Economic Crime

Deidre Brock Excerpts

Thursday 2nd December 2021 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

I thank the hon. Member for Barrow and Furness (Simon Fell) for speaking and giving his expertise on this. I, too, have a bit of a gammy ankle, so I will try not to fall over. He will find that if he sits on the Front Bench and leans against it, he will get a wee bit more support and will not have to wobble so much. That is a top tip from my hon. Friend the Member for Central Ayrshire (Dr Whitford), who has had a similar affliction recently.

This debate is incredibly important and timely, and I am very grateful to the right hon. Member for Barking (Dame Margaret Hodge) and the hon. Member for Thirsk and Malton (Kevin Hollinrake) for securing it. I feel as though this has almost been economic crime week for me in this place, because our Treasury Committee took its final evidence from Ministers on this issue on Monday. The Economic Secretary to the Treasury and the Minister for Security and Borders were very clear that not enough is being done. That is probably the biggest understatement in this House this week. It is very evident that not enough is being done, because these crimes are going unprosecuted, victims are increasing in number and it feels as though nothing very much is happening to address it. It is incredibly worrying, as we see when we look at the figures, which indicate the scale of this. It can only indicate the scale of it because, by its very nature, economic crime can be very difficult to count; that money is gone—it is disappeared and it vanishes, never to be seen again.

I very much support the suggestion that all Members who have spoken so far have made of an offence of a failure to prevent economic crime. That is crucial, and I would tie it in to the online safety Bill that is coming, because that is a golden opportunity. The evidence we have had from almost every person who has come before the Treasury Committee to talk about this has been, “You have to get this in the online safety Bill.” They do not believe another good enough opportunity will come along quickly enough to deal with this issue. The Government are very good at saying, “Oh yes, when parliamentary time allows—we will look at this soon. We will do this in good time.” But we need to see it now, as this has been drifting long enough and action needs to be taken on it.

The right hon. Member for East Ham (Stephen Timms) mentioned that the Governor of the Bank of England, every other financial institution that has come before us and sent in evidence, independent experts, journalists and organisations such as the Royal United Services Institute—all kinds of people from all kinds of backgrounds—have said that more needs to be done, that there is an opportunity here and that it would be huge neglect on the part of the Government if they failed to take the opportunity that is in front of them right now. It is an opportunity that they have presented to this House in the form of this Bill. If they miss this chance, it will be a matter of significant detriment to all our constituents.

The biggest barrier is the lack of enforcement. The Government will point to very good laws that they have on money laundering, and things that they feel are useful to tackle financial and economic crime more broadly, but enforcement levels are woeful. The figure of only 1% of police resource going to something that is an increasing problem in our society is part of that. The enforcement agencies are doing their best, but they are a hotchpotch; they are a patchwork of different agencies all working away in their own wee world and not managing to connect all of these different things. People are drowning under suspicious activity reports, while those who ought to be filing them are not even bothering. There is a huge gap in enforcement.

As I have said ad nauseam in this place, in Bill Committees and everywhere else, Companies House is the front door to this. Graeme Biggar, the director general at the National Economic Crime Centre, spoke to the Treasury Committee on 25 January—I cannot believe that it was that far back, but it was—and said:

“It can be too easy to set up companies here, as we have seen repeatedly over the years. We have done some analysis recently on some of the laundromats that have come out of Russia and the former Soviet Union, and a disturbing proportion of the money that comes out of those laundromats—not much shy of 50% in one case—were laundered through UK corporate structures.”

He pointed out that not all of that money will have been in the UK or will have touched the UK, but it is the corporate structures themselves that have been facilitating this economic crime.

The Royal United Services Institute has said:

“The ease with which a company can be formed in the UK—within 24 hours, without showing any ID and for a mere £12—has contributed strongly to the UK corporate structures emerging as the money-launderers’ vehicle of choice over the past decade.”

It says the “vehicle of choice” for “money launderers”. This Government have proposed Companies House reform, but, while welcome, it does not go nearly far enough. It makes no sense to me that, if I want to apply for a driving licence or a passport to do my self-assessment tax return, I have to go through a whole gamut of Government verifying schemes. That is not the case, as I understand it, for setting up a company. All it will cost me is £12. The information that I put into the Companies House register may be complete and utter guff, because it has no one checking that information; it is just a repository of that information.

Some statistics were given in the reading material that has been pulled together. Four thousand beneficial owners are listed in the persons of significant control register who are under the age of two. I am sure that there are many prodigious under two-year-olds out there, but I do not think that they really should be beneficial owners of companies. There are five beneficial owners who control more than 6,000 companies. Again, there should be some kind of limit to the number of directorships that beneficial owners can hold, because it is very clear that these people can have no real role in the running of those companies, because there are far too many of them.

Even more worryingly, some of this has been facilitated through Facebook. A recent “File on 4” programme showed how people were being recruited as company directors via Facebook. Again, they had no role or responsibility in the company, but were being brought in as a means of making money. I ask the Government what they intend to do about this kind of fraudulent behaviour.

That is before I get to Scottish limited partnerships, which, again, I have talked about at length in this place. I pay tribute to Richard Smith, David Leask and Roger Mullin—my colleague who was in this place until 2017—for their constant plugging away on the subject of Scottish limited partnerships. The Government will say, and they would be correct to say, that since they brought in the reforms, the number of Scottish limited partnerships has reduced. However, as the hon. Member for Barrow and Furness pointed out, what has happened is a bit of a whack-a-mole strategy. As my good friend, colleague and employee Councillor Alexander Belic has said, the point of whack-a-mole is the increasing frequency of moles rather than an effective mole eradication effort. That is very true of financial crime and SLPs.

Many of those involved have moved to Northern Irish limited partnerships, English limited partnerships, trusts, other obscure company formations, or, as Colm Keena of The Irish Times has pointed out, Irish limited partnerships. There is therefore a wider consequence of this Government’s actions. I doubt very much that they informed the Irish Government that this was going to happen, only to leave them saying, “Oh, gosh, this is now on our doorstep. Now we have to deal with this international financial crime”. Some of those Irish limited partnerships had Scottish limited partnerships as their people of significant control, so it becomes a nesting doll of different companies, and we can never get to the centre of it and find out who really is in charge.

At the very heart of all that is this: if we reform Companies House, it will slam the door in the face of all of this. If we give Companies House an anti-money laundering supervisory role, if we tighten up the registration process, if we make it that a person has to prove that they are a real person before they can register a company, and if we put up the fees, we will take away a lot of this crime. The Government really should be looking at that very urgently, and the lack of urgency remains a significant concern to me.

I sat on the Bill Committee when the Sanctions and Anti-Money Laundering Bill came through this House. The Government had a lack of interest in a great number of things, but it was funny how quickly they got interested in dirty Russian money when the Salisbury attack happened during the course of that Committee. All of a sudden they were very interested in doing something about that.

I also sat on the Joint Committee on the Draft Registration of Overseas Entities Bill. We made very good recommendations and the Government replied, but they did not accept all of them—and now, tumbleweed. Nothing has happened; there is no urgency. When I questioned the Economic Secretary to the Treasury on Monday, I asked, “Are you actually going to bring it forward urgently?”. It does not feel urgent in the slightest, because there is nothing happening and nothing is changing.

The longer it goes on, the more I wonder who benefits from this delay. Is it the oligarchs and those to whom they donate? There are wider political implications of this delay—not just here, although there is an implication here for transparent structures such as unincorporated associations, which are set up in Scotland and fund parts of the Conservative party and the no campaign in Scotland.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

My hon. Friend clearly shares my concerns and those of the Electoral Commission about unincorporated associations. Among a number of other troublesome characteristics, those that meet the threshold for registration with the Electoral Commission are not required to conduct permissibility checks on a relevant donation—a donation meant for political activity. Presumably, she would like to see those very much tightened up.

[Alison Thewliss]

I would; we should have strong registration requirements for donations to political parties, and there should be no ways of circumventing them.

Whether the money turns up as millions of pounds in Conservative party coffers, leads to the House of Lords in the end, or is just laundered from Russia, Uzbekistan, Ukraine or any number of other countries involved in SLPs and money laundering, we should be worried, because this issue goes to the very heart and fundament of our democracy. If we cannot guarantee where the money goes, who it influences, where it ends up and who it benefits, we are in real trouble as a democracy, as well as an economy.

It is really important that the online safety Bill deals more with frauds, scams and misleading info. As the right hon. Member for East Ham pointed out, if people take out paid advertising that costs a penny, they will get away with a lot more than if they generated it themselves and did not pay for it. That seems fundamentally wrong.

There is a lot of information being put about out there. Google, Facebook and some other companies have all appeared before us in the Treasury Committee, and they really did not do much by way of accounting for the behaviour of people using their platform for activity such as allowing others to register as company directors, trying to sell goods online and defrauding our constituents, or offering financial advice—that is a regulated sector, which makes that very serious behaviour. No one should be giving financial advice unless qualified to do so, but if hon. Members were to look at Instagram, they would find all number of accounts offering this advice or that advice, saying “Take these shares out” or “Do this and put your money here”. All this activity puts people at risk, whether it is user-generated or advertised, and it should be regulated properly so that people cannot use such platforms to defraud others and profit for themselves.

The nature of this world is changing. Lots of people are conducting their business on Instagram now, including lots of entirely legitimate people and businesses, many of which suffered when Instagram went down because they could no longer sell their pizzas or whatever they were selling online. We need to be mindful that the platforms have a responsibility to the people who use them to ensure that they cannot easily part with their money and be defrauded. Although faster payments are great in a number of ways in facilitating financial transactions, once that money is gone, it is very hard to get it back.

At the moment, the banks often get the money back for people, but there is no consequence for the platforms that facilitate the fraud. They do not have to pay anybody their money back. They allow this to happen and they get to just hold their hands up and say, “It’s not our fault. People should know better”. That is not good enough. The platforms are facilitating a good deal of this fraud. The Government will be failing in their duty to all our constituents if the online safety Bill does not address those levels of transactions where people are doing lots of business that way nowadays—if it does not hold to account those big, wealthy providers and platforms, both the ones that exist just now and those that will emerge in future, and make sure that they take responsibility for their actions.

I urge the Government to listen to everybody who has given evidence on this matter to the Treasury Committee, to the Work and Pensions Committee, and to our APPGs—to listen to those experts and not miss this opportunity to take action to protect our constituents, our economy and our democracy.