Economic Crime and Corporate Transparency Bill

Chris Bryant Excerpts

2nd reading
Thursday 13th October 2022 Commons Chamber

[Suella Braverman]

When it comes to golden visas, I was very proud of the action the Government took in relation to Russian individuals following the invasion, where we stopped the sale of golden visas to particular individuals—

[Chris Bryant (Rhondda) (Lab)]

The sale? You were selling them?

[Suella Braverman]

The issuance—excuse me—of golden visas to particular individuals from Russia. I agree that there is further work we can do and I am very keen to look at it.

[Chris Bryant]

I think the Home Secretary said the sale of tier 1 visas, as if the Government or the Conservative party were somehow selling these things. Is it not absolutely shocking that 10 of the people the Government sanctioned this year were people to whom the Conservative Government had given tier 1 visas? We were inviting crooks and Putin’s cronies to come into this country, make their lives here and carry on their criminal activities here.

[Suella Braverman]

I think the hon. Gentleman will find that this has actually been a long-standing issue for Administrations of both colours, and we have been vulnerable for some time. However, I am incredibly proud of and make no apology for the robust, tough and unapologetic action that this country took in response to the invasion of Ukraine by Russia. That includes, along with the EU and the US, sanctioning thousands of Russian individuals and entities; taking aggressive, prohibitive action to stop them taking part in the UK financial system; freezing the assets of all Russian banks; barring Russian firms from borrowing money; and, importantly, ensuring that we take a strong stance to affect and disable, to a degree, the Russian economy. That is how we will win this war, not by cheap political points.

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[Chris Bryant]

Look, some of us have been battling on this for a very long time. Some of us said in 2014 that if we did not sanction Putin properly then, he would not only take the Crimea, but try to take the whole of Ukraine. Some of us fear that the Government’s refusal to act in this area is part of what has emboldened Putin. The biggest problem is that, in many cases, the UK’s sanction regime has been much weaker than that of other countries. The Home Secretary is wrong: we have not sanctioned all the Russian banks. There are still others to be sanctioned. We have sanctioned 20% of the people who have been sanctioned by the United States of America. For most of the people we have sanctioned, we are relying on EU legislation—we are just copying it. Honestly, I think she needs to do her work a bit more carefully.

[Suella Braverman]

No, I disagree. I will not repeat the points that I have made, but I am very proud of our record. The action was tough, unprecedented and far-reaching, and I am very glad that other countries followed suit soon after.

The Bill includes essential reforms of Companies House and measures to prevent the abuse of limited partnerships. It creates additional powers to seize cryptoassets more quickly and easily. The Bill will enable more effective and targeted information sharing to tackle money laundering and economic crime.

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[Suella Braverman]

I will make some progress. As hon. Members have said, I have been very generous, but I am struggling to get through my speech. I know that everybody wants to speak, so I will take no more interventions for now.

We will introduce identity verification for new and existing directors, beneficial owners and those who file information with Companies House. That will improve the accuracy of Companies House data and will ensure that we know who is really acting for and benefiting from companies.

[Chris Bryant]

Will the Home Secretary give way on that point?

[Suella Braverman]

I am sorry, but I will not.

The powers of the registrar of companies will be broadened, making the registrar a more active gatekeeper for company creation and a custodian of more reliable data. The registrar will receive new powers to check, remove or decline information that is submitted to or already on the company register. The Bill will improve the financial information on the register so that it is more reliable, complete and accurate, and enables better business decisions. Companies House will be given more effective investigation and enforcement powers, including by enabling it proactively to share information with law enforcement bodies about higher-risk corporate bodies, or where there is evidence of anomalous filings or other suspicious behaviour. To protect individuals from fraud and other harm, we will also enhance the protection of personal information and addresses provided to Companies House.

We will introduce broader reforms to clamp down on the misuse of corporate entities. These reforms will support enterprise by enabling Companies House to deliver a better service for more than 4 million UK companies. They will help us to maintain our swift and low-cost routes for company creation. They will also improve the collection of data to inform business transactions and lending decisions across our economy.

[Suella Braverman]

Without knowing the details of that case, what is clear is that the reforms to Companies House will ensure not only that more investigation and enforcement powers are afforded to it, but that there will be new powers for checking, removing and declining information submitted to the company register if there are grounds for concern.

[Chris Bryant]

The Home Secretary is being generous in giving way; I am very grateful. I warmly welcome all these changes to Companies House, for which some of us have been arguing for a very long time. My anxiety is that Companies House will have a major change of role: as several agencies have said recently to the Foreign Affairs Committee, it will go from being a registrar to being effectively a policeman. To do so, it will need enormous additional capacity. Can she tell us how much additional money it will have to fulfil that role?

[Suella Braverman]

The transformation of Companies House has been under consideration for some time, and the Treasury Committee has done quite a lot of inquiring into the issue. We published a White Paper on corporate transparency and register reform earlier this year, which provided considerable detail on how these reforms will operate. It is a complex area of law. Resources will be needed for these extra powers.

[Chris Bryant]

How much?

[Suella Braverman]

The transformation is already under way, with £20 million invested in 2021-22 and a further £63 million announced up to 2024-25 at the most recent spending review. We have been thinking about this, and the money has been announced in spending reviews. It has been thought about.

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[Yvette Cooper]

My hon. Friend has made an important point which I hope can be explored further in Committee. There is clearly a problem when those with the deepest pockets, who effectively have endless wealth that they can draw upon, can use and abuse the court system in order to silence people. That issue needs to be addressed further.

We know that this problem has a wide impact on the state of our economy and our national security. We supported the last economic crime Bill and we support this one, although there are deep concerns about how long this process has taken, and also about the gaps. We welcome, in particular, the overhaul of Companies House, which Labour has supported and has pressed the Government to get on with, and which I know has been championed by Members on both sides of the House. It is right to give Companies House powers to check and challenge basic information. When we try to explain this to people, most of them are shocked to learn that it did not already have powers to check the identities of people trying to set up shell companies.

We welcome the measures on cryptoassets. The new technology is outpacing action against economic crime and organised crime. The power to freeze and seize criminal assets cannot just be an analogue one in a digital age. We welcome the measures to encourage information sharing to help spot fraud and money laundering, and we welcome the measures that the Home Secretary has referred to about the ability for the SRA to increase fines.

There are sensible measures in the Bill, but the delays in getting this far have caused a problem, and so do the gaps in the Bill. We are still playing catch-up rather than looking forward, and it should not have taken a war for us to get this far. Transparency International warned about serious problems back in 2015. For years, the National Crime Agency has called internally on the Home Office, the Department for Business, Energy and Industrial Strategy and the Treasury to do much more. We were promised action in 2016, in 2018 and in 2019, but as of August, fewer than half the recommendations in the Government’s 2019 economic crime plan had been enacted. The shadow Attorney General called for action on serious corporate fraud nine years ago. As shadow Home Secretary, I called 10 years ago for stronger laws and action on economic crime and fraud.

We are very clear about the importance of the matter. The Labour party believes in stronger action to defend our national interest, our economy and our national security from the organised criminals, fraudsters, corrupt oligarchs and kleptocrats. We know that that depends on having robust powers and procedures in place to defend our economy and our financial and economic institutions from fraud and abuse.

[Chris Bryant]

In fact, we tabled some of the measures in the Bill as amendments in 2018, and all that lot voted against them. One of my anxieties is about what happens with oligarchs’ assets that are frozen by the UK. There is a legitimate question about whether it is right for the state to seize assets that belong to private individuals. On the whole, that is not a good thing—that is what authoritarian regimes do—but we need some clarity on how we proceed in a time of war, which is effectively where we are at the moment. I note that Abramovich’s Chelsea was sold, and the money is still sitting in his bank account because the Foreign Office still has not put in place a means of transferring it to Ukraine. This is months in, and it is absolutely bonkers.

[Yvette Cooper]

My hon. Friend makes an important point, and I pay tribute to the work he has done over very many years, long before other people were talking about these issues and highlighting the risks. I also pay tribute to the work of the all-party parliamentary group on anti-corruption and responsible tax, co-chaired by my right hon. Friend the Member for Barking (Dame Margaret Hodge) and the hon. Member for Thirsk and Malton (Kevin Hollinrake). We really need to get the detail right and go further.

I agree with the principle that my hon. Friend the Member for Rhondda (Chris Bryant) has raised. Safeguards must be in place, but in an extreme time of war, when oligarchs have supported and enabled Putin’s regime and his illegal war for so long, there is a strong case for using their assets to support Ukraine. I do hope that the Government will look further at that. Canada and other countries have changed their laws in the most serious of circumstances, and we are keen to talk to the Government about taking forward something similar.

We want to explore with the Government going further on other measures, such as provisions to enable Companies House to publish and verify up-to-date information on shareholders, and provisions on third-party enablers of organised crime and kleptocracy. The Home Secretary will know that there have long been concerns about those who help organised criminals and kleptocrats hide their money, and who cover up for crime. The regime for preventing that and for effectively regulating high-risk sectors is still too weak. She will be aware that the Office for Professional Body Anti-Money Laundering Supervision has said that 81% of professional supervisors on money laundering do not have an effective risk-based approach. I hope that we can look further at that in Committee and work with the Government on stronger measures.

We have already raised with the Home Secretary concerns about enforcement, and I will keep pushing her on the question of funding for the National Crime Agency. We know that it was asked to draw up proposals for 20% staffing cuts. I think that is irresponsible at a time when we face economic crime; when the NCA’s work can benefit the Exchequer and the economy by taking strong action, including on criminal asset seizures; and when the NCA needs to deal with wider issues around organised crime, people smuggling and trafficking. I will keep pressing the Home Secretary, because she did not rule out the 20% staffing cuts, and we want to know that they have been abandoned.

There have been wider questions about training for law enforcement in things such as cryptocurrencies.

[Chris Bryant]

One issue that is quite difficult for UK agencies concerns moneys that come from British companies straight into sanctioned accounts in the United States. British paper manufacturer Mondi, for instance, is selling off its arm in Russia, but it has just sold it to one of Putin’s closest allies. In other words, millions of British pounds have gone into Russian pockets and will end up funding the war in Ukraine. How do we make sure that we have the resources to track down these problems and bring these people to book?

[Yvette Cooper]

My hon. Friend is right. Our law enforcement needs a level of agility to keep up with the scale and pace at which organised criminals and corrupt oligarchs work and the resources that they have at their disposal.

Hon. Members have raised concerns about the huge gap in the Bill when it comes to tackling fraud, particularly serious corporate fraud—many Members have raised concerns about the proposed legislation in that regard—but fraud more widely, too. It has become the single most common crime that we face, not just the most common economic crime. There were 4.5 million fraud offences—40% of total crimes—last year, and, shockingly, only 0.01% of them were charged. Charges for fraud have dropped. In 2015, 9,000 fraud charges were brought, but last year there were fewer than 5,000. That is a 47% drop in fraudsters being taken to court. Serious Fraud Office prosecutions plummeted by 60%, and SFO convictions were down from 10 in 2016 to just three last year. That is not justice, and it is not keeping people safe. It is as though the Government have shrugged their shoulders and said that criminals and fraudsters can have free rein. We must have proper enforcement in place and take action on serious crimes.