or the extension of existing powers, further resources, not least financial and staff resources, will surely be required. What are the Government’s intentions in this regard, and which agencies will be responsible for implementing and enforcing the new powers set out in the Bill, apart from the National Crime Agency? For example, will Border Force be involved, or the many individual police forces in this country, and if so, in what way? What is the Government’s assessment of the impact of this Bill on the forces and agencies, including our security and intelligence agencies, which will be responsible for implementing its provisions?

I have indicated our support for the aims and objectives of the Bill, but as I have also stated, there are areas where we think that more could be done than appears to have been provided for. There is also the issue of resources and the effectiveness of our systems and processes, not least in relation to combating money laundering. As the Minister has said, the Bill is not seeking to address victimless crimes. We want it to prove to be about more than just good intentions. Instead, it should play a key part in the process of ending the situation where this country appears to be a money-laundering hub so that we show what can be achieved, in particular on coming down hard on money laundering and the purposes for which it is used, as well as on tax evasion through schemes and arrangements that have not been cleared by revenue and customs. We want to ensure that we can show the wider world what can be achieved in this regard.

European Union: Migration

Lord Rosser Excerpts

Tuesday 7th March 2017 Lords Chamber

[Baroness Williams of Trafford]

My Lords, I cannot be accountable for what happened in the past. We have been a very, very generous country in terms of letting people come here for the purposes of work. There was a very clear message sent last year about controlling the numbers of people who come into this country from both EU and non-EU countries. That is what we intend to do and we will keep Parliament fully involved in the process.

[Lord Rosser (Lab)]

On 12 January the Government stated in response to an Oral Question:

“The directive sets out that in order for an EU citizen to reside in another member state beyond three months, they must be exercising a treaty right; that is, working, self-employed, self-sufficient or a student”.


After being asked three times why they did not implement this three-month rule for EU citizens still here without a job, but who were not students, the Government said,

“it is not a failure to implement … This country is more than generous in its implementation of that directive”.—[Official Report, 12/1/17; col. 2059-61.]

First, why do the Government maintain that it is only by leaving the EU that we can reduce EU migration, when they accept that they have not applied the EU directive’s three-month rule as firmly as they could have done, instead considering that they have been “more than generous” in their implementation of that directive? Secondly, how much lower would the net migration figure for EU nationals have been in each of the last five years, had they applied the directive as firmly as they believe they were entitled to do?

[Baroness Williams of Trafford]

My Lords, as the noble Lord said we have been a very generous country, and certainly when Labour was in power it decided not to exercise the opt-out the noble Lord asked about. In terms of what the figures would have been had we adopted a different process, we are where we are. The country has given a very, very clear message in the referendum and we intend to follow that through by making sure that net migration to this country is in the tens of thousands.

Operation Conifer

Lord Rosser Excerpts

Tuesday 7th March 2017 Lords Chamber

[Baroness Williams of Trafford]

I thank my noble friend for that question. He will know that it is not appropriate for me to comment on individual operational matters, which are a matter for the relevant chief officer. As I have said, chief officers are held to account in respect of operational matters by their police and crime commissioner. In line with recognised best practice, Wiltshire Police also recently commissioned Operation Hydrant to undertake an independent review of the investigation to ensure its ongoing proportionality and justification. My noble friend talked about the secret and unnamed group. It is recognised as best practice and that is what Wiltshire Police has done. It has engaged a panel of independent experts outside policing who are providing ongoing scrutiny of the investigation to ensure its proportionality and justification. The membership includes individuals from the legal profession and academics.

[Lord Rosser (Lab)]

The newspaper quotations last month came from an anonymous source claiming to know the views of the chief constable for Wiltshire. This raises the issue of the relationship between the police and the national press and makes the case for Leveson part 2 even stronger. Coming to the role of the police and crime commissioner to which the Minster has referred, the second issue relates to the call for a government-instituted judicial inquiry into Operation Conifer, the investigation by Wiltshire police. Will the Government confirm that the Wiltshire police and crime commissioner has the power to commission such a judicial inquiry into an operation by his own force? Thirdly, will the Government confirm that if any hard evidence actually emerged that the chief constable had made the comments claimed by the anonymous newspaper source, the Wiltshire police and crime commissioner could, under his powers, suspend or dismiss the chief constable? In other words, is the ball not very much in the elected Wiltshire police and crime commissioner’s court?

[Baroness Williams of Trafford]

The noble Lord raises a very good point about the role of the police and crime commissioner in this situation. Without talking about the specific case about which the noble Lord, Lord Armstrong, has asked, it is for the police and crime commissioner to make the decision to appoint, to suspend or to remove a chief constable. In making the decision to compel a chief constable to resign or to retire, a PCC is bound by certain requirements including acting reasonably, acting fairly and consulting the chief constable and the local police and crime panel. A PCC may compel a chief constable to resign or to retire under Section 38(3) of the Police Reform and Social Responsibility Act 2011.

Police National Database: Facial Images

Lord Rosser Excerpts

Thursday 2nd March 2017 Lords Chamber

[Baroness Williams of Trafford]

From now on; the noble Lord is absolutely right. However, if your face is currently on the database, you can say, “It has been on there for 10 years and please will you remove it?”.

[Lord Rosser (Lab)]

As has been said, the review has just been announced by the Government in a Written Statement of 24 February. Interestingly enough, the Statement managed to make no reference to the fact that the review arose from a judgment against the Government in 2012—which begs the question of why that was not included in the Statement—and we will have to wait to see whether the arrangements now proposed will lead to another legal challenge. Since the recommendation for a review, which is being adopted, is that “unconvicted persons” can,

“apply for deletion of their custody image”—

that is, they have to take the initiative to apply, which is the point that the noble Lord, Lord Paddick, is making, but I do not wish to repeat the question that he asked—what steps will the Government take to ensure that widespread publicity is given to the fact that millions of unconvicted peopled can now apply for deletion of their custody image? What form will the Government’s advertising and publicity campaign take, since the 2012 judgment was in a case against the Secretary of State? How much money do the Government intend to spend on their advertising and publicity campaign to advise millions of people of their right in respect of deletion of their record?

[Baroness Williams of Trafford]

The noble Lord is absolutely right that the Government recognised that the 2012 judgment said it was contrary to Article 8 of the European Convention on Human Rights, and that has now been addressed through the custody images review. I assume that there will be something on GOV.UK about publicity regarding innocent people whose faces are still on the database, but I will get back to the noble Lord on the precise steps that we will take.

Terrorist Attack: Response

Lord Rosser Excerpts

Thursday 23rd February 2017 Lords Chamber

[Baroness Williams of Trafford]

My Lords, some of the work that the Government have done in terms of disrupting journeys through the Prevent programme has been very effective, both in preventing people going to Syria and in preventing people’s minds being poisoned by certain ideologies which run contrary to our rule of law.

[Lord Rosser (Lab)]

The Question is about the Government promoting and supporting charities which give guidance to the public on how to react in the event of a terrorist attack, but we also need to support those trying to prevent terrorist attacks in the first place, and we too extend our congratulations to Cressida Dick on her appointment as the next Metropolitan Police Commissioner. Could the Government say whether they have had any concerns raised with them, other than in Parliament, about the actual or potential impact of cuts in police budgets—whether already implemented or now being required to be made in police budgets—in real terms on the effectiveness and thoroughness with which the police will be able to play their part in preventing and combating acts of terrorism in the future? If so, from what sources have those concerns come and what has been the Government’s response to them?

[Baroness Williams of Trafford]

I can tell the noble Lord that £144 million over five years has been put into armed policing capability, which is obviously vital in situations such as this, to allow them, as he says, to respond more quickly in such eventualities. The number of armed police will increase by more than 1,000 over two years, and additional round-the-clock specialist teams will be deployed outside of London. In addition, there will be 40 extra armed police response vehicles on the street.

Crime: Firearms

Lord Rosser Excerpts

Thursday 9th February 2017 Lords Chamber

[Baroness Williams of Trafford]

I have all sorts of facts and figures but I do not have that one, so I will write to my noble friend on that point.

[Lord Rosser (Lab)]

Does the Minister agree that figures on the numbers of illegal firearms seized each year are not very meaningful without an estimate of the percentage of firearms illegally imported into the UK that are seized each year? Is she able to tell us whether we are seizing most firearms that are illegally imported or only a very small percentage?

[Baroness Williams of Trafford]

That is a very difficult question to answer in reference to the first Answer that I gave. However, I can give examples of seizures, for example through Operation Dragon Root, during a specific period of time. In the October operation, there were 282 confirmed arrests and the recovery of 833 firearms, as I think the noble Lord, Lord Harris, pointed out. There were also seizures of 169 other weapons, 4,385 rounds of ammunition and over £575,000 worth of cash.

Child Refugees

Lord Rosser Excerpts

Thursday 9th February 2017 Lords Chamber

[Baroness Williams of Trafford]

I presume the noble Lord refers to children both at home and abroad. Obviously, if a child is in Greece, Italy, France or wherever, it is the responsibility of that Government to safeguard that child. I said to the noble Lord that I did not have evidence of disappeared children in this country. That is not to say that in future that may not happen, but at this point we have had no representation from local authorities to say that children are disappearing. Obviously, if that were to be the case, we would follow it up with some urgency.

[Lord Rosser (Lab)]

My Lords, yesterday my noble friend Lord Dubs in this Chamber asked the Government,

“to confirm the news that we have heard about the Government intending to bring to an end the scheme under Section 67 of the Immigration Act”,

namely, the Dubs amendment. In response, the Government told the House:

“A Written Ministerial Statement will underscore that, far from doing that, Section 67 of the Act … stands”.—[Official Report, 8/2/17; col. 1715.]


Why was no reference made yesterday by the Government to any cap of 350 when that response was given to the very specific question from my noble friend Lord Dubs?

Can the Minister also respond to a question about the Written Statement? It says:

“Local authorities told us they have capacity for around 400 unaccompanied asylum-seeking children until the end of this financial year”.


What capacity have local authorities told the Government they have for unaccompanied asylum-seeking children in the 1917-18 financial year on the basis that the current level of government funding is continued?

[Baroness Williams of Trafford]

My noble friend referred the House to the Written Ministerial Statement in which the figure of 350 was iterated; clearly, the WMS was laid not long before Questions began. I cannot remember the second part of the noble Lord’s question.

[Lord Rosser]

I am happy to repeat it because it is a quote from the Government’s own Written Statement:

“Local authorities told us they have capacity for around 400 unaccompanied asylum-seeking children until the end of this financial year”.—[Official Report, Commons, 8/2/17; col. 10WS.]


What capacity have local authorities told the Government they have for unaccompanied asylum-seeking children in the next financial year, namely 1917-18, on the basis that the current level of government funding is continued?

[Baroness Williams of Trafford]

I think the noble Lord means 2017-18. Obviously, as I have said to noble Lords, the Government are in constant consultation with local authorities on a range of things, including this. The scheme is entirely voluntary. We do not want to force local authorities to do things that they may not have the capacity to fulfil. Children are of paramount importance.