All 2 Diane Abbott contributions to the Criminal Finances Act 2017

Read Bill Ministerial Extracts

Tue 25th Oct 2016
Criminal Finances Bill
Commons Chamber

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tue 21st Feb 2017
Criminal Finances Bill
Commons Chamber

3rd reading: House of Commons & Report stage: House of Commons

Criminal Finances Bill Debate

Full Debate: Read Full Debate
Department: Home Office

Criminal Finances Bill

Diane Abbott Excerpts
2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 25th October 2016

(7 years, 5 months ago)

Commons Chamber
Read Full debate Criminal Finances Act 2017 Read Hansard Text Read Debate Ministerial Extracts
Diane Abbott Portrait Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
- Hansard - -

If someone walks around the most expensive neighbourhoods of London—Knightsbridge and South Kensington—they will see house after house dark every night. Some have no lights on because the owners are out, but many more have no lights on because they have been bought as an investment and lie empty most of the time. Some of the most expensive properties in the capital are unoccupied because they have been bought solely for the purpose of laundering dirty money.

In 2016, money laundering is not just happening in accountancy offices or the back rooms of banks. It is happening in plain sight of ordinary Londoners, because we see some of the most expensive domestic properties in the world change hands but remain mysteriously and persistently empty. We welcome the Bill, which has been introduced with the express purpose of providing new powers and safeguards to improve the Government’s capacity to tackle money laundering and terrorist financing and, above all, to recover the proceeds of crime. I want to make it clear that, in principle, the Opposition support the aims of the Bill.

We do so because it is vital to do as much as we can to bear down on illegal activity, including targeting the enablers of illegal activity: lawyers, accountants and estate agents. We support the Bill partly because public opinion, encouraged by the work of the Public Accounts Committee under distinguished past and present leadership, rightly demands that politicians do more to stop tax evasion. We also do so because some of the poorest countries in the world have had their Treasuries denuded by money laundering. If the UK, which is often described as one of the money-laundering centres of the world, could act effectively against money laundering, not just our own tax authorities but the populations of countries in the global south, from which some of this money has been looted, would benefit.

We will wish, however, to ascertain that the provisions of the Bill will actually work and impact in reality on the harms that the Minister set out. We will weigh carefully the civil liberties implications of those provisions. Furthermore, we seek assurances that the Government agencies tasked with implementing the legislation will have all the resources and support that they need.

Keith Vaz Portrait Keith Vaz
- Hansard - - - Excerpts

The issue of resources was raised by the hon. Member for Newark (Robert Jenrick). Despite the effective way in which the Minister made his case, he did not answer my question. When will the NCA get a new computer system? When will ELMER be renewed so that the agency can look through SARs? The system is designed for 20,000 complaints, but it is currently dealing 385,000. The agency needs a new computer system to do what the Minister and my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) want the Bill to achieve.

Diane Abbott Portrait Ms Abbott
- Hansard - -

I am grateful to my right hon. Friend for that important intervention. If the Minister does not give a clear reply to that question on the Floor of the House, I can assure him that we will pursue the issue in Committee.

The Minister said that money is not the main obstacle to pursuing money launderers and criminal actors, but it does not help when agencies such as the NCA experience cuts. The Home Affairs Committee produced an important report in June on the proceeds of crime, and I am indebted to the then Chair and the Committee as a whole for their investigatory work. The Committee pointed out that money laundering takes many complicated forms, ranging from complex financial vehicles and activity in tax havens around the world to property investments in London and high-value jewellery. I share the Select Committee’s astonishment that of over 1 million property transactions last year only 335 were deemed suspicious. I agree with the Select Committee’s conclusion that supervision of the property market has been “totally inadequate” and has

“laid out a welcome mat for launderers”.

The Select Committee report also made the important point that it is all too easy for people who want to launder money to buy property in London, let it out in the capital’s high-value lettings market, then take in clean money in perpetuity.

Overall, the NCA believes that up to £100 billion of criminal funds could be passing through the UK each year in the form of property, luxury cars, art and jewellery. Transparency International estimates that there are hundreds of properties in the UK that are strongly suspected to have been acquired with the proceeds of corruption. Land Registry figures show that UK real estate worth more than £170 billion is held by more than 30,000 tax haven companies. I do not argue that there can never be a legitimate reason for holding UK real estate in a tax haven company, but I believe that, all too often, what we see could well be illicit activity.

Charlie Elphicke Portrait Charlie Elphicke
- Hansard - - - Excerpts

As a former tax lawyer, may I point out to the hon. Lady that companies in tax havens own UK property because it was possible to do a stamp duty avoidance scheme called “enveloping” during most of the period in which the Labour Government were in office? Action taken by this Government has put a stop to a lot of that abuse.

Diane Abbott Portrait Ms Abbott
- Hansard - -

I made a point of saying that there can be legitimates reasons for holding UK property in tax haven companies. I remind the hon. Gentleman that it was not every single detail of the activity of the last Labour Government that I supported.

Most owners of those companies hide behind anonymous trusts or nominee directors and shareholders. For instance, in a single 50-storey apartment complex in London, The Tower at St George Wharf in Vauxhall, a stone’s-throw from the House, a quarter of the flats are held through offshore companies. This Bill aims to close a loophole which means that authorities cannot seize property from overseas criminals unless the individuals are first convicted in their country of origin. The orders will apply to property and other assets worth more than £100,000. If the owner fails to demonstrate that a home or piece of jewellery was acquired using legal sources of income, agencies will be able to seize it.

The Opposition support the new law in principle, but stress that for it to be effective agencies must be given the financial and political support to take powerful and wealthy individuals to court. Furthermore, there is some concern, which we will explore in Committee, that the measures may be too widely drawn. Throughout, the sole safeguard for seizure orders is the reasonable suspicion of a police officer on their own authority. This may be too low a bar as a safeguard against the incompetent use or abuse of state powers.

Keith Vaz Portrait Keith Vaz
- Hansard - - - Excerpts

I thank my hon. Friend for her kind comments about the Select Committee’s report published in July. In evidence to the Committee, Sir Bernard Hogan-Howe suggested that the criminal law should be amended to ensure that those who had not paid their compensation order should be the subject of a second criminal offence. Does my hon. Friend agree that it is wrong for those who are subject to a compensation order to go to prison, finish their sentence and come out without it being paid? We need to look very carefully at this aspect.

Diane Abbott Portrait Ms Abbott
- Hansard - -

My right hon. Friend is right. We need to look at the case of people who serve a prison term that may be relatively short, but are able, in effect, to flout the compensation order.

Lord Garnier Portrait Sir Edward Garnier (Harborough) (Con)
- Hansard - - - Excerpts

I take the point that my neighbour, the right hon. Member for Leicester East (Keith Vaz), makes, but often when a criminal is sentenced, along with a compensation order or a proceeds of crime order, he is sentenced to an additional term of imprisonment in the event that he does not pay back the money. Sometimes those extended sentences can be very long—indeed, as long as or even longer than the original sentence.

Diane Abbott Portrait Ms Abbott
- Hansard - -

Far be it from me to bandy words with the many lawyers in the Chamber. I repeat that as the Bill goes through Committee we will seek to examine the question of people flouting compensation orders. Overall, in relation to bearing down on money laundering, we welcome the relevant provisions, including the unexplained wealth orders, the reform to the suspicious activity reports regime, information sharing and the new disclosure orders.

The Bill also deals with tax evasion. In recent years there has been a great deal of public interest and a raft of Government measures on tax avoidance. Arguably, less attention has been paid to tax evasion. There is some blurring between the two terms, but broadly, tax evasion occurs when an individual or corporate entity acts in breach of the law, and tax avoidance occurs when an individual or corporate entity complies with the letter but not the spirit of the law. In recent years Her Majesty’s Revenue and Customs has produced estimates of the tax gap—that is, the difference between the tax that is collected and that which is theoretically due. Clearly, any such estimate must be speculative, but I draw the attention of the House to the fact that HMRC’s most recent estimate of the gap is £36 billion, which is the equivalent of 6.5% of total tax liabilities. Of that £36 billion that is lost, £5.2 billion is lost to evasion and only £2.2 billion is lost to avoidance.

We welcome the measures to bear down on tax evasion, and we welcome the provision that makes it a criminal offence for corporations to fail to stop their associated persons facilitating tax evasion. We particularly welcome the fact that this will have extra-territorial jurisdiction. However, we regret that in the tax evasion measures in part 3 there is no reference to the British overseas territories and Crown dependencies. That is a startling oversight. There are 14 British overseas territories. Just one of them, the British Virgin Islands, is mentioned no fewer than 113,000 times in the Panama papers. BVI, with a population of just 29,000—fewer than my own constituents in Hackney—is home to 452,000 international businesses. Maybe the 29,000 population is particularly skilled at accountancy and banking, but maybe some of those business entities are shells for tax evasion.

There are three Crown dependencies, Jersey, Guernsey and the Isle of Man, and it is frequently argued that the British overseas territories and the Crown dependencies are the largest tax evasion network in the world, so the failure to mention them in a Bill which purports to deal with issues surrounding tax evasion is a major omission. We will be seeking amendments as the Bill goes through Committee. It is frequently asserted that it is not possible to legislate for the British overseas territories and the Crown dependencies, but the Ministry of Justice seems to think differently. This is an issue that we will explore.

The Minister referred to the beneficial ownership register that we are encouraging the overseas territories and the Crown dependencies to introduce, but he must be aware that at least some of the overseas territories are boasting that they are in practice evading the Government’s efforts to get them to set up beneficial ownership registers, and many of them are saying that these registers will not be publicly available. The Opposition insist that if this Government are serious about dealing with tax evasion, they must ensure that the overseas territories and Crown dependencies not only set up beneficial ownership registers, but make them publicly available.

We note that there is little distinction in the Bill between corporate or partnership bodies which facilitate tax evasion, and those that do it routinely and as a central part of their business model. We believe that we should look into a new provision specifically criminalising entities and individuals for whom tax evasion is at the heart of their business model, and punishing them more harshly.

I shall not conclude my remarks on tax evasion without mentioning the Labour party’s tax transparency enforcement programme. We want a public inquiry to examine the loss of tax revenue, and increased powers for HMRC, including a specialised tax enforcement unit. We want to force foreign firms to list their owners and beneficiaries, and we want the introduction of a general anti-avoidance principle and the extension of current rules to cover offshore abuses.

The Bill deals with the important issue of terrorist finance. Those of us who have watched with horror terrorist atrocities all over the world, and here in London, know that terrorism is an existential threat to us and our society. We share the Government’s aims in reducing the terrorist threat, not just to us in the UK but to our allies and interests overseas, and agree that one way of doing this is to deprive terrorists of the financial resources required for terrorism-related activity. Globalisation means that we must constantly update our legal instruments. We note the changes that the Bill will make to the law enforcement and intelligence agencies in relation to investigations of offences under the Terrorism Act 2000, but we will examine these proposals because we are anxious that they do not have too harsh a bearing on genuine charities.

Labour Members support the Bill in principle. We will scrutinise its detail with care. We insist that it is vital that agencies such as the National Crime Agency get the money they need for implementation, because otherwise the Bill will be a dead letter. For too long, London has been accused of being a hub for money laundering, with all its terrible effects not only on the take of our Treasury but on the lives and countries of many of the poorest people in the world. We hope that this Bill is the beginning of a process that brings the curtain down on the era when London could be described as a money-laundering hub, instead ensuring that London and the UK set an example internationally about what can be done to bear down on money laundering and tax evasion.

Criminal Finances Bill Debate

Full Debate: Read Full Debate
Department: Home Office

Criminal Finances Bill

Diane Abbott Excerpts
3rd reading: House of Commons & Report stage: House of Commons
Tuesday 21st February 2017

(7 years, 1 month ago)

Commons Chamber
Read Full debate Criminal Finances Act 2017 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 21 February 2017 - (21 Feb 2017)
Diane Abbott Portrait Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
- Hansard - -

We in the Opposition broadly support the thrust of this legislation, and we have noted that the Minister has proved to be a listening Minister, which we welcome.

Tax avoidance and money laundering are the opposite of victimless crimes. In the first instance, there are inflated asset prices in the territories where the money is laundered, and there is no bigger example of that than the housing market in this country, particularly in London. In some of the most expensive parts of London, we can walk down streets where most of the houses are completely empty. Some might be empty because it is the wrong time of year for their owner to be there, and others because they have been bought as an investment, but increasing numbers of those properties are being used to launder money, and if this legislation can bear down on that, it will be of value not least to people who are victims of the wildly inflated London housing market.

Tax avoidance and money laundering mean a loss of tax for some of the poorest communities in the world. I was in Ghana last year looking at tax avoidance and evasion, and I was struck by the fact that a woman selling drinks by the side of the road could pay proportionally more tax than some of the biggest drinks manufacturers in the world. These are distorted systems of taxation, and if this legislation can bear down on that type of tax avoidance, it is to be welcomed. I was pleased to hear the Minister say that we are beginning to return money to some of those territories, notably Macau. I believe that we have also signed an accord with Nigeria. Above all, this legislation is important for suppressing corruption. It is not just a law-enforcement measure; it is also, indirectly, an anti-corruption measure.

I remind the House that the genesis of the Bill was the Panama papers, which revealed extremely widespread and highly lucrative avoidance of tax on an industrial scale. There were 11 million leaked files, and Britain was the second most prominent country in which the law firms’ middlemen operated. It was second only to Hong Kong. One British overseas territory, the British Virgin Islands, was by far the most popular tax haven state used by the firms in the documents. The Minister has said that we are at the forefront of taking action on tax avoidance and money laundering, and so we should be. The UK has sovereignty over one third of tax havens internationally.

We welcome the Government’s new clause 7, which will bear down on money recycled as a consequence of human rights abuses elsewhere. We still believe that there is insufficient scope for the civil recovery of assets, and the enforcement powers in the civil recovery provisions could be improved. There are particularly important omissions regarding the penalties for offences relating to the facilitation of tax avoidance, involving middlemen such as lawyers, accountants and straightforward spivs such as those identified in the Panama papers.

On the disclosure of beneficial ownership, we feel that there is a major problem, as the lack of disclosure can help to facilitate money laundering and corruption. Let us take an example. In the Department for Business, Innovation and Skills consultation paper published in March 2016, the Government said that between 2004 and 2014, more than £180 million-worth of property in the UK was being investigated by UK law enforcement agencies as it was suspected of being funded by the proceeds of corruption. Moreover, more than 75% of those properties had offshore corporate ownership. That is believed to be the tip of the iceberg in terms of scale and of the proceeds of corruption being invested in UK property through offshore companies.

On the British overseas territories and Crown dependencies, I understand the technical argument that we cannot apply the same regime to those areas, but the moral issue is substantially the same. Some Members have spoken as though the populations of those territories as a whole benefit from financial services, but that is not the case. Only in recent years has the financial services industry been open to employing people born and bred on those islands in advisory, legal and management positions. Just because the political elites in those countries argue for light-touch regulation, let us not delude ourselves that financial services are helping the territories as a whole. We believe that the argument that we cannot impose proper standards on those territories is false. UK jurisdiction applies in all matters of defence and security, and the House has a right and a duty to see how best to impose those laws.

The people who are benefiting from the secrecy and the lack of regulation are the tax evaders and avoiders, the money launderers, the major criminal enterprises and the terrorist networks. We urge the Government to move forward on those issues. If legislation is required for onshore activity here in the UK, most reasonable people would argue that it is even more pressing to include overseas territories and Crown dependencies.

The Opposition are calling for a wide-ranging review of the UK tax gap, including an assessment of the loss of income tax due to tax evasion. As several Members on both sides of the House have said, if the legislation simply rests on the statute book and does not result in commensurate prosecutions, it will be a dead letter. We note that the Minister has listened thus far, and I hope that the Government and the appropriate Departments are listening when I urge them to ensure that the legislation amounts to more than just good intentions and that it is actively used to bear down on tax evasion, money laundering and corruption.

John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

This debate has been concluded with notable speed.

Question put and agreed to.

Bill accordingly read the Third time and passed.