Sanctions and Anti-Money Laundering Bill [Lords]

Alex Norris Excerpts

2nd reading: House of Commons
Tuesday 20th February 2018 Commons Chamber

[Alex Norris (Nottingham North) (Lab/Co-op)]

As I have been sitting here listening to the debate, I have had a growing sense of déjà vu with regard to a similar sedentary vigil just before the recess when we debated the Nuclear Safeguards Bill. That is an important piece of legislation that we need as we leave the EU and seek to quickly and safely reproduce the benefits of our EU membership. It is in the same vein that we consider sanctions and anti-money laundering provisions. We must have arrangements in place not only because sanctions and anti-money laundering provisions are important causes, but because we have international duties to fulfil. This must be done, as is widely accepted across the Chamber.

Nuclear safeguards are of course high-impact, but also relatively easy to define and understand. That makes things a bit easier. We have civil nuclear matter, we need it, we want to move it, and we do not want it to fall into the wrong hands. Our current arrangements work, and we want to continue to have the same level of protection and safeguards. We cannot say the same about this area of murky finance, with money moving across boundaries and individuals profiting from criminal activities and then seeking to legitimise that wealth elsewhere. This is an ever-changing world, so our arrangements must be able to keep up. As we have heard very powerfully from Members throughout the Chamber, our current arrangements leave a lot to be desired. It would therefore be remiss of us just to lift and shift current systems; we should seek to improve them, and I will suggest a couple of ways in which we might do so.

First, I want to address the issue of the EU’s fifth anti-money laundering directive. This has now been agreed in principle between the EU and member states, of which we are still one, but it is scheduled for a phased introduction from next year, presumably falling during a post-Brexit transitional period. We have not had a lot of clarity from those on the Treasury Bench about how we will approach this. I hope that we will not see a request for us to concede a boatload of secondary legislation to Ministers. There was considerable interest about that in the other place, and I think we can do better. Even the hon. Member for Amber Valley (Nigel Mills), who is not currently in his place, said that we ought perhaps to transpose the directive into our law. When we hear the hon. Gentleman talk about transposing EU directives, we really are in a special place.

So what could we do about our sanctions regime? Currently, we lag behind the US and Canada. We need a targeted, flexible approach that promotes human rights and protects innocents from paying the price for the crimes of their leaders. That is why we have heard many voices call for Magnitsky-style amendments to the Bill. I add my voice to that. Such provisions allow us to pick and choose public officials from around the world who have committed human rights abuses or violations, and seize their assets and ban their travel. Such sanctions work because they target the wrongdoer specifically. A broader sanction or embargo at a national level punishes all, and often those who can least afford it bear the burden. Instead, such provisions target the people we need to get to. They would give Ministers flexibility and promote our attempts to meet our human rights goals as a country. We could underpin that—I am very keen on this, and it has not been mentioned yet—with humanitarian impact assessments of any sanctions that the Government impose. When our Government seek to impose sanctions, it is reasonable that we ought to have a clear understanding of their impact on the wider community in the affected area.

With regard to the anti-money laundering provisions, I start with the obvious: it is time for a property register. The initial commitment was made by the Government in 2016; we are now told that it will be operational in 2021. That will not do. This Bill is a good opportunity for us to pick up the cudgels and get on with it. Bricks and mortar is an obvious place to start, where we can disrupt the supply chain and follow the money. That would also have benefits in affected communities through releasing properties for people who actually wish to live in them.

That would help us at home, but we need to take on the broader challenge across the world. We will have failed if we get to the end of the process with a gold-standard piece of legislation—as I very much hope we will—but find that those high standards can be easily circumvented through a British overseas territory or Crown dependency. I know that this is controversial and there are strong feelings on it, but while we have a relationship whereby this Parliament has responsibility for defence, security and foreign relations in those territories, we should continue to take a strong interest in money laundering, because it sits at the very root of all those things. When the British Virgin Islands is at the heart of the Panama papers and Oxfam rates Bermuda as the No. 1 worst corporate tax haven, we should want to act and use all the tools that we can. Notwithstanding the qualifiers heard from the Government Benches, it is not too much to ask that we should see a public register of beneficial ownership of companies in the overseas territories and Crown dependencies.

The final way we could improve is by looking at the role of the banking system in preventing money laundering. We know that banks are under pressure to serve the bottom line and that they can have their heads turned when they encounter potentially profitable customers. We also know that relative to estimated levels of money laundering, regulatory fines have been low. When penalties are low, rewards for looking the other way are high. When there is little personal reputational risk, these things can happen.

The current legal framework is inadequate, and we should seek to change it. Two years ago we had a consultation on creating a specific “failure to prevent economic crime” offence, which would have covered money laundering. That was downgraded to a call for evidence, which closed in March 2017. It has been nearly a year, and we have not seen the fruits of that. I know as well as anybody what 12 months can do in life—it has been a big 12 months for me—but it is time we got around to this.

In conclusion, how we approach the Bill will tell us a lot about Britain’s place in the world post Brexit. Do we still believe that we have an outward-looking leadership role? Do we still seek to set high standards for ourselves and others? Are we keeping up with the pace of the modern world and the changing nature of crime? I believe that we ought to want to do all those things, and that we can use this Bill to do so.