Economic Crime (Transparency and Enforcement) Bill

Baroness O'Loan Excerpts

2nd reading
Wednesday 9th March 2022 Lords Chamber

[Baroness O’Loan (CB)]

My Lords, it was a privilege yesterday to listen to the brave and compelling words of President Zelensky on the situation in Ukraine. We are at a pivotal moment in the history of this world and we stand again at an abyss. Brave people in Russia are trying to stand up against the invasion of Ukraine by their own leaders, but their efforts are being ruthlessly suppressed. We should pay tribute to those who go out on the streets of Russia to protest, knowing that there is no right of freedom of speech in that country and that their actions will inevitably attract sanctions.

President Zelensky asked that we do all we can to increase the sanctions against Russian kleptocrats and other criminals. The economic crime Bill is but one small measure that will allow that to happen; we must not escalate the conflict, but this measure should help a little. There is a widespread view that its effects need to be more immediate. I welcome the Bill, limited though it is, as so many noble Lords have observed.

I want to make one small point. Clause 48 creates a more robust power to impose monetary penalties by amending the Policing and Crime Act 2017 so that a person will be liable to sanction if a breach of a prohibited act or failure to comply with an obligation can be proved. Whether they had knowledge or reasonable cause to suspect that their actions were in breach of a sanction is irrelevant. If there has been a breach, fines, which can be very substantial, may follow. The clause enables greater flexibility in the decision-making process, permitting decisions to be made by other officials in the department rather than a Minister. It could be argued that the power in this section is so extensive that decisions should continue to have to be made by Ministers. At the very least, guidance should ensure that any official given such a power should be of an appropriately senior level.

Taken together, Clauses 48 and 46—the latter changes the costs regime following enforcement action—may give rise to questions about the Government’s assertion that the safeguards available in the legislation fully protect a person’s rights. There is an urgent need to prevent the kind of money-laundering activities to which the Bill is directed. Judges will have discretion as to the kind of costs orders that are made. It is important, though, that the procedures we adopt are capable of withstanding scrutiny and challenge.

Clause 46 amends the Proceeds of Crime Act 2002. Of course, that Act has many deficiencies, not least that the person subject to the inquiry and to the POCA proceedings sells the property identified, often at a price significantly lower than the normal market price. However, this is an amendment to the Proceeds of Crime Act relating to who bears the costs of proceedings, as other noble Lords have stated, associated with unexplained wealth orders, where a person who is not found guilty of any breach or any offence may have to pay very substantial costs, possibly greater than any fine, unless they can prove that the enforcement authority acted either unreasonably or, alternatively, dishonestly or improperly—whatever “improperly” may mean. Notwithstanding this, there are concerns that, given the complex and sensitive nature of such proceedings and the investigation that precedes them, it could prove profoundly difficult to meet this test of improper behaviour, dishonesty or unreasonableness.

I ask Her Majesty’s Government whether they can assure the House that these provisions fully protect a person’s rights not to find themselves with a very large costs bill resulting from an unfounded allegation or action, so that those with legitimate funds to invest in the UK will not be deterred from so doing. In saying this, I do not in any way detract from the condemnation of what is happening in Ukraine at present.