Autocrats, Kleptocrats and Populists

Baroness Kramer Excerpts

Thursday 3rd February 2022 Grand Committee

[Baroness Kramer (LD)]

My Lords, the crisis in Ukraine has finally put on the front pages an inconvenient truth largely, if not deliberately, ignored by the Government. The safe haven and money laundering which the UK provides to kleptocrats and oligarchs sustains, enables and rewards pretty much any and every corrupt and autocratic regime on the globe. In 2016, the UK Government estimated that the amount of corrupt money flowing into the UK had reached £100 billion a year.

The Government introduced legislation, particularly the Proceeds of Crime Act, to tackle some aspects of economic crime transacted by what I might call traditional organised crime, but they have notably avoided the key pieces of legislation necessary to stem the laundering of money from oligarchs and kleptocrats. Their money is laundered particularly through UK property. Transparency International has identified at least £1 billion in property bought with suspect money from Russia alone. That will never be stemmed until we have legislation to require not just a register but a public register of the beneficial owners of property in the UK, enabling civic society and activists across the globe to aid our woefully understaffed and fragmented enforcement bodies and regulators, described by Chatham House as "weak and under-resourced”. That legislation was fully drafted weeks—possibly months—ago but, for some reason, the Government have chosen to halt it. Perhaps the Minister would tell us why. We also need proper verification of the Companies House public register of the beneficial ownership of companies. Will the Government tell us when we can expect its introduction—we have been waiting for months—and the other reforms of Companies House regulations?

Other gaping loopholes exist in some of our overseas territories and crown dependencies which do not yet have public registers of the beneficial owners of companies or property. We in the Lords thought that we had, in recent Financial Services Acts, fixed this problem, but the Government have used every strategy they can muster not to force changes. Will the Minister now update us? While UK property is at the heart of what is now known globally as the London laundromat, the other locations which make up the British financial family are almost as important to the kleptocrats.

The Americans have stopped being polite about the problem. The Center for American Progress, very close to the Biden Administration, has called for a joint US-UK counter-kleptocracy working group; in other words, they just do not trust us to take effective action on our own. I ask the Minister: will we agree to it? I suspect we have all read this quote:

“uprooting Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the United Kingdom’s ruling Conservative party, the press, and its real estate and financial industry”.

However, Government laxity, some might say collusion, is far from the only problem. As other have said, we need to go after the enablers—I quote the CAP again—

“the law firms, accountants, real estate firms, and investment firms that all profit from integrating Russian oligarch wealth into the West.”

Will the Government introduce a “failure to prevent” to stop such enablers? Speaking of prevention, will the Government end their disgraced golden visa scheme, described by Chatham House as a national embarrassment?

Free ports are now being introduced to the UK, with a proposal that there will be a register of beneficial ownership of businesses in them but that it will not be made public. Will the Government accept my amendment on this issue, recognising the importance of a public register, not a secret one, particularly given our weakened enforcement agencies? Will they take up my Private Member’s Bill to create an office of the whistleblower to provide proper protection for whistleblowers, who are presently ruined by their disclosures, but whose actions are vital to effective enforcement against powerful people such as oligarchs and kleptocrats?