Sanctions and Anti-Money Laundering Bill [Lords]

Helen Goodman Excerpts

2nd reading: House of Commons
Tuesday 20th February 2018 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

This is one of many Bills that we need because of our impending departure from the European Union. We agree that sanctions are a crucial lever in our foreign policy armoury. Indeed, their use and usefulness is demonstrated by the fact that we have 36 sanctions regimes on countries ranging from Afghanistan to Zimbabwe, and covering terrorist organisations such as Daesh and al-Qaeda. We accept that the repeal of the European Communities Act 1972 in the EU (Withdrawal) Bill means that the Government must replace it with domestic powers. However, we have a number of questions, criticisms and challenges for the Government about the way in which they are doing that in the Bill.

Money laundering through the City of London is now estimated at £100 billion a year, and the two clauses in the Bill devoted to the matter are wholly inadequate to tackle this massive problem, which is illegal in itself and also hides and enables other crimes, perverts justice, distorts the economy and is seriously undermining our reputation. International standards to prevent it are set out by the Financial Action Task Force and translated—currently via the EU—to national level. We agree that legislation is needed so that we can continue to honour our international obligations.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Does my hon. Friend agree that if we tackled tax evasion and avoidance, we would not see such modest levels of overseas development? Countries around the world—in Africa and Asia—would be able to finance their own basic services. Those places do have the money, but companies are stealing it via evasion and avoidance.

[Helen Goodman]

My hon. Friend is absolutely right. Quite a lot of the money that is hidden is hidden by corrupt regimes, particularly in Africa.

A major criticism of the Bill as first drafted was of its Henry VIII clauses. Throughout, the Bill was giving Ministers the power to make regulations—in other words, to make law that cannot be amended by Parliament and is sometimes made without even any debate. In our consideration of the EU (Withdrawal) Bill, Members across the House complained that the level of the Henry VIII powers was so excessive that the Government agreed to a sifting Committee in order to limit the concentration of the power of the Executive. Arguably, with no sunset clause, this Bill is even worse in this respect. Speaking in the other place, the well-named and noble Lord Judge described it as a “bonanza of regulations” and the “Regulation Bulk Buy” Bill. Their lordships defeated the Government twice in votes on this. I hope that the Government will not now seek to undo those changes to the Bill. If so, we will oppose them.

It is surely obvious to everyone that sanctions regimes are effective only when they are co-ordinated internationally, as the Foreign Secretary acknowledged, and we need maximum support across the world and agreed implementation mechanisms to enforce them. However, he did not really answer some of the questions as to how that is going to be done post Brexit. Half our sanctions emanate from the EU. I am not saying that this is necessarily a matter for legislation, but surely the Government should have a plan for how we are going to be involved in EU decision making on sanctions regimes and the implementation of those regimes. Ukraine is a good example of where that is needed. What specific plans has the Foreign Secretary developed for a framework to provide for continued co-operation with the EU on foreign policy issues after we leave? What discussions have been held on that particular issue in the Brexit talks? What are the Government seeking to achieve in their negotiations with the EU on that matter? We were warned last week by the three spy chiefs that, without co-operation with our EU partners in intelligence sharing, policing and judicial matters, it would be difficult to enforce compliance on sanctions, which are vital for dealing with terrorism and proliferation.

Labour’s view is that the core principles of sanctions policy should be that sanctions are targeted to hit regimes rather than ordinary people; minimise the humanitarian impact on innocent civilians; and have clear objectives, including well-defined and realistic demands against which compliance can be judged, with a clear exit strategy. There should be effective arrangements for implementation and enforcement, especially in neighbouring countries, and sanctions should avoid unnecessary adverse impacts on UK economic and commercial interests. We will seek to amend the Bill to ensure that those principles are adhered to throughout.

One very big and obvious hole in the Bill is its failure to incorporate Magnitsky clauses, which the House has repeatedly supported and voted for. Sergei Magnitsky was a Russian lawyer who uncovered large-scale tax fraud in Russia. For his pains, he was imprisoned and tortured throughout a whole year, finally dying having been brutally beaten up while chained to a bed. We will be tabling a Magnitsky clause that would enable sanctions to be made in order to prevent or respond to gross human rights violations. Such provisions have been adopted in the United States and Canada, and they were also reflected in the Criminal Finances Act 2017. I cannot understand how or why the Foreign Secretary has missed this opportunity; perhaps he has been too busy designing bridges. Such a step is not just about Russia. We are now in the strange position that the United States has tougher sanctions than we do on Myanmar.

[Boris Johnson]

I hesitate to accuse the hon. Lady of failure to read the Bill, but clause 1(2) makes it absolutely clear that sanctions can be imposed to promote human rights. A fortiori, that obviously involves a Magnitsky clause to prevent the gross abuse of human rights. The measure that she seeks is in the Bill.

[Helen Goodman]

I am afraid that I do not think the Bill makes that clear. First, it does not include the phrase, “gross human rights abuses”, which the Foreign Secretary just used, and furthermore, it does not refer to public officials. This is a matter that we can debate upstairs in Committee, and I will be happy to do so with the Minister.

Another key area that the Government have failed to address properly is the position of refugees and victims of human trafficking. Last month, the House unanimously resolved:

“That…conflict resolution…and the protection of human rights should be at the heart of UK foreign policy and that effective action should be taken to alleviate the refugee crisis”.

There are now 66 million refugees—more than there have ever been and more than the population of the United Kingdom. The flow of desperate people across the Mediterranean and through Turkey is continuing. Yet the Bill gives no impression that Ministers have given any thought whatsoever to the plight of these people, who are seeking refuge from desperate and protracted conflicts around the world.

[The Minister for Europe and the Americas (Sir Alan Duncan)]

May I draw the hon. Lady’s attention again to clause 1(2)? Paragraph (e) mentions exactly what she is talking about—promoting

“the resolution of armed conflicts or the protection of civilians in conflict zones”.

Paragraphs (f), (g) and (h) refer exactly to the human rights abuses that my right hon. Friend the Foreign Secretary mentioned in response to her earlier comments.

[Helen Goodman]

That is absolutely true, but if the Minister reads a little further into the Bill and looks at clauses 6 and 7 on aircraft and shipping, he will see that there are some problems at that point. Again, we can come back to this in Committee.

The Bill states that prohibitions can be applied to UK nationals and companies based in the United Kingdom, but not against companies based or incorporated in the British overseas territories. Recent reports from UN monitors implicate territories such as the British Virgin Islands in the setting up of front companies that helped North Korea to evade the sanctions imposed on it. The problem of sanctions avoidance is very serious. Last week, I was told in answer to a written parliamentary question that the total cost of financial sanctions reported as having been breached last year was £170 million. This afternoon, I received a letter from the Treasury, which has looked at the numbers again and says that the number is £1.4 billion. We need to look at this in more detail in Committee.

I now turn to the anti-money laundering provisions—what one might call the McMafia section of the Bill. To set this in context, the Home Affairs Committee report of June 2016 found:

“Money laundering is undoubtedly a problem in the UK…It is disgraceful that at least a hundred billion pounds is being laundered through the UK every year. If the UK is to remain the centre of global finance, this must be addressed.”

It pointed out that

“money laundering takes many…forms…from complex financial vehicles and tax havens around the world through to property investments in London…and high value jewellery. It is astonishing that just 335 out of some 1.2 million property transactions…were deemed to be suspicious. This suggests to us that supervision of the property market is totally inadequate”.

At the moment, it is far too easy—

[Layla Moran (Oxford West and Abingdon) (LD)]

Is the hon. Lady aware of the geographical targeting orders piloted by the USA that we were told about in the Public Accounts Committee during our trip to Washington last week? Does she know that 30% of the properties investigated were found, in the end, to be owned by nefarious people?

[Helen Goodman]

That is very shocking. I did not know about it. I hope that the hon. Lady will dilate on the matter further during the debate.

It is obviously possible for people to buy a property, take in rent in perpetuity and have a clean income. In evidence to the Home Affairs Committee, the surveyor Henry Pryor said:

“we do have the equivalent of a welcome mat out for anybody to come if you want to launder your money.”

Money laundering enables the corrupt to live in comfort and security. It is also used to finance other serious and organised crime such as drug dealing, human trafficking, terrorism and even the illegal arms trade and WMD sanctions busting. The click of a computer mouse in London or the overseas territories can mean untold misery across the globe. The Government’s own impact assessment for the Bill says:

“As a global financial centre, the UK is particularly exposed to the threat of being exploited as a destination or transit point for illicit funds”.

Ministers know that this is a problem. Between 2013 and 2016, David Cameron’s Government issued increasingly strong statements and promises, culminating in the May 2016 global summit. There were three specific proposals: a transparent register of beneficial owners of all companies registered in the UK, similar registers in the British overseas territories and Crown dependencies, and a public register of foreign owners of UK property. However, the implementation has been halting, under-resourced, partial and confused. Currently we have at least 25 different regulatory bodies. It is true that we can now see on the Companies House register who the person is with significant control, but last year 400,000 companies failed to submit the information. Companies House has no due diligence procedure and employs only 20 people to supervise 4 million entries.

[Lloyd Russell-Moyle]

Does my hon. Friend share my concern that, when one of my constituents reported a fraudulent entry in the Companies House register, the response from Companies House was that it does not do the enforcement, but is just the registry? This fraud is a mockery of the whole registry system.

[Helen Goodman]

My hon. Friend has brought precisely the point to the House in highlighting that unfortunate episode.

Registers have been introduced in some of the British overseas territories, but they can be accessed by the authorities in London only when the authorities have a reason to be suspicious. The inadequacy of that approach was demonstrated by the publication of the Panama papers and the Paradise papers. According to the Guardian investigators, the law firm Mossack Fonseca, operating out of Panama, acted for 113,000 companies incorporated in the British Virgin Islands, which hosts 950,000 offshore companies. That is a country with a population of 30,000. This is public interest journalism at its best—fearless, determined and forensic. Had it not been for the excellent investigatory journalism, we would not have known that Britain’s high street banks processed $740 million from a vast money-laundering operation run by Russian criminals through anonymously owned firms, nor that Mukhtar Ablyazov, who fled Kazakhstan in 2009 after $10 billion went missing from the bank he chaired, had a Cayman Islands trust set up by law firm Appleby.

Significantly, HMRC has been able to use the information revealed in Panama and Paradise to open civil and criminal investigations into 66 people and pursue arrests for a £125 million fraud, tackle insider trading and place dozens of high net worth individuals under review. Imagine how much more effective it could be if transparency were the rule and not the exception.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

My hon. Friend makes a good series of points about the nature of the British overseas territories and Crown dependencies. Given that the Bill considers the whole nature of our governance structures after Brexit, does she agree that we should look in a broader sense at the curious structure of British overseas territories and Crown dependencies? We should perhaps follow the example of France, which has incorporated its overseas territories into its metropolitan country and given them a democratic place in its legislature. We could consider the same thing.

[Helen Goodman]

My hon. Friend is right that the situation is complex—we have one legal regime for the overseas territories and another for the Crown dependencies—but I think that that would be beyond the scope of the Bill.

The all-party parliamentary group on responsible tax, led by my right hon. Friend the Member for Barking (Dame Margaret Hodge), has been pursuing this agenda energetically for several years now, and across the House, Members want effective action.

Another scandal is the use of London property by oligarchs, corrupt officials and gangsters from across the globe. I am talking about people like Karime Macías, the Mexican wife of the former Veracruz Governor Duarte. He has been imprisoned and charged with corruption, money laundering and involvement in organised crime. His years in office saw a spike in disappearances and murders, while she claims to be a fugitive in London.

When I was young, if you drove through Chelsea at night, it was full of light because people actually lived there. Now, swathes of London are pitch black, as properties are bought simply as money safes. Meanwhile, in the outer boroughs, which the Foreign Secretary never visits—

[Boris Johnson]

As the hon. Lady may recollect, I was never out of the outer boroughs when I was Mayor of London, and the former Mayor of London visited Havana more often than he visited Havering.

[Helen Goodman]

I wish the Foreign Secretary was as energetic in his pursuit of the corrupt in this Bill as he is concerned to defend his own record on travelling around the London underground.

In the outer-London boroughs, new buildings are bought off plan and some never even have the cellophane unwrapped. Global Witness has found that 86,000 properties in this country are owned by companies in secrecy jurisdictions. The Cayman Islands representatives told me, when they came to see me in preparation for the Bill, that they were responsible for 11% of the property investment in Britain, pushing up prices so that they are unaffordable, and young people’s home ownership in this country is now at an all-time low.

The new register promised by the Government in 2015 has been put back by six years. There must be a suspicion that this secrecy continues because some senior Tories use it. Just one example will suffice. Lord Sassoon was revealed by the Paradise papers to have been a beneficiary of a Bahamas trust fund that has sheltered a family fortune worth hundreds of millions of dollars, yet he was a Treasury Minister and the man charged with presiding over the Financial Action Task Force—the very body tasked with setting the standards to combat money laundering.

We are going to pursue all these issues over the coming weeks. I cannot do better than quote the global summit communiqué, which said:

“Corruption is at the heart of so many of the world’s problems. It erodes public trust in government, undermines the rule of law, and may give rise to political and economic grievances that…fuel violent extremism. Tackling corruption is vital for sustaining economic stability and growth, maintaining security of societies, protecting human rights, reducing poverty, protecting the environment for future generations and addressing serious and organised crime…We need to face this challenge openly and frankly”.

--- Later in debate ---

[Alison Thewliss]

That sounds like a vague, “I don’t know” kind of answer.

[Helen Goodman]

Perhaps the hon. Lady would like to ask the Minister whether the powers he is taking in chapter 3—temporary powers in relation to EU sanctions lists—will not give him the power to enforce the fifth money laundering directive.

[Alison Thewliss]

That is a very good question. I do not know whether the Minister wants to take this opportunity to answer it—perhaps not. He has heard the question, so I need not repeat it.

Finally, I want to refer to the Scottish Government, because aspects of the Bill reflect some of the powers that lie within Scotland. The Court of Session is referred to in clause 33(2) and clause 34(2). What consultation has there been with the legal profession in Scotland and with the Scottish Government on that? On clause 47 —“Regulations: general”—the power to change devolved legislation under the negative procedure is really not cool. It is not just I who object to this; the Library briefing states that this will

“enable ministers to make supplemental, incidental, consequential, transitional or saving provisions repealing or otherwise amending existing legislation, including devolved legislation.”

Lord Judge referred to this clause as “monstrous”. Has the Scottish Government been consulted on this provision? What has the Minister got to say about this? This power grab, hidden on page 35 of the Bill, is something that I will seek to amend in Committee.

I support any moves to improve the scope of the Bill, and I look forward to hearing the rest of the debate.

--- Later in debate ---

[The Minister for Europe and the Americas (Sir Alan Duncan)]

As my right hon. Friend the Foreign Secretary said in his opening speech, this Bill is necessary to ensure that we can continue to use sanctions and anti-money laundering regulations to support our foreign policy and national security goals as we leave the European Union. We have had a lively and passionate Second Reading debate, but I sense that the setting up of a UK sanctions regime on our departure from the EU would appear to enjoy the broad support of this House.

It is often invidious in winding up a debate to pick out some speeches but not all, but forgive me, Mr Speaker, if I do that this evening, because I think the two strongest and most remarkable speeches were those of the right hon. Member for Barking (Dame Margaret Hodge) and my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), with whom I worked very closely as his deputy in DFID. I appreciate the passion of the right hon. Lady; we will no doubt debate these matters at great length in Committee and on Report, and we will take on board the strength of the arguments we have heard tonight, and which, of course, we have heard before. Likewise, my right hon. Friend made an impassioned plea for humanitarian agencies to be fully considered, and I will come to that shortly. He also spoke of Magnitsky, as did many Members; I will go into more detail later, but for now I will say that this Bill has wide-ranging powers to sanction people for human rights abuse. On open registers, we share my right hon. Friend’s view on wanting to bear down on illicit money flows; as he said, the registers are open to instant access by regulatory authorities, but I quite understand his view that such action alone does not suffice.

I have a small point to make to my hon. Friend the Member for Huntingdon (Mr Djanogly), who asked if we could publish the anti-corruption strategy; we did so in December of last year. The hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) asked why nobody has been prosecuted for export control offences; in fact, there have been 23 not just prosecutions, but convictions, for export control offences in the 10 years from 2006 to 2016, and a number of these prosecutions relate to exports to countries covered by UN and EU sanctions regimes.

This being a Second Reading debate, I want to dwell on a few key principles contained in the legislation, as I have no doubt that we will discuss the closer detail further in Committee. The first such issue is that of delegated powers. They are rightly coming under scrutiny in this place today. However, it is important to recognise that Ministers implement sanctions and anti-money laundering regulations by using delegated powers now, through secondary legislation under the European Communities Act 1972, and this Bill will not change that approach. In fact, in the future Parliament will have greater oversight of sanctions than it currently does, with votes needed in both Houses when the UK acts outside the requirements of the UN, and given the need to respond quickly to global events, the Government believe that regulations remain the best mechanism for implementing and amending sanctions and anti-money laundering regimes.

There is, however, the question of creating criminal offences, as referred to by the hon. Member for Glasgow Central (Alison Thewliss), and I am confident this will be addressed before Report. We have listened to these concerns and we are working on a solution that we hope will be accepted by those who expressed them in another place. Indeed, Lord Judge, whom we have been talking to, and his colleagues did not disagree that breaches of sanctions should be criminal offences, and we will introduce amendments to fix this and address their concerns in due course.

On procedure, we believe we have the right balance of affirmative and negative resolutions. Regulations that implement UN regimes will be made under the negative procedure; regulations that do not implement UN sanctions regimes will be made under the made-affirmative procedure.

The hon. Member for Glasgow Central talked about the ability to amend devolved legislation as being “monstrous”. I think she slightly misunderstands the process here. Sanctions are a matter of foreign policy.

[Helen Goodman]

On negative and affirmative resolutions, the Minister is choosing to draw a distinction based on the origin of the sanctions—whether they are from the UN or the EU—but would there not be a greater logic in drawing a distinction between individual sanctions on people, which obviously have to be done quickly, and the rules of the game for the regimes, where the House would be reasonable in seeking to be consulted before they are introduced?

[Sir Alan Duncan]

The reason that we have made this distinction in terms of procedure is that we are obliged in law to implement UN sanctions. Once the sanctions have been agreed at the UN Security Council, the UK has an obligation to implement them under the UN charter. Not to do so would leave the UK in breach of international law—hence the distinction in the procedure that we are using.

Returning to what the hon. Member for Glasgow Central described as “monstrous”, I say again that sanctions are a matter of foreign policy and so are reserved to this Parliament.

Sanctions and Anti-Money Laundering Bill [Lords]

Helen Goodman Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 1st May 2018 Commons Chamber

[Sir Alan Duncan]

No, not for the moment.

We do not want to legislate directly for the overseas territories, nor do we want to risk damaging our long-standing constitutional arrangements, which respect their autonomy. However, we have listened to the strength of feeling in the House on this issue and accept that it is, without a doubt, the majority view of this House that the overseas territories should have public registers ahead of their becoming the international standard, as set by the Financial Action Task Force.

We will accordingly respect the will of the House and not vote against new clause 6. Unless my right hon. Friend the Member for Sutton Coldfield chooses not to press the new clause, we accept that it will become part of the Bill. In the same spirit, I would appreciate it if the hon. Member for Bishop Auckland chose not to press new clause 14, which would add the Crown dependencies to that stipulation.

Her Majesty’s Government are acutely conscious of the sensitivities in the overseas territories and of the response that new clause 6 may provoke. I therefore give the overseas territories the fullest possible assurance that we will work very closely with them in shaping and implementing the Order in Council that the Bill may require. To that end, we will offer the fullest possible legal and logistical support that they might ask of us. Alongside that, we retain our fullest respect for the overseas territories and their constitutional rights, and we will work with them to protect their interests.

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to take part in the debates on Report of this important Bill. I will follow the same order as the Minister in discussing the amendments.

I took the rather unusual step of signing the Government’s Magnitsky amendments, new clause 3 and amendments 10 to 13, so this House can present a united voice to the whole world in expressing our abhorrence for gross human rights abuses and our determination to tackle them together.

I thank the right hon. Member for Newbury (Richard Benyon) and my hon. Friends the Members for Rhondda (Chris Bryant) and for Dudley North (Ian Austin)—the latter is not in the Chamber at the moment—all of whom have campaigned on this issue for a long time. Her Majesty’s Opposition believe that human rights should be at the centre of foreign policy. The only way gross human rights abuses will stop is if those who perpetrate them, order them and facilitate them are brought personally to account. They must pay the price.

Sanctions against individuals for gross human rights abuses were originally conceived as a response to the terrible treatment of Sergei Magnitsky, but we believe there is a wider problem. We note, for example, that the United States has sanctioned Maung Maung Soe, one of the generals responsible for the ethnic cleansing of the Rohingya in Myanmar.

Last year, the Criminal Finances Act 2017 enabled the Government to freeze the assets of people responsible for such crimes, and this Bill will enable us to ban visas and prevent such people traveling here. The only question is why it took so long for the Government to come round to seeing the importance of this measure.

We introduced so-called Magnitsky amendments in Committee that would have given us the same ability as Canada and the United States to implement targeted sanctions. Unfortunately, the Government initially did all they could to reject our amendments. They rejected them in principle on Second Reading; they reordered the consideration of the Bill; they suspended the Committee; and then they downright voted against the amendments. After the Salisbury incident on 4 March, the Prime Minister announced a complete U-turn. We are pleased the Government have seen the light, but it is unfortunate that it took such a tragic event for them to change their mind.

I am pleased to offer the support of Her Majesty’s Opposition to new clause 6, tabled by my right hon. Friend the Member for Barking (Dame Margaret Hodge). I congratulate her on her long campaign, which began when she was Chairman of the Public Accounts Committee. She has stuck with it over many years, and we see in the Minister’s announcement today that the campaign was well worth while. I also congratulate the right hon. Member for Sutton Coldfield (Mr Mitchell) on putting together a fantastic coalition of support for this change.

We believe the time to act has come. In 2014, David Cameron wrote to the British overseas territories recommending that they introduce public registers—the UK introduced a public register in 2016—and new clause 6 sets out a timetable for them to do so by 2020. Money laundering through London is estimated by the National Crime Agency to total £90 billion, and it is facilitated by the secret ownership of companies allowed in tax havens. Unfortunately, the British overseas territories and Crown dependencies are major actors. They enable the corrupt to live in comfort on their ill-gotten gains and facilitate tax avoidance and evasion on a spectacular scale. The UK is estimated to lose £18.5 billion each year. I am only surprised that the Chancellor of the Exchequer did not also sign new clause 6.

The poorest countries in the world are estimated by the United Nations to lose £100 billion a year through these tax havens, which dwarfs any aid flows we supply. That is another reason why new clause 6 is very much to be welcomed.

The scope for hiding large funds facilitates serious international crimes: drug dealing, people trafficking, sanctions busting, illegal arms sales and terrorism. Over and again, the names of the British overseas territories and Crown dependencies come up when these crimes are finally uncovered.

[James Duddridge (Rochford and Southend East) (Con)]

Clearly, it is important to remember that this is not just an overseas territories issue but a global one. Is the hon. Lady worried that this legislation will just displace all the activity to states such as Delaware, which do not have this transparency, and we will not gain any of the real benefits?

[Helen Goodman]

Of course the hon. Gentleman raises a worry, which has been expressed. My right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) and I were in the United States a fortnight ago, when we met several members of the US Congress who are keen to crack down on Delaware, Nebraska and the other states there. Leading by example, which is what the last Administration did, is a way to make progress on this issue. I will come back to the international links later in my speech.

[Mr Geoffrey Cox (Torridge and West Devon) (Con)]

What does the hon. Lady say to the 50,000 or 60,000 inhabitants of the Cayman Islands, who were given a constitution in which the responsibility for the governance of their financial and economic affairs was solemnly conveyed to them by this Parliament? The measure she is supporting will require that constitution to be amended so that the section that conveys on them the power to make their own orders in these affairs will have to be removed. What does she say to them?

[Helen Goodman]

My understanding is that the position on the British overseas territories, as set out by a White Paper when the hon. Member for North West Norfolk (Sir Henry Bellingham) was a Foreign Office Minister, is that it is appropriate for this House to legislate for the Cayman Islands and the overseas territories if it is considered necessary. Given the long list of crimes, which I have just read out to the House, that are facilitated, it can be argued completely that when we are making changes in this respect, this is an international, foreign policy issue, as that is what we are talking about; we are talking about the financing of international crime and of terrorism. This is not like trying to intervene in street lighting or purely local matters. It simply has a completely different import for the world.

[Robert Neill (Bromley and Chislehurst) (Con)]

I understand the point the hon. Lady is making and, as a lawyer, I very much appreciate the importance of the international fight against crime and money laundering, but will she concede that at least some overseas territories take their obligations very seriously? For example, Gibraltar, which is part of the EU as well, has already publicly accepted that it will transpose the fifth anti-money laundering directive, which includes a public register of beneficial ownership, into place by December 2019? In a sense, such places do not need to be legislated for, because they are willing to do this. It is important to be proportionate in our approach, is it not?

[Helen Goodman]

Of course what the hon. Gentleman says about the fifth anti-money laundering directive is right, in so far as it does put obligations on Gibraltar. That was why I have linked new clause 14 to the fifth anti-money laundering directive, because clearly it is easier, in terms of international competitiveness, for many jurisdictions to move together.

[Sir Henry Bellingham (North West Norfolk) (Con)]

The hon. Lady mentioned the 2012 White Paper on the overseas territories, in which we said that in extreme cases we would legislate on such matters but that we would always try to build consensus first, because of our great respect for the constitutions of those territories. I plan to make a few remarks about that, but given the Government’s announcement today, will she confirm that she will not press new clause 14, which would extend new clause 6 to the Crown dependencies?

[Helen Goodman]

I will come on to that at the end of my speech.

I was explaining that these crimes are significant and that we see money being laundered in the UK, and I wanted to give the example of Mr Temerko, who was once a senior figure in Russia’s defence industry and who rose to become a key player in the Russian oil giant Yukos. His engineering company, Offshore Group Newcastle Ltd, had a large site up in Hadrian’s yard in Newcastle, where it was doing some energy work. The company won a grant from the Government’s regional growth fund in 2013, but it later went into administration and the work in the north-east was left unfinished. OGN Ltd is owned by a parent company based in the secrecy jurisdiction of the British Virgin Islands. Clearly, the effects of the lack of transparency are not felt solely in London; they are felt across the United Kingdom.

As I have said, I acknowledge that progress has been made, in so far as registers of beneficial ownership or “similarly effective systems” have been set up, but these are not transparent.

[Mr Jim Cunningham (Coventry South) (Lab)]

After the incident in Salisbury, I was led to understand that the Government were cracking down on money laundering in this country, particularly in respect of these Russian oligarchs. Does my hon. Friend not agree that the Government should pursue this a lot further than they have been doing?

[Helen Goodman]

I certainly agree with that. Obviously, the law enforcement agencies—the National Crime Agency, the police and the Serious Fraud Office—need more resources. They would then be in a better position to crack down on this money laundering.

The purpose of transparency is not for the entertainment and titillation of the curious; it is to facilitate the authorities’ ability to track down illicit flows, because they can see the connections and links. This effectiveness of transparency was demonstrated by the fact that the Panama and Paradise leaks enabled Her Majesty’s Revenue and Customs to open civil and criminal investigations into 66 people, to pursue arrests for a £125 million fraud, to tackle insider trading and to place dozens of high net worth individuals under review.

I am extremely pleased that the Minister said what he did about not opposing new clause 6, which stands in the name of my right hon. Friend the Member for Barking. I welcome his change of heart on that. He has, in the written ministerial statement he produced this morning, bigged up the role of the Financial Action Task Force, and I was a bit surprised by that, as the FATF is a rather unsatisfactory forum. It is an inter- governmental body with no legal personality or explicit formal authority under international law and no enforcement powers. It has 37 members, which include Russia, China and the Gulf Co-operation Council. Foreign Office Ministers have been eloquent in recent months in saying that the United Nations Security Council is ineffective in upholding international law because of the Russian veto, yet here, when we want to tackle the financing of major crimes and terrorism, they seem content to hand over their moral compass to the Russians. The FATF is also highly secretive; in answer to my questions, Ministers have refused to publish future agendas or papers for discussion. Even the UK does not always ensure its FATF representative has a thorough-going commitment to reform—for years it was a person who had his family money in a secret Bahamas trust. So I will be very pleased if the House can unite behind new clause 6 this afternoon.

I turn now to new clause 14, which would require public registers in the Crown dependencies. The case in principle for acting to improve transparency in the Crown dependencies—the Channel Islands and the Isle of Man—is substantively the same: their secret ownership arrangements facilitate both money laundering and tax evasion.

[Gavin Robinson (Belfast East) (DUP)]

The hon. Lady will have heard what the Minister said in his speech about the response that the Isle of Man and other Crown dependencies are able to give within hours, whenever a request is made for information that falls within a terrorist category. Does she accept that the Crown dependencies forthrightly, earnestly and efficiently provide information to our law enforcement agencies within hours, when it is requested?

[Helen Goodman]

The hon. Gentleman makes the same point about the Crown dependencies as other Members have made about the British overseas territories. The current situation is as he describes it—if the law enforcement agencies want information and ask for it, the authorities in the relevant jurisdictions give it to them—but the problem is that, to crack down on serious and organised crime, it is really useful to see the whole picture, and we can see the whole picture only if we have all the information. That is the point of transparency and that is the lesson from the Panama and Paradise papers.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

My hon. Friend is making a brilliant speech. Have we not learned that dark money will move to wherever the law is darkest? If we bring transparency to the overseas territories, most of the money is simply going to be relocated to the Crown dependencies, unless we change the law to cover them, too.

[Helen Goodman]

That point was made to me by the Minister and his officials when we discussed the Bill, and my right hon. Friend is absolutely right that, because we are making changes in respect of the overseas territories, we need to make changes in respect of the Crown dependencies.

[Ms Angela Eagle]

My hon. Friend is making an extremely good speech. Does she agree that the time for secrecy in all these jurisdictions is now over? We need transparency so that we can minimise the abuse—whether tax evasion, tax avoidance, or the laundering of criminal money—that is becoming more and more of a feature in these jurisdictions. Does my hon. Friend agree that once we have our own house in order, we can then campaign internationally to close down all tax havens?

[Helen Goodman]

My hon. Friend has succinctly made my whole case for me. She is absolutely right. Those people who think that the situation in the Crown dependencies is not as serious as that in the British overseas territories need only to remember the 957 helicopters that were registered on the Isle of Man to avoid VAT.

[Several hon. Members rose—]

[Helen Goodman]

I shall make a little more progress, because many Members want to speak.

I have linked new clause 14 to the fifth anti-money laundering directive, so that we would see a number of jurisdictions moving together. I am pleased that the Government have accepted the secrecy jurisdictions and that we have a role with respect to the overseas territories, but we need an effective path to bring change according to a timetable, within the current Parliament, and new clause 6 tabled by my right hon. Friend the Member for Barking would provide that. I will not press new clause 14 to a vote—I was not going to press it in any case—because I think we can reach an agreement on how to proceed on these matters.

[Dame Margaret Hodge (Barking) (Lab)]

Let me start by saying how grateful I am to all right hon. and hon. Members from all parties who support new clause 6. I am particularly grateful to the right hon. Member for Sutton Coldfield (Mr Mitchell), who has worked with me on this important issue and shown his particular skills and experience as a former Government Chief Whip.

The fact that the new clause commands such wide support throughout the House speaks volumes for what it says. Our proposal is right in principle and will be effective in practice. When it is passed—I am grateful to the Minister for conceding that the Government will not oppose it—this simple measure to require British overseas territories, our tax havens, to publish public registers of beneficial ownership will transform the landscape that allows tax avoiders, tax evaders, kleptocrats, criminals, gangs involved in organised crime, money launderers or those wanting to fund terrorism to operate. It will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system, often for nefarious purposes.

Transparency is a powerful tool. With open registers, we will know who owns what and where and will be able to see where the money flows. We will thereby be better equipped to root out dirty money and deal with the related issues, and we will be better able to prevent others from using secretive jurisdictions to hide their ill-gotten gains.

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[Alison Thewliss]

I rise to speak to the amendments in my name, on behalf of the Scottish National party. As I said earlier, I will formally withdraw amendments 31 to 33, which the cross-party amendments have dealt with adequately.

First, I would like to thank the Government and their advisers and civil servants for their time and expertise in the run-up to the Bill, as well as all those who sent me information and briefings, which have been incredibly helpful. I also want to particularly thank the experts at the Law Society, UK Finance, Roger Mullin, Richard Smith and David Leask for their thoughts on Scottish limited partnerships.

A lot has changed since the Bill began its process. Salisbury has focused minds and, I hope, will now result in some action. The UK Government went from trying to find a way to wriggle out of the Magnitsky amendment to the Prime Minister giving it her full support. Regardless of how the Government have come to that decision, I am grateful that they have finally come on board, and we can all be grateful that that move has been made.

I spent the weekend finishing Bill Browder’s disturbing book “Red Notice”, which details the lengths to which the rich and powerful in Russia are willing to go to preserve their ill-gotten gains. I recommend that all Members read it as an object lesson in Russian oligarchs’ power, which we need to be mindful of. It is a complex trail which finally led to the brave lawyer Sergei Magnitsky being wrongfully imprisoned, maltreated, tortured and eventually beaten to death in prison because he refused to perjure himself. He stood for the truth. He documented the human rights abuses against him, and, after his death, Bill Browder and his team campaigned steadfastly to bring some justice to the situation. That led to the Magnitsky Act in the US, which introduced Government sanctions prohibiting entry to the US and access to the US banking system for those involved in Sergei Magnitsky’s death. It has since been expanded in scope to become the Global Magnitsky Act, tackling more dirty money and dubious people.

The UK Government made moves on that with section 13 of the Criminal Finances Act 2017. The amendments today expand on that in a very welcome way, and I am glad to give my party’s support to them. It is crucial that the names go on the record, and I am glad that the Government have committed to an administrative list being publicly available. I could read out right now all the names that are currently on the American Magnitsky list, because they are in the public domain and everybody can see them. There is transparency and accountability, with nowhere to hide once someone is on that list. It is crucial that the list is used in the same way in the UK and that the webpage, or wherever the names are held, is available and updated regularly.

I appreciate that this is not an issue for the House, but I hope that Members will give further thought to how the process of parliamentary scrutiny will work. Will it be through a Committee? If so, which Committee? Will that Committee have powers to add names and conduct reviews? We must hold ourselves to the same standard as the existing Magnitsky list for this to be fully effective.

I want to speak about the issue of Scottish limited partnerships, which is dealt with in new clauses 1 and 19. We believe that linking an SLP with a human individual would go a considerable way to cracking down on the abuse of SLPs, so we suggest that a limited partner and a general partner must both be British citizens and that a general and a limited partner must have a UK bank account. That would, at a stroke, remove a great deal of illegitimate SLPs, while protecting those in agriculture and other areas who would be easily able to fulfil those simple requirements. The anti-money laundering requirements of our banks would act as a degree of deterrent to those seeking to abuse the system.

On new clause 1, until 2009 registrants of limited partnerships were required under the Limited Partnerships Act 1907 to provide the full name of the partners. However, the Legislative Reform (Limited Partnerships) Order 2009 confirmed that the legally required level of registration disclosure needed to be less expansive. The new clause would restore the basic information requested at the time of registration and introduce a requirement for one of the general partners to be a British citizen.

New clause 19, on the UK bank account requirement, would tie this a bit more tightly. Although SLPs’ name and country of incorporation may give them the veneer of a UK-regulated entity, at the moment their bank account and all their financial transactions can be run through overseas bank accounts that have few, if any, anti-money laundering checks on their account holders. We want to tighten that up significantly, because allowing that kind of abuse could severely damage the credibility of UK legal entities abroad.

[Helen Goodman]

I am most grateful to the hon. Lady for giving way. I took so many interventions on overseas territories that I forgot to comment on new clauses 1 and 19. We think that both are very sensible, given the explosion in SLPs in recent years and the complete failure to act on what has happened in the past year. New clause 19 is particularly powerful because it would mean that these people were within the ambit of the anti-money laundering legislation for the banking system.

[Alison Thewliss]

I thank the hon. Lady for her support. I hope to at least press new clause 19 to a vote, because there needs to be some action on SLPs, and tying it to a bank account is a good way of doing that.

The SNP is extremely proud of Scotland’s reputation as a successful place to conduct business, but with SLPs continuing to generate new scandals, there is an ever-growing reputational risk to Scotland, and indeed the UK, if action is not taken. I would like to take this opportunity to dig the Government up for their shenanigans on SLPs.

Owing to the diligent campaigning by the former Member for Kirkcaldy and Cowdenbeath, Roger Mullin, the UK Government launched a consultation on SLPs on 16 January last year and closed it on 17 March last year. We then had an election, in which my dear friend did not get re-elected. We waited. Questions were tabled, and we were told again and again by Government that a response on the consultation was imminent. There was nothing. A month ago, we were told that it would be a matter of weeks, but probably not until after the Bill came back. Last week, we were told by officials that the report on SLPs was awaiting sign-off in Government, and on Sunday there was an announcement in the press that action was going to be taken, with a “Crackdown on abuse of UK businesses for foreign money laundering”. When we get to the detail, what in fact is it? It is another consultation—it is a consultation about a consultation.

That simply will not do. The UK Government are well aware of the problems with SLPs, which are well documented. The Secretary of State mentioned earlier the evidence that led to the bringing into scope of the person of significant control. We know that that was required, and there was evidence on it. We are waiting for fines to be levied on people who have not registered their persons of significant control.

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[Richard Benyon]

We have it in our power to create something in Parliament that will hold future Governments as well as this Government to account. I am full of respect for what our security Ministers have been doing recently to freeze the bank accounts of certain individuals, and I absolutely believe that the Government have the will to ensure that we get our economy sorted out so that we cannot be a safe haven for these people. However, what we are talking about will be happening way into the future. It will affect future Governments as well, and we must hold them to account.

We could put this in the hands of an existing Committee —perhaps a Select Committee—but I suggest that that might not be the right framework. A Select Committee has the specific role of holding a Department of State to account and looking into certain details. I personally like the idea of a bespoke Committee that would draw together members of different Committees. The example that I would throw out there for others more important than me to grab is the Committees on Arms Export Controls—the CAEC. It has a specific remit, with members from various Select Committees, and I think it would be an effective model.

[Helen Goodman]

May I urge the right hon. Gentleman to read new clause 10, which sets out a proposal for a scrutiny Committee?

[Richard Benyon]

Well, I have. I just think new clause 3 leaves it much more open for Parliament to make a decision, and I am quite content with that, although I am open to other suggestions. Some people say that the Joint Committee on Human Rights might be best placed to carry out this scrutiny, but I see, from delving into the Standing Orders, that Standing Order No. 152B(2)(a) states that the Joint Committee has a remit to look at

“matters relating to human rights in the United Kingdom”.

What we are talking about here is matters relating to human rights anywhere. We could be talking about someone who is evicting the Rohingya, for example, or actions taken in conflicts or situations as yet unknown and unforeseen. We need to ensure that we can look at human rights everywhere.

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Amendment 7, which stands in the names of the hon. Members for Bishop Auckland (Helen Goodman) and for Oxford East (Anneliese Dodds), would change “may include guidance about” to “must include” in respect of three stated areas of guidance. The amendment could be interpreted as limiting the areas on which the Government have committed to providing guidance to just the areas listed in the clause. With amendment 8, the hon. Members also wish the Government to review guidance issued under clause 38 on a yearly basis and submit a report to Parliament containing the results of that review. I see no grounds for instituting an additional review and reporting requirement in the Bill as there is already one in the Bill.

[Helen Goodman]

Those two amendments were tabled by the SNP.

[John Glen]

I am happy to be corrected, and I apologise to the hon. Lady.

Amendment 29 relates to the procedure by which individuals or entities apply for licences and exceptions to be included in the regulations. Retaining the application procedures in guidance will give the Government the flexibility to update them as needed and to respond to stakeholder feedback.

The Government have tabled new clause 4 because we recognise the concern raised by the Independent Reviewer of Terrorism Legislation and the Joint Committee on Human Rights that the repeal of part 1 of the Terrorist Asset-Freezing etc. Act 2010 would remove the independent reviewer’s oversight of domestic counter-terrorism asset freezes. Government new clauses 15 to 17 and amendments 23 to 26 will provide the UK Government with the powers necessary to enforce UK sanctions regulations against ships in international and foreign waters. These powers will ensure adherence to the standards set out in relevant UN Security Council resolutions and provide protection against the transportation of dangerous and harmful goods in international waters. These provisions contain important safeguards on the use of these powers, including a requirement to have reasonable grounds to suspect that sanctions are being flouted before enforcement action can be taken as well as flag state and foreign state consent where relevant.

New clause 20, tabled by the hon. Member for Glasgow Central—I hope I have got that one right—would oblige the Secretary of State to lay a report before Parliament each year on the exercise of the powers in the Bill. We have a range of reporting requirements in the Bill already, including an annual report on the sanctions regulations in force, and further reports when sanctions are imposed or amended. In addition, new clause 3 sets out reporting requirements for regulations made under the human rights purpose. We consider it unnecessary, therefore, to add an additional report on top of these, given that the issues that would be addressed in the report would be mirrored by those already required in the Bill.

Amendments 3 to 6, also tabled by the hon. Lady, would require that every sanctions designation be comprehensively re-examined annually. We agree that sanctions should only be in place for as long as there are good reasons for them to be so, and the Bill contains a range of procedures to ensure that all our sanctions are subject to regular scrutiny and review. We believe that three-year comprehensive reviews, combined with a robust package of procedural safeguards in the Bill, will ensure that these standards are at least maintained, so we would ask that she consider not pressing her amendments.

New clause 10, tabled by the hon. Members for Bishop Auckland and for Oxford East, would require statutory instruments that are to be considered under the draft affirmative procedure to receive a positive recommendation from a House of Commons Committee before being laid. All secondary legislation to which it would apply requires affirmative votes before coming into force, and we believe that that negates the need for additional parliamentary scrutiny. Sanctions are a manifestation of the UK’s foreign policy. They are not stand-alone or independent initiatives. Indeed, a number of existing parliamentary Committees have considered, or are planning to consider, sanctions issues, including the House of Lords EU Committee and the House of Commons Treasury Committee. It is not clear why further layers of scrutiny are necessary or desirable.

Amendment 22 would remove the requirement for Ministers to publish a written statement of explanation if they did not comply with a reporting provision. I should make it clear that this provision does not in any way displace the statutory duty to report; Ministers who fail to comply with that duty must face the consequences, regardless of whether an explanation is given.

Amendment 1, tabled by the hon. Member for Glasgow Central, would mean that sanctions regulations could be created only when that was deemed “necessary” for the purposes of the Bill, rather than when it was deemed “appropriate”. For many years the use of sanctions has been an essential part of international diplomacy, to respond to threats such as terrorism or to change unacceptable or threatening behaviour. It is important for the Government of the day to have the flexibility to impose sanctions or not to do so, after a thorough review of the prevailing political situation. Changing “appropriate” to “necessary” would mean that the Government could consider sanctions only as the last resort.

Amendment 9 would require the legislative consent of the devolved Administrations for any sanctions regulation made under section 1, if that regulation included a consequential repeal of, revocation of, or amendment to any law created by those Administrations. The power to create sanctions regulations falls under matters that are reserved to Westminster, and that includes modifications consequential on those regulations. Under the UK’s constitutional settlement, foreign policy is a reserved matter. The Bill gives the Government the power to impose sanctions as a foreign policy and national security tool.

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[Sir Alan Duncan]

Yes, really.

[Helen Goodman]

Surely not!

[Sir Alan Duncan]

I salute them for all their efforts.

On what my hon. Friend the Member for Banbury (Victoria Prentis) said about the overseas territories, I am grateful that, in response to the point of order made by my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox), Mr Speaker made it absolutely clear that procedurally the Government’s proposed amendments were in order. The compromise amendment was tabled rather late in the day, but it was not out of order for being late. We fully recognise that the Speaker has the discretion to select or not to select an amendment for debate. We were obviously disappointed that the compromise amendment was not selected, but we respect Mr Speaker’s decision.

[Sir Alan Duncan]

I am very short of time. Does the shadow Minister wish to speak?

[Helen Goodman]

indicated assent.

[Sir Alan Duncan]

She does; I shall therefore not take an intervention so that I can leave a couple of minutes for her.

I thank my right hon. and hon. Friends on the Government Benches who would have supported the compromise amendment. I apologise if I marched them up to the top of the hill only for them to find that the hill had disappeared. I put on record my thanks to all who have helped with the Bill and, indeed, my thanks to the Opposition Front-Bench team for their co-operation on Magnitsky. Out of courtesy and shortness of time, with apologies for leaving her so little of it, I leave the last couple of minutes to the shadow Minister.

[Helen Goodman]

When the Minister began with his historical overview, I thought he was going to go back to Thucydides, who was of course the first person to write about sanctions; but no, his history was not quite so extensive.

The Opposition accept the need for this Bill in the post-Brexit environment. When it was first introduced in the other place, it had several major flaws. It presented a bundle of Henry VIII powers that gave the Government and the Executive too much power. An effective coalition of Labour and Cross-Bench peers improved the Bill substantially.

Another weakness of the Bill was that, although it was titled the Sanctions and Anti-Money Laundering Bill, only one of its 53 clauses was devoted to anti-money laundering. Through a series of measures, both those that the Government did not support and those that they were forced to support, we have inserted stronger anti-money laundering provisions.

When the Bill came to this House, it was clear that more needed to be done on the human rights front. We tabled Magnitsky amendments, and we are pleased that the House is now united on the need for a Magnitsky law in this country. The Paradise and Panama papers have shown how British overseas territories and Crown dependencies play a major role in aiding tax evasion and money laundering. Without the great investigative journalism, many of the cases to which we have referred might never have been uncovered. Under David Cameron’s Administration, the Government promised to extend the United Kingdom’s—