Sanctions and Anti-Money Laundering Bill [HL]

Earl of Kinnoull Excerpts

Ping Pong (Hansard): House of Lords
Monday 21st May 2018 Lords Chamber

[Lord Faulks]

My Lords, I think that the noble and learned Baroness is quite right with her mote and beam analogy. We must think about London, as my noble friend Lord Naseby, said. In 2016, David Cameron announced his intention in respect of anti-corruption and a register of beneficial interests. Since then we have had the Criminal Finances Act 2017 and this Bill. In both of those, my noble friend Lord Hodgson and I were keen to ensure that the Government did their best to stem the flood of dirty money, particularly into property money in London, by setting up a register of beneficial ownership which, when combined with unexplained wealth orders, might really do something to prevent what is a real obscenity about London property at the moment. So much money is flooding into the market yet so few people who start their work in London can afford to live. That is the mote that we have in London.

I wanted to press the matter to a vote, because our intention was to hurry this up, but I was met with formidable opposition from the Government, explaining how difficult the whole thing was. Finally, just before a vote might otherwise have taken place, I was reassured that there was much activity in this regard and there would be regular updates and a ministerial Statement. Sadly, the earliest the register would be legislation-ready was 2021—so five years after David Cameron’s summit. Here we have an amendment put down in the Commons after very little of the preliminaries, as has been quite rightly pointed out, with no consultation and nothing of the sort that one would expect with such a radical procedure. It states:

“The Secretary of State must, no later than 31 December 2020, prepare a draft Order in Council”.


It is a “must”, not a “may”. The only part of this amendment which is, perhaps, acceptable, is the very first part, describing the reasonable assistance to be given to the Governments of the British Overseas Territories. However, I apprehend that that is being—and has been—given for some considerable time. I disagree with my noble friend Lord Naseby on only one point: the Minister, not only today but in responding to the amendment so eloquently moved by the noble Baroness, Lady Stern, on Report, vigorously defended the position of the Government and of the British Overseas Territories in their attempt to comply with the natural desire that we all have to stamp out corruption.

This amendment goes on to require an Order in Council to be laid before Parliament, but then provides that it ceases to have effect,

“if not approved by a resolution of each House of Parliament before the end of 28 days”.

I wonder if a resolution of that sort would meet with the approval of both Houses of Parliament, having regard to the hasty way in which this amendment was introduced and to the real difficulties that it will cause to our friends in the British Overseas Territories.

This amendment is ill thought out, no doubt born out of an entirely proper desire to stem the flood of corruption. However, in so doing it damages our relationship with the British Overseas Territories at a time when we need all the friends we can get outside this country. The amendment asks them to do what is required in a timeframe which is much shorter than that for this country: the mote and beam analogy is entirely appropriate.

[The Earl of Kinnoull (CB)]

My Lords, I declare my interests as set out in the register of the House, particularly those in respect of financial services. I support Amendment 22A, in the name of the noble Lord, Lord Naseby. How well we know what a stramash would result if Westminster sought to legislate for Scotland, in a matter of devolved competence, without even consulting the Scottish Parliament. Parliament developed the Sewel convention to cope with this very situation. We have heard, in a very powerful speech, from the noble and learned Lord, Lord Neuberger, and others just how this convention now expressly extends to our overseas territories.

The overseas territories are proud and sophisticated countries and deserve our respect. Constitutionally, our respect includes conventions. Money laundering is, rightly, a devolved matter for them. Bermuda, the Cayman Islands and the British Virgin Islands are large and sophisticated financial centres with well-respected regulators. Accordingly, to legislate without even consulting these Parliaments is conventionally wrong. This is why I feel that the Sewel convention should apply. Westminster has the power to intervene and should exercise this only when things are badly awry. However, evidence of “awryness” is, in fact, the other way.

As other noble Lords have mentioned, Pierre Moscovici delivered a report last year, and this was adopted by the European Council on 5 December. On page 5 of that 35-page report, the Council affirms that,

“these actions collectively taken by EU Member States are in line with the agenda promoted by the G20, the OECD and other international fora”.

None of the overseas territories is on the blacklist.

Annexe 2 of the adopted conclusions, which was updated twice in March this year, lists countries in various categories that have agreed to make changes by the end of this year; it is a large list. In other words, provided that changes are made by those countries, in the EU Council’s view they will be fully compliant with EU, G20 and OECD thinking in this area. Only four of the 14 overseas territories feature on the list of co-operative countries. The other 10 do not; in other words, they are absolutely clean in the eyes of Pierre Moscovici and his very substantial and hard-working staff. In that respect, the 10 that are clean are doing rather better than Switzerland or Hong Kong, which both appear on the list. Indeed, 29 countries are making changes to improve transparency; none of the overseas territories is listed. Twenty-seven countries are making changes to anti-BEPs measures, which are sophisticated corporate tax dodges; none of the overseas territories is listed. Twenty-eight countries, including Switzerland and Hong Kong, are making changes to amend or abolish harmful tax regimes. None of the overseas territories is listed. Nine countries, including Bermuda, Anguilla, the BVI and the Cayman Islands, have agreed to,

“address concerns relating to economic substance”.

Among those nine countries are Guernsey, Jersey and the Isle of Man, the only time their names appear in the annexe at all. Those three islands do not appear in the Commons amendment and, as other noble Lords have observed, I cannot believe that is fair.