Economic Crime: Law Enforcement

Alison Thewliss Excerpts

Thursday 7th July 2022 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

It is a pleasure to come to the House this afternoon. Even with all the chaos and politics outside, we have come together to have a very good debate and to share comprehensive ideas and solutions to the ongoing issue of economic crime.

I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) and the right hon. Member for Barking (Dame Margaret Hodge) for coming together to secure this debate. We often all agree whenever we have such debates, and it is for the Minister to respond to our comprehensive agreement and suggestions. I have often been in discussions on economic crime in which all the experts in the room have solutions but the Government are way behind in implementing them. I urge the Minister to work with his colleagues and others to bring those experts together so that we can get to some kind of solution. It feels like we have been talking about this throughout my time in Parliament, and there has been relatively little action.

Enforcement is crucial. The Government can have the best rules in the world, but if they do not follow through with enforcement, as they have not in many cases, there is almost no point in having those rules at all. If criminals realise that they are going to get away with it, the rules do not matter. I am sure the Minister will address what has been said about the Financial Action Task Force but, again, there is a gap between the rules and the enforcement; between what the FATF has said about the UK and the UK regime and the actual reality on the ground.

A number of Members highlighted that things move fast in this area. The hon. Members for Thirsk and Malton and for Strangford (Jim Shannon) both mentioned crypto-exchanges and cryptocurrencies, which is a fast-moving and fast-developing situation that means money can move away from people very quickly. Tracing that money then becomes incredibly difficult.

It strikes me that perhaps the Government need to get further into the expertise of this sector, because the criminals who do these scams and financial crimes are always several steps ahead of the Government on the technology, skills and expertise. It takes the Government and legislation an awfully long time to catch up with the fraudsters’ expertise.

The issues with Action Fraud—or inAction Fraud—have been set out very clearly by many people. It has been a problem for years, and I understand that the Scottish Government do not pay into Action Fraud because they do not see the value. They get nothing from it, so instead they look to our police force to deal with fraud. I will talk a wee bit about that, too.

We have a crime campus at Gartcosh just outside Glasgow. When Assistant Chief Constable Patrick Campbell gave evidence to the Treasury Committee as part of its economic crime inquiry in early 2021, he talked about the value of the crime campus. There are 27 enforcement bodies in one location, so people can speak to each other as they go about their business. They are made to communicate because of the useful way in which the campus is set up.

Patrick Campbell also talked about Scotland’s economic crime and financial investigation unit, detailing that 150,000 officers are tasked with serious organised crime and high-level fraud, and 17,000 people are gathering that information on the frontline and making sure that people know where to report these crimes. That contrasts with the fragmentation across the plethora of UK agencies, as the Treasury Committee’s report highlighted. Nobody has proper responsibility and proper oversight over economic crime in the whole UK, which really shows when it comes to enforcement.

Some very good suggestions have been made, and I would welcome more executive responsibility and liability for economic crime. A duty to prevent economic crime is crucial, and a good comparison was made to the Health and Safety Executive. Because nobody is responsible or accountable for economic crime, it is difficult to see anybody doing anything about it. I would extend that to social media companies—some of the evidence we took in the Treasury Committee reflected this—because they are where an awful lot of fraud happens these days.

I went to an event in this place with TSB Bank, which sent me some more information about the levels of fraud on social media platforms. It reported that between January and March, 70% of that fraud came through Meta companies—24% on Facebook and 46% on Instagram—with 4% on Snapchat and 23% on other social media platforms. Why is Meta not being held to account for the fraud on those platforms? It is not Facebook, Instagram or Snapchat that have to pay up for such fraud, but the banks. That fraud is not the banks’ fault. They are not facilitating it; the social media companies are.

[Kevin Hollinrake]

The hon. Lady makes an important point. The point about the failure to prevent offence is, of course, that it does not just apply to the banks; it could also apply to the companies she talks about, which are facilitating the scamsters who facilitate the crime. It could also apply to the senior executives in the organisations she refers to.

[Alison Thewliss]

I absolutely agree. The hon. Gentleman made a point about the fraud coming through on his WhatsApp. There is a real problem there; such fraud is taking place on those platforms. If they did not exist, perhaps the fraud would happen in a different way, in a different place. However, social media companies ought to be taking real responsibility. TSB said that one of the highest value incidents within the period I have mentioned was a £3,000 fraud carried out against somebody on a social media platform, with the average amount of fraud being £415. That is a lot of money for people to lose. Many people on social media might not be on particularly high incomes, but they might buy and sell across marketplaces. We see fraud where someone advertises a games console, and when people pay the money over, it never arrives, because it was literally just a picture of a games console. Some people then try to pass that on to somebody else, and more people get scammed. This is a real issue. TSB ran a sample across a week and found that 67% of those purchase scams were happening on Meta. The Government need to do an awful lot more to understand the levels of such fraud, how it is happening and how we should go about chasing it down. There is an awful lot more that can be done in that regard.

I come to the issues that the right hon. Member for Barking (Dame Margaret Hodge) so excellently and comprehensively set out about kleptocrats, Londongrad and the dirty money washing through the City of London and other places. The Government should be seeking out the experts on that, getting them to come in and exploring these things with them. I am referring to experts such as Oliver Bullough and other journalists who have done so much to expose this. Why is this still happening? Why is it still being allowed? What opportunities are there in the economic crime Bill to nail this down and do more than the Government have done so far? Although the first economic crime Bill was a welcome reaction, it was pretty small scale, and an awful lot more needs to be done.

As I often say, more needs to be done on Scottish limited partnerships, which have been used so well to facilitate such fraud. It has spread, as it does—if we push down the bubble in the wallpaper, it will come up somewhere else—to Irish limited partnerships. What discussions have the Government had with the Irish Government about what our failure to tackle this has done to their limited partnership system? What progress and what dates can the Minister give in respect of the register of overseas entities? We have talked about that for years, and nothing has yet happened. The Scottish equivalent has been set up and is operating, and the UK Government are behind.

Let us consider the impact on the wider economic system, on sanctions and on Russia. I understand that Bill Browder said this week that the UK is the world’s biggest destination for dirty money from Russia, and that

“there has not been a single Russian economic crimes prosecution in the UK”.

Why is that? What are the Government doing to ensure that nobody can get off scot-free?

I wish to talk briefly about Companies House, because I always do, and I will continue to do so until it gets fixed. Companies House is utter guff, and the register is full of complete nonsense. Will the Minister meet Graham Barrow, an expert in this area, to talk about the timescales and the process for reforming Companies House? Graham Barrow pointed out that on Tuesday this week, 4,063 new companies were registered at Companies House. That is not a sign of a booming legitimate economy, but a sign that something is very wrong with Companies House. For example, Wendy Siegelman, a journalist in the States, pointed out that a company was registered in Edinburgh in December 2020 under the name of President Donald John Trump. When she flagged that up with Companies House, the response was:

“The person was no longer President of the USA at that time.”

That is entirely missing the point; I do not think that Donald Trump is living and registering companies in Edinburgh—I think he is somewhere else in the world, doing other things just now. Companies House should be taking these issues a lot more seriously.

More seriously for the Government, Martin Williams of openDemocracy has mentioned that fraudsters have been exploiting Companies House to set up companies in the names of officials at the Ministry of Justice and Her Majesty’s Revenue and Customs. This identity fraud being perpetrated through Companies House should be of great concern to the Government, not only because it is government officials being affected, but because you, I or anybody else, Madam Deputy Speaker, could be affected by a company being registered in our name. We would then become somehow liable for it, despite perhaps never knowing anything about it. Companies House reforms are well overdue. It must be an anti-money laundering supervisor in its own right, and it must ask for verification of not only our companies, but individuals.

I could talk for longer on this—I could talk until the cows come home or we lose a Prime Minister, whichever comes sooner—but I will leave it at that. There is an awful lot to be done on this, and the Government need to listen to the experts. The Government need to get them in, get them around the table and figure out how to fix this properly, once and for all—or give Scotland the powers to do so, and we will do so ourselves.

--- Later in debate ---

[Kevin Foster]

We would accept there is a need to go further and certainly, following today’s debate, we look forward to the debates we will have on the forthcoming Bill. From what we have heard today, I think Members across the House will have thoughts, opinions and valuable contributions to make on how we can strengthen our regime, in both its legal construction and its direct impact.

We recognised in the 2021 spending review the need to invest in this area. The economic crime levy, combined with public contributions, is now an overall package of £400 million to tackle economic crime over the next three years. In the wake of Russia’s invasion of Ukraine, the National Crime Agency established a new combating kleptocracy cell specifically to combat corrupt elites, their dirty money and those who enable them to abuse our financial system. We also recognise that we need to further empower law enforcement through the forthcoming economic crime and corporate transparency Bill, which will be designed to tackle economic crime and protect our national security while supporting enterprise. The Bill will include much-needed reforms to Companies House and limited partnerships, with additional powers to seize suspect crypto assets more quickly.

[Alison Thewliss]

I welcome all reforms of Companies House, but will the Minister put it on a proper footing and make Companies House an anti-money laundering supervisor in its own right, so that it does not have to rely on third parties to fulfil that function?

[Kevin Foster]

We will set out the details in the Bill and we look forward to the debates on it, but certainly we are clear that the registrar of companies should become more of an active gatekeeper for company creation and a custodian of reliable data, including powers to check, remove or decline information submitted to it. In her contribution, the hon. Lady rightly gave the example of someone setting up a company in the name of “Donald Trump”. Clearly that was not a legitimate company being established—[Interruption.] Some hon. Members may have missed that particular example.

Some of the changes are on identity verification. In my normal role talking about immigration, we do quite a range of work on ensuring that people can validate who they are and what their status is, and we want to bring a lot of that practice into the area of company formation to remove some of the worst examples we have heard about today. I accept that many people will see that as overdue, but it needs to be done and it is something we intend to legislate on and bring forward as a key change to our enforcement structure, to ensure there are fewer opportunities to abuse the system of company registration here in the UK.

Comments have been made about the resources of the National Crime Agency. We have increased its budget year on year since 2019. Taking all NCA funding into account, its budget has increased by 32% since 2019.

In response to concerns on corporate criminal liability laws, which a number of colleagues picked up on in the debate, we have sought to establish whether there is a case for change. I think it was my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) who referred to the Law Commission and the review we asked it to undertake. As he rightly says, it sets out several options for reform; he outlined his view that he would like to see us accept them, and we are assessing them. Certainly, that is something we specifically asked the Law Commission to do because we believe it is an area that needs careful consideration.