Global Anti-Corruption Sanctions Regulations 2021

Baroness Wheatcroft Excerpts

Wednesday 26th May 2021 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, it is a pleasure to follow the noble and learned Lord, Lord Garnier, who brings his lawyerly expertise to the issue. Like him, I welcome these regulations, which are already being put to use.

Outside the EU, the UK needs its own regime to deal with corruption on the global stage, and we are getting there. Being able to freeze the assets of guilty parties and prevent them travelling to the UK has the capacity to inflict real pain on those guilty of corruption. We know that those who amass fortunes from corrupt behaviour enjoy displaying their wealth via lavish London homes, expensive public school educations for their offspring and the best private health treatment when required. Preventing them having access to that will cause genuine pain.

The instrument covers people deemed to be involved in the most harmful types of corruption. I applaud the intention but have a couple of specific questions, apart from the one raised already about the definition of serious corruption. For instance, I wonder whether the Minister can help me with Regulation 6(2)(d), which says that those covered by the regulations include a person who is

“a member of, or associated with, a person who is or has been … involved”

in serious corruption. The term “associated with” is very loose. Is there a clearer definition that could be applied?

Similarly, in Regulation 6(3)(c), a person is deemed to be

“involved in serious corruption if … the person profits financially or obtains any other benefit from serious corruption”.

I can envisage scenarios in which somebody benefits without being aware of the corruption involved in bringing that financial benefit to them. Can we not be a little more specific?

Otherwise, I welcome these regulations. There was an impassioned debate in this House following the death of Sergei Magnitsky in a Russian jail. As others have commented, he had been uncovering a massive financial fraud in his capacity as a lawyer for Bill Browder. After his death the US instituted the Magnitsky law, and I am delighted that the UK has moved to implement similar legislation. As the Minister pointed out, the anti-corruption regulations have already been used against 14 Russians implicated in the $230 million fraud that Magnitsky uncovered.

Corruption and human rights abuses often go hand in hand. The UK’s global human rights sanctions of last year are already being used against around 80 individuals and entities, including four Chinese officials and one Chinese state-run entity for the appalling abuse now taking place in Xinjiang province. These are the first sanctions that the UK has imposed on China since 1989; they should not be the last.

The regulations that we are debating today are designed to penalise those guilty of corruption. Of course, those people are well schooled in money laundering, but I wonder whether we are doing enough to combat money laundering in the UK. In 2018, the National Crime Agency estimated that more than £100 billion a year in illicit funds made its way through the UK every year. Are we doing enough to catch that or to penalise those involved in the process?

The noble and learned Lord, Lord Garnier, pointed out that the Office of Financial Sanctions Implementation was established in 2016, and yet, up to February last year, it had levied only four fines, three of which were miniscule. The fourth fine was a whopping £20 million-plus against Standard Chartered for violation of EU sanctions rules involving a Russian bank. That sum is enough to make even one of our big banks think hard about their practices and maybe examine them more closely. I do not believe that the crooks have stopped trying to launder their funds, so I wonder whether the Minister can tell the House whether the Office of Financial Sanctions Implementation has been a bit more active in the last year. The war against corruption has to be pursued with vigour. Could we do more to combat it?