Sanctions and Anti-Money Laundering Bill [ Lords ] (Fifth sitting)
Helen Goodman Excerpts(6 years, 8 months ago)
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The Chair
Before we resume line-by-line consideration, may I ask everyone to ensure that their electronic devices, including phones, are turned off or silenced? I remind hon. Members that Mr Speaker does not allow tea or coffee to be brought into Committee sittings.
Today’s selection list is available in the Committee Room and on the Bill website. It shows how the selected amendments—generally those on the same or a similar issue—have been grouped for debate. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules after debate on the relevant amendments.
Clause 44
Reports on progress towards register of beneficial owners of overseas entities
Question proposed, That the clause stand part of the Bill.
Helen Goodman (Bishop Auckland) (Lab)
It is nice to see you in the Chair again, Mr McCabe, in this much warmer Committee Room 12.
Clause 44 is a concession that the Government made in the other place because there was a lot of concern that they had not cracked on with making progress towards a register of beneficial owners of overseas entities—an extremely important part of the machinery for preventing money laundering. It is rather a pathetic clause, so the Opposition have tabled a new clause that would speed up the timetable, for reasons that I will explain when I move it. I want to register the fact that although we do not intend to vote against clause 44, we think it somewhat weak as a concession.
The Economic Secretary to the Treasury (John Glen)
As the hon. Lady says, clause 44 fulfils a Government commitment made at an earlier stage of the Bill in response to a call for clarity on our intentions for the delivery of a separate anti-corruption policy. My noble Friend Lord Ahmad of Wimbledon committed us to reporting on progress made on our policy to create a register of beneficial owners of overseas entities that own or buy property in the UK or that participate in UK Government procurement. We are committed to the register being operational in 2021.
The clause requires the Secretary of State to publish and lay before Parliament three reports on the progress made towards putting the register in place, each of which will be due after the expiry of a 12-month reporting period. The first and second reports must set out
“the steps that are to be taken in the next reporting period towards putting the register in place, and…an assessment of when the register will be put in place.”
The third
“must include a statement setting out what further steps, if any, are to be taken towards putting the register in place.”
The obligation to report to the House on progress reinforces the commitments on our timetable that the Government have given elsewhere.
Question put and agreed to.
Clause 44 accordingly ordered to stand part of the Bill.
Clause 45
Crown application
Question proposed, That the clause stand part of the Bill.
The Minister for Europe and the Americas (Sir Alan Duncan)
Clause 45 allows sanctions regulations under clause 1 and regulations under clause 43 to make provision binding the Crown, but not to make the Crown criminally liable. It also stipulates:
“Nothing in this Act affects Her Majesty in Her private capacity”.
Both are common provisions in law. I commend the clause to the Committee.
Question put and agreed to.
Clause 45 accordingly ordered to stand part of the Bill.
Clause 46 ordered to stand part of the Bill.
Clause 47
Regulations: general
Helen Goodman
I beg to move amendment 39, in clause 47, page 34, line 33, leave out paragraph (a).
This amendment would remove paragraph 2(a) from Clause 47, which enables the appropriate Minister to amend, repeal or revoke enactments for regulations under section 1 or 43.
We return to the vexed issue of Henry VIII powers and the Government over-reaching themselves once again. I want to recount for the Committee what happened on this matter in the Lords. Lord Judge moved an amendment to leave out paragraph (a), because he was concerned that it was a Henry VIII provision. Our amendment covers the same issue. Lord Judge said that
“with Clause 44, there is no primary legislation at all...It just says, ‘Let’s give the Minister regulation-making powers for this, that and the other’...This is all being done on the basis of an unknown law, because the Minister has not yet brought the regulations into existence.”
One might say that clauses 47 and 48 are pure Henry VIII powers. They give Ministers the power to change this piece of legislation and other pieces of legislation in perpetuity before the regulations under the clauses have been made. This is perhaps slightly more difficult to understand than the problems with making new criminal offences by regulations, but it is wholly objectionable.
Lord Judge continued:
“In advance of the law being made by regulation, we are giving the Minister power to amend the regulations and to do away with statute. This is in a world where, as we discussed earlier, we already have the Terrorism Act, the Counter-Terrorism and Security Act, the Terrorism Asset-Freezing etc Act and the Proceeds of Crime Act…all of which bear on this Act, and all of which will be susceptible to amendment repeal at the Minister’s behest…the secondary will override the primary; and the Minister is in effect going to replace Parliament”.—[Official Report, House of Lords, 17 January 2018; Vol. 788, c. 718.]
It was not just the Cross-Bench peers who expressed concern about this. Viscount Hailsham, another Lord with a great deal of legal experience, also argued against it. He said:
“It could be used in amending, revoking or repealing existing legislation or to extend classes of offence to which the amended legislation applied. It could be used to increase penalties. It could be used to remove statutory defences. It could be used to amend the definition of criminal intent. Indeed, it could make absolute offences that presently require proof of a specific intent. Because it is an amending power, it could be used to give further powers to the investigating officials or to increase the penalties imposed by the courts.”—[Official Report, House of Lords, 17 January 2018; Vol. 788, c. 719.]
Lord Pannick, as everybody will recall, was the lawyer who ensured that article 50 was brought to Parliament rather than exercised through the royal prerogative, and he is a person with a strong commitment to this House. He argued that this excess of Henry VIII powers could lead to a point where,
“the courts are not prepared to accept them and are showing every sign that they will give them the narrowest possible interpretation because, as a matter of constitutional principle, they are objectionable”.—[Official Report, House of Lords, 17 January 2018; Vol. 788, c. 721.]
The Committee has gone over the argument about the problem with Henry VIII powers before, and we have debated it in the Chamber on the European Union (Withdrawal Bill.) People may begin to find it slightly boring, but we are debating it repeatedly because the Government have stuffed it into the Bill so many times. That is the problem, so we really need to persuade Ministers that it is excessive and we need to demonstrate how much they are going down that path.
Of course Ministers think, “When we write these regulations it will all be absolutely fine, because we are nice chaps. It will all be perfectly okay,” but they need to remember that they might not always be in power. Other Ministers might write regulations, about which the current Ministers might not be quite so enthusiastic. We need to be a lot more cautious. I do not understand why Minsters have structured the Bill in such a way. They should have put into primary legislation the overall structure for making regulations on both sanctions and anti-money laundering. Ministers are in an even weaker position on anti-money laundering than they are on sanctions.
There is a case for saying that individual sanctions must be made swiftly, and therefore having the negative resolution procedure for statutory instruments is common sense. We all understand that. However, I cannot fathom why Ministers have not said to the lawyers, “Can we please structure this so that we have the overall shape of the way these things work and the penalties in primary legislation?”, and Ministers could categorise them. They could say, “We will have a class A, a class B and a class C, and then we will name them quickly,” in the way that we do with drugs when people make new chemical formulae and we have to swiftly designate things. That would have got over the problem.
We started with clause 1(1), which states that Ministers may make sanctions regulations. Here we are, right at the end of the Bill, and the pattern is still the same. We still have the same problem.
Sir Alan Duncan
Amendment 39 would remove the power to make certain consequential modifications to existing primary and secondary legislation through regulations made under the Bill. Such power is not unusual. It is worth noting that the Delegated Powers and Regulatory Reform Committee made no comment on the inclusion of the delegated power in its report on the Bill. I recognise that concerns have been expressed—we have just heard them—about the breadth of the regulation-making powers conferred by the Bill. The consequential power is both appropriate and necessary, and I hope I can provide reassurance on that.
The power can be used only to make consequential provisions. It also enables other provisions that are supplemental, incidental or transitional, or that make savings to the sanctions or money-laundering regulations. It is important to note that it does not confer the power to make any changes to legislation that are independent of the sanctions and money-laundering power. For example, the power can be used to repeal frozen EU legislation saved by the European Union (Withdrawal) Bill, so when we use the powers in the Bill to replace a sanctions regime in frozen EU law with one in a statutory instrument, the power will enable the frozen EU law to be repealed even if all that has happened in practice is that the sanctions have been relabelled. Without the power we would be unable to do so without another Act of Parliament. I am sure hon. Members agree that that would not be a good use of parliamentary time and that it would be impractical.
The power simply provides a tool to make changes to ensure that the statute book works as a result of sanctions being imposed or anti-money laundering regulations created. It does not give the Government the ability to change swathes of legislation without regard to the purposes of sanctions and anti-money laundering.
I want to reassure hon. Members that any regulations made that use the power to amend, revoke or repeal any primary legislation would be required to use the draft affirmative procedure. That means both Houses would need to give their consent before the changes would come into effect, and it is fully in line with the standing advice of the Delegated Powers and Regulatory Reform Committee about the appropriate parliamentary procedure for such powers.
In other words, we know what these laws will be. They will be sanctions and anti-money laundering regimes of the types set out in the Bill and for the purposes listed in it. I hope that I have been clear that this power is appropriately limited to what is necessary, and that on that basis the hon. Lady will withdraw the amendment.
Helen Goodman
The Minister said that this power to amend primary legislation through regulations will apply only to sanctions and anti-money laundering; however, he did not and could not say, because it would not be true, that that will mean amendments only to this Bill. That is because sanctions and anti-money laundering offences are already covered by other pieces of legislation on the statute book. This will not be the one Act that says everything anybody ever dared to ask about sanctions and anti-money laundering. This is part of a large carpet, and it has been woven in, I feel, in a most unsatisfactory way. The principle is broken when Ministers take the power to make regulations that may amend primary legislation.
Sir Alan Duncan
May I point out that if there is an amendment to another Bill, it is because those offences would become out of date, and therefore these are consequential?
Helen Goodman
I am grateful to the Minister for that interjection. As I said, and as he has just admitted, this does affect other pieces of legislation. Even if that were not the case, the problem is an issue of principle. We are changing primary legislation with secondary legislation. That is what we find objectionable, and that is why I wish to test the will of the Committee on the amendment.
Question put, That the amendment be made.
John Glen
I beg to move amendment 8, in clause 47, page 34, line 38, leave out subsection (3) and insert—
“(3) Regulations under section 1 may amend the definition of “terrorist financing” in section 43(4) so as to remove any reference to a provision of regulations that is revoked by regulations under section 1.
(3A) Regulations under section 1 may amend the definition of “terrorist financing” in section 43(4) so as to add a reference to a provision of regulations under section 1 that contains an offence, but only if—
(a) each purpose of the regulations containing the offence, as stated under section1(3), is compliance with a UN obligation or other international obligation, or
(b) paragraph (a) does not apply but the report under section 2 in respect of the regulations containing the offence indicates that, in the opinion of the appropriate Minister making those regulations, the carrying out of a purpose stated in those regulations under section1(3) would further the prevention of terrorism in the United Kingdom or elsewhere.”
This amendment provides that regulations under Clause 1 may amend the definition of “terrorist financing” in the Bill to add a reference to an offence only where the purpose of the regulations containing the offence is compliance with a UN or other international obligation or a purpose related to the prevention of terrorism.
There are two purposes behind the amendment. The first is to allow us to update the definition of “terrorist financing” in regulations. The nature of terrorist finance has a tendency to change over time and it is important that we are able to update our counter-terrorism measures to take account of the changes. This will allow us to continue to maintain a robust counter-terrorism regime, while meeting our international UN obligations.
While that is crucial, we also seek to restrict the ability to add to the definition of terrorist financing in the second part of the amendment. The Government listened to the concerns expressed by noble Lords about the aims of the regimes and the need for a proportionate approach. Having engaged with noble Lords, we agreed to restrict the ability to add to the definition of terrorist financing. The definition may be changed only to comply with international obligations or to further the prevention of terrorism, as set out in the clause. If the amendment were not agreed to, we would be unable to update our terrorist finance regime to respond to changing events.
Helen Goodman
Of course, nobody thinks that we should not have effective measures to tackle terrorist financing. That is plain and there is an obvious consensus about that. There are two questions. First, is this the appropriate way to go about it? Secondly—I would like the Minister to elucidate on this a little further—could the Minister give us some examples of the kind of changes to terrorist financing, that are not caught at the moment, but that could be dealt with in regulations as the issues arose?
John Glen
I am grateful for that challenge. As I set out, the Government would only amend the definition when necessary to meet UN obligations to further the prevention of terrorism. The clause is designed just to give the scope to amend the definition of terrorist financing.
Sir Alan Duncan
The hon. Lady’s fears are utterly unfounded. I do not think there are any such examples. These are reserved matters, so changes are for this Parliament. The question of overriding the devolution settlement simply does not apply to this clause or to the Bill.
Question put and agreed to.
Clause 47, as amended, accordingly ordered to stand part of the Bill.
Clause 48
Parliamentary procedure for regulations
Helen Goodman
I beg to move amendment 40, in clause 48, page 36, line 1, leave out paragraph (d).
The Chair
With this it will be convenient to discuss new clause 7—Parliamentary committee to scrutinise regulations—
“(1) A Minister may not lay before Parliament a statutory instrument under section 48(5) unless a committee of the House of Commons charged with scrutinising statutory instruments made under this Act has recommended that the instrument be laid.
(2) The committee of the House of Commons so charged under subsection (1) may scrutinise any reviews carried out under section 27 of this Act.”
This new clause would require a specialised House of Commons Committee to approve all statutory instruments laid under the affirmative procedure under this Act. The Committee would also scrutinise the Government’s reviews of sanctions regulations.
Helen Goodman
The clause relates to parliamentary procedure for regulations. Amendment 40 distinguishes between regulations relating to anti-money laundering and those relating solely to sanctions. As I have said in relation to other amendments and clauses, there is a question of whether it is appropriate, in the case of anti-money laundering measures, to use the swift regulatory approach, which does not give either House the opportunity to make changes to the regulations. Although it is proposed that the affirmative procedure be used at this point in the Bill, that does not give us the opportunity to amend. We feel that the Government have not made their case for going down this path. We think it would be better to use the super-affirmative procedure as a bare minimum. There was cross-party consensus on that in the Lords—it was not complete, obviously, which is why the proposal is still in the Bill.
New clause 7 would enable us to create a new Committee of the House. One of the problems with what the Government are doing in the Bill is that they are reducing the amount of scrutiny of regulations on sanctions. We have discussed that issue before. For UN sanctions, the same process—Delegated Legislation Committees and the negative resolution procedure—will be followed, but at the moment EU sanctions go to the European Scrutiny Committee and there is a scrutiny reserve. We will lose that part of the machinery. With this new clause, we seek not simply to replace but to enhance and strengthen that piece of the machinery.
In the European Union (Withdrawal) Bill, we agreed that there should be a sifting Committee of the House, which will decide, for any piece of delegated legislation, whether it is appropriate to use the negative procedure or the affirmative procedure. For sanctions, we all agree that we sometimes have to act quickly and use the negative procedure, so the affirmative procedure clearly would not be appropriate.
I am concerned about the use of Delegated Legislation Committees. I am sure that every member of the Committee will agree that they are the lowest form of parliamentary life; they are the weakest form of parliamentary scrutiny. They are pulled together, people often do not turn up to them, people do not read the papers and the papers are not given to the Opposition Front Bench spokesperson more than two days before. Again, there is no possibility of amending the substance of the measures being considered. Because every single Delegated Legislation Committee is a new Committee, no expertise is built up; there is no institutional memory.
One of the things that we kept being told during the referendum campaign was that we were going to take back control and have parliamentary sovereignty. Accepting the amendment would be a way of strengthening Parliament. It would provide a way for Parliament to structure things, to build up some expertise in this important policy area, to learn from experience and to bring the experience of one situation to the next situation.
It would also be sensible, obviously, for the new Committee to be the Committee that looks at the reviews that the Government have agreed to prepare annually for the House under clause 27. I take the Committee back to clause 27, which sets out that annual reviews will be carried out to consider the effectiveness of sanctions.
At the moment, there is not really a Select Committee that has an overarching view of sanctions policy. There is no Select Committee in this House that examines sanctions policy on a regular basis. That is partly because—
Sir Alan Duncan
There is the European Scrutiny Committee, which looks at every single sanction and every piece of legislation coming from the EU. There is a formalised procedure for that sort of thing.
Helen Goodman
First, we are going to lose that Committee under what Ministers are proposing. Secondly, the European Scrutiny Committee is not a Select Committee. Thirdly, that Committee does not look at the UN-based sanctions, which, as the Minister knows, make up half the sanctions we impose.
Sanctions encompass many things: foreign policy objectives, which is why the Minister for Europe and the Americas is leading for the Government on this Bill; financial measures, which is why we have a Treasury Minister on the Committee; trade measures; and travel bans. Because of that, many Departments are involved with sanctions and therefore many Select Committees have an interest in them, but at the moment we do not have a regular review of sanctions policy by everybody.
It might be possible to set up such a scrutiny Committee on a similar basis to the Committees on Arms Export Controls, which have people from a number of different Select Committees bringing their different expertise to a subject. However, I thought that that would be rather too complex and, in any case, it would not be something that one would legislate for in a Bill; it would be a matter for the Standing Orders of the House.
What we would do is to agree that we wanted to improve scrutiny—that is what the whole Brexit thing is all about—and improve the standing and the role of the House. Then, we could consider the detail as to whether we wanted the Committee to be free-standing or a sub-committee of other Committees when we came to amend the Standing Orders of the House.
Both the amendment and the new clause are designed to strengthen Parliament, to strengthen parliamentary sovereignty and to bring back control.
Sir Alan Duncan
Before I speak to the two amendments in this group, perhaps it would be helpful if I restated the Government’s case for the approach we are taking—the parliamentary procedures for secondary legislation under this Bill.
The Government recognise that it is important that Parliament scrutinises the use of sanctions and that this Bill allows for such scrutiny. A set of regulations dealing with UN sanctions regimes will be made under the negative procedure. Once sanctions are agreed at the UN Security Council, the UK has an obligation to implement them under the UN Charter. Not doing so would leave the UK in breach of international law.
A set of regulations that do not deal with UN sanctions regimes will be made under the made affirmative procedure. That will allow regimes to come into force immediately, while still allowing Parliament to debate the regulations. That will negate the risk that, before any restrictions take effect, assets are removed, individuals leave or enter the UK, or arms or other prohibited goods are exported to countries that they should not be. It negates that risk.
Helen Goodman
I do not think the Minister or the officials have understood what the new clause aims to do. It would not change the process or whether the negative, made affirmative or draft affirmative procedure was used for a statutory instrument; it would change the group of people who looked at it, so that we build up some expertise on the matter among parliamentarians across the House.
Sir Alan Duncan
Let me come to the detail of the amendments in a second. I am just outlining the principles behind the Bill and its context.
At present, anti-money laundering regulations are transposed into UK law through the negative procedure in section 2(2) of the European Communities Act 1972. Under the Bill, the vast majority of anti-money laundering regulations will be made using draft affirmative procedures, so parliamentary scrutiny will be increased in that regard. Both the Delegated Powers and Regulatory Reform Committee and the Constitution Committee accepted in their reports on the Bill that the use of delegated powers for sanctions is appropriate. The DPRRC thought that it is
“appropriate for this mechanism to operate through the exercise of delegated powers”.
The Constitution Committee confirmed that and thought that,
“In practice, a delegated powers model is inevitable, given the practical difficulties that would arise if Parliament had to legislate to create and amend individual sanctions regimes.”
Amendment 40 would delete subsection (5)(d) and so remove the reference to regulations made under clause 43 being made under the draft affirmative procedure, in all but narrowly defined circumstances. The effect of that—which I assume is not hon. Members’ intention—would be to reduce parliamentary scrutiny over future money-laundering regulations after the UK ceases to be a member of the EU.
Money-laundering regulations, most recently those that came into force last year, are typically made through the negative procedure. They do not usually require a debate or vote in this House or the other place before coming into force. To enhance scrutiny after the UK ceases to be a member of the EU, subsection (5)(d) provides that substantive changes to money-laundering regulations made under the Bill will be made through the draft affirmative procedure. That will require all such regulations to be debated and voted on by Parliament before coming into force.
The only exception is when the UK is updating the list of high-risk jurisdictions in connection with which enhanced due diligence measures are required. Changes to the list will be made via the made affirmative procedure, as set out in subsections (2) and (3). Again, that will enhance parliamentary scrutiny. Changes to the list are currently made at EU level. If accepted, the amendment would require most regulations under clause 43 instead to be made under the negative procedure, as is provided for clause 48(6). That would weaken parliamentary scrutiny under the Bill as drafted.
New clause 7 would require secondary legislation introduced under subsection (5) to receive the approval of a new House of Commons Committee before being laid before Parliament. I do not think that is necessary, because the new clause would apply to all regulations made using the draft affirmative procedure. Such regulations will be scrutinised directly by Parliament when they are made, as both Houses would need to give consent before they could come into force, thereby negating the need for a scrutiny Committee to look at any of them first.
Were parliamentarians to object, they could reject the regulations. That would force the Government to lay a new instrument, taking into account any concerns that had been expressed. The EU withdrawal Bill is an exception because of the very large volume of statutory instruments that will need to be passed under it in a very short space of time, ahead of the day the UK leaves the EU. That is why a Committee with such a sifting function is appropriate for the powers in that Bill. The same does not apply to the powers mentioned in the new clause. There will not be nearly as much secondary legislation to pass via the draft affirmative procedure. Given that, and together with the points I made on amendment 40, I ask the hon. Lady to withdraw her amendment.
Helen Goodman
I am grateful to the Minister for that explanation. Of course, improvements were made to the Bill in the other place in response to criticisms, and some processes were upgraded from the negative procedure in the original draft to the affirmative procedure in the Bill before the Committee. I do not wish to press amendment 40, but we will wish to press new clause 7 to the vote. I shall explain why, even though we are going to vote on it. First, it is for this House to decide on our processes. We would not dream of telling the other House how to run its affairs. What the Delegated Powers and Regulatory Reform Committee or Constitution Committee in the House of Lords say does not cover procedures in this House. They are our responsibility. The Minister said there would be far fewer statutory instruments under this Bill, but he has given us no estimate. Does he have any sense of the number of statutory instruments that might come forward? Perhaps he will benefit from inspiration before I sit down, so that he can intervene and tell me what he expects.
Sir Alan Duncan
Our estimate of the regimes that will have to be transferred at the moment is in the region of 33.
Helen Goodman
Thirty-three whole regimes is quite a chunky number, is it not? That is not 33 individuals; it is 33 regimes. Of course, I was extremely concerned about the way that the EU withdrawal Bill looked, as were many Members. However, in one respect the problem is greater in this Bill. This is a Bill with permanent powers; the EU withdrawal Bill is one with temporary powers. Therefore, when we come to the right moment, we will wish to put new clause 7 to a vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Alison Thewliss
I beg to move amendment 37, in clause 48, page 36, line 5,
‘(5A) A statutory instrument containing regulations under section 1 that repeals, revokes or amends—
(a) an Act of the Scottish Parliament,
(b) a Measure or Act of the National Assembly for Wales, or
(c) Northern Ireland legislation,
must receive the consent of the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly, respectively.”
This amendment would require the UK Government to obtain the consent of the devolved administrations before repealing, revoking or amending devolved legislation using a statutory instrument containing regulations under section 1.
As I mentioned before, in this Bill the Government have given themselves the capability—although it is not necessarily their intention—to amend devolved Acts. It is not necessarily that the Government will do that, but we need to be mindful that future Governments may choose to. We cannot foretell exactly what the future will hold. In its response to the consultation on this issue, the Law Society posed the question about whether the Government have consulted the devolved Administrations and for what purpose the measure is in the Bill. Although the Government have given themselves this power, they have not explained the circumstances in which they might need to use it. If they say that nothing in the legislation has to do with the devolved Assemblies, why are they giving themselves the power to revoke devolved Assemblies’ legislation, when they would not have any competence to do so? It does make any sense that they would put something in the Bill if they have no intention or need to use it.
I would also like to know—given that the Government have not explained this either—the circumstances in which they would want to override devolved legislation and why they feel a consent provision such as the one I am suggesting is not appropriate. If the Government believe that devolved legislations have no power in this area anyway and would therefore not be legislating in it, why have they put the capability of amending devolved Acts within the scope of this Bill? Would the Minister also explain why our consent provision would be considered inappropriate? That has not been explained up to this point, or during deliberations in the Lords. I have read some of the background, and Baroness Northover and Baroness Sheehan did not quite understand the need for what the Government propose either, so I would be grateful if they made more information available. It is not clear to me, and, as I mentioned previously, this provision strikes me as a power grab, and an unnecessary one at that.
Alison Thewliss
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 48 ordered to stand part of the Bill.
Clauses 49 and 50 ordered to stand part of the Bill.
Schedule 3 agreed to.
Clauses 51 to 53 ordered to stand part of the Bill.
Clause 54
Extent
Helen Goodman
I beg to move amendment 41, in clause 54, page 41, line 6, leave out “may” and insert “must”.
The Chair
With this it will be convenient to discuss the following:
Amendment 42, in clause 54, page 41, line 16, leave out “may” and insert “must”.
Amendment 43, in clause 54, page 41, line 22, leave out “may” and insert “must”.
Amendment 44, in clause 54, page 41, line 25, leave out “may” and insert “must”.
Helen Goodman
Clause 54 defines the territorial extent of the Bill. I did not include an explanatory statement for amendments 41 to 44 because I thought their effect so obvious that it did not need further explanation.
In the sanctions part of the Bill, at the moment, Ministers may, by Order in Council, provide for any of the provisions to the Channel Islands, the Isle of Man and the British overseas territories, whereas the amendment would require an Order in Council to extend the provisions to the Channel Islands, the Isle of Man and any of the British overseas territories. We are obviously making the distinction that the Minister made earlier between Her Majesty in her personal role and Her Majesty as the Crown, which is the representative of the Executive. We think that it is appropriate to extend the sanctions part of the legislation in this way.
I am sure that Ministers have looked at the draft EU withdrawal document produced by the EU Commission last week, but in case not every member of the Committee has done so, I would like to draw their attention to article 3 on territorial scope:
“1. Unless otherwise provided in this Agreement or in Union law made applicable by this Agreement, any reference in this Agreement to the United Kingdom or its territory, shall be understood as referring to:
(a) the United Kingdom;
(b) the Channel Islands, the Isle of Man, Gibraltar and the Sovereign Base Areas of Akrotiri and Dhekelia in Cyprus to the extent that Union law was applicable to them before the date of entry into force of this Agreement;
(c) the overseas countries and territories listed in Annex II to the TFEU having special relations with the United Kingdom, where the provisions of this Agreement relate to the special arrangements for the association of the overseas countries and territories with the Union.
2. Unless otherwise provided in this Agreement or in Union law made applicable by this Agreement, any reference in this Agreement to Member States, or their territory, shall be understood as covering the territories of the Member States to which the Treaties apply as provided in Article 355 TFEU.”
Then there is a footnote to list the overseas countries and territories that have that special relation with the United Kingdom:
“Anguilla, Cayman Islands, Falkland Islands, South Georgia and the South Sandwich Islands, Montserrat, Pitcairn, Saint Helena and Dependencies, British Antarctic Territory, British Indian Ocean Territory, Turks and Caicos Islands, British Virgin Islands and Bermuda.”
This Bill is a Brexit Bill. We are trying to have new provisions that apply to the United Kingdom post-Brexit. It is absolutely clear that when we leave, the Channel Islands, the Isle of Man, Gibraltar and all the overseas territories will also be affected as set out in that draft agreement. Many things in the Commission’s draft were controversial and were challenged and questioned, but the territorial extent was not one of them. It seems reasonable to enable us to move from a situation where Union law applies in the existing way to the Crown dependencies and the overseas territories, and not to set up a situation where we have great big loopholes.
This raises a question for Ministers. At the moment, European law applies to the United Kingdom, the Channel Islands, the Isle of Man and Gibraltar. There is still a question mark over Ministers’ intentions with respect to the fifth anti-money laundering directive. Although my amendment applies to the sanctions part of the Bill, it raises the question of whether Ministers plan to accept the contents of the fifth anti-money laundering directive. The UK is ahead in some respects, but not in all, and clearly the Crown dependencies and the overseas territories are not ahead. I wish to tease that matter out with this series of amendments.
Sir Alan Duncan
I suppose the overarching point is that Brexit will change the UK’s relationship with the EU; it is not designed to change the UK’s relationship with its overseas territories and Crown dependencies. The starting point is that EU law applies to a certain extent to Crown dependencies and overseas territories, but not entirely. Currently, overseas territories are not bound to apply EU sanctions, but choose to do so to ensure alignment with the UK’s foreign policy.
Let me explain that in more detail. As I said last Tuesday, the UK is responsible for the foreign affairs and security of the Crown dependencies and overseas territories. That is the constitutional position. However, another important constitutional point is that our long-standing practice is that we do not generally legislate for these jurisdictions without their consent, except in exceptional circumstances. Sanctions are tools of foreign policy, or are used to protect our national security. We have been clear that the overseas territories and Crown dependencies must follow the UK Government’s foreign policy, including the sanctions that we apply.
Currently, there are two ways in which sanctions are implemented by the overseas territories and Crown dependencies. The UK legislates directly for the majority of these jurisdictions, with their consent, through Orders in Council. Other jurisdictions choose to legislate for themselves, but they follow precisely the sanctions implemented in the UK. That model is well established, and respects the rights of the jurisdictions. The Bill is drafted in a way that reflects that reality. It is consistent with the current implementation model for UN and EU sanctions, as well as measures under the Terrorist Asset-Freezing (Temporary Provisions) Act 2010. It allows those jurisdictions that choose to follow UK sanctions through their own legislation to continue to do so. It also allows the UK to legislate directly for certain overseas territories, where they choose.
I do not see the Bill as the right place to change those long-standing constitutional arrangements, nor do I see a compelling case for doing so at all. I am sure that hon. Members would not wish to jeopardise the achievements that friendly co-operation with these jurisdictions has already made, nor would they seek to disenfranchise those territories that have chosen to legislate for themselves. On that basis, I urge the hon. Member for Bishop Auckland to withdraw her amendment.
Helen Goodman
The Minister has set out the position in principle; he has not given any examples. Let me put it like this: if they always do what we want them to, why do we not just have an automatic system? What is the value of the divergence? That is the obvious rejoinder, but I feel that perhaps this is not the right way, and the right place, to deal with this matter, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 54 ordered to stand part of the Bill.
Clause 55
Commencement
Helen Goodman
I asked the Minister about commencement last week and he did not have a clear answer. I hope he has had time over the weekend to think about the issue and can now explain the Government’s plan to us. While it is perfectly acceptable, normal and understandable, when dealing with some real technicality, to rely on officials, commencement is something for which Ministers themselves are responsible—how the Bill’s commencement provisions will interrelate with our withdrawal from the European Union, and whether the intention is to implement the sanctions on 1 April 2019, to wait until 1 January 2020—the projected end of the transition period—or to implement them at some other time.
I am concerned that, in looking at the Bill, thinking about what they wanted to do, and considering how this interrelates with everything else in EU withdrawal, Ministers did not seem to have a clear plan—last week, at any rate. They do not appear to have thought through what they are trying to achieve with these negotiations. It is all very well to say, “It’ll all come out in the wash and we’ll find out in the end,” but that puts us very much in the position of being recipients of whatever the European Union, from on high, prefers to give. I would have thought that Ministers would have an objective, and how they wanted it to happen. We need more clarity from the Minister, not on subsection (1) which covers sections 44 to 56, but on the earlier parts of the Bill. What is his plan?
Sir Alan Duncan
This clause sets out when the Act will commence. It is not part of the negotiations we are currently having with the EU, which are, of course, still a matter of negotiation. I urge the hon. Member for Bishop Auckland to appreciate that what we debating here is the detail of this particular Bill.
Clauses 45 to 49 and 51 to 56 will come into force on the day on which the Bill becomes an Act of Parliament. Those clauses make up part 3 of the Bill, dealing with supplementary provisions, definitions and final provisions, with the exception of clause 50 which deals with consequential amendments and repeals. The remaining clauses will come into force on a day appointed by the Secretary of State, who may allow for clauses to commence on different days. That will enable the Secretary of State to commence the other clauses when required. With that flexibility—which I hope the hon. Lady appreciates— I urge that clause 55 stand part of the Bill.
Helen Goodman
The Minister has not given us a plan; he has not said how he sees this panning out, and he has not even made it clear whether the Secretary of State will implement chapters 1 to 5 on the same day, or on multiple days. I think we need to test the view of the Committee.
Question put, That the clause stand part of the Bill.
Helen Goodman
That was an extremely useful explanation. We feel that the new clause is a significant step forward, and deals well with some of the issues raised in the other place. We are happy for it to be added to the Bill.
Question put and agreed to.
New clause 3 accordingly read a Second time, and added to the Bill.
New Clause 4
Duties to lay certain reports before Parliament: further provision
(1) In this section “a reporting provision” means section 2(4), (Report in respect of offences in regulations)(2) or 40(2) or paragraph 20A(2) of Schedule 2 (duties to lay before Parliament certain reports relating to regulations).
(2) Where more than one reporting provision applies in relation to particular regulations under section 1, the reports to which those provisions relate may be contained in a single document.
(3) If a reporting provision is not complied with, the appropriate Minister who should have complied with that provision must publish a written statement explaining why that Minister failed to comply with it.
(4) Subsection (5) applies where a reporting provision applies and—
(a) a statutory instrument containing the regulations concerned, or
(b) a draft of such an instrument,
is laid before the House of Commons and House of Lords on different days.
(5) Where this subsection applies, the reporting provision in question is to be read as requiring the laying of a copy of the report to which that provision relates—
(a) before the House of Commons at the time the instrument or draft mentioned in subsection (4) is laid before the House of Commons, and
(b) before the House of Lords at the time that instrument or draft is laid before the House of Lords.—(Sir Alan Duncan.)
This new clause enables certain reports relating to regulations to be combined in one document, requires a written statement to be made by the Minister if certain reporting requirements are not complied with, and clarifies how those requirements apply.
Brought up, read the First and Second time, and added to the Bill.
New Clause 1
Public registers of beneficial ownership of companies in the British overseas territories
(1) For the purpose of preventing money laundering, the Secretary of State must provide all reasonable assistance to the governments of—
(a) Anguilla;
(b) Bermuda;
(c) the British Virgin Islands;
(d) the Cayman Islands;
(e) Montserrat; and
(f) the Turks and Caicos Islands,
to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in that government’s jurisdiction.
(2) No later than 1 January 2019 the Secretary of State must prepare an Order in Council in respect of any British overseas territories listed in subsection (1) that have not by that date introduced a publicly accessible register of the beneficial ownership of companies within their jurisdiction, requiring them to adopt such a register by 1 January 2020.
(3) In this section a “publicly accessible register of beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006 (information about people with significant control).—(Helen Goodman.)
This new clause would require the Secretary of State to take steps to ensure the governments of specified British overseas territories introduce public registers of beneficial ownership of companies.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 8—Public registers of beneficial ownership of companies in the British Crown Dependencies—
(1) For the purpose of preventing money laundering, the Secretary of State must consult with the authorities of governments in each Crown Dependency on establishing a publicly accessible register of the beneficial ownership of companies registered in their jurisdictions.
(2) Within 6 months of this Act being passed, and every 12 months thereafter, the Secretary of State must report to Parliament on progress within the Crown Dependencies on establishing registers as referred to in subsection (1).
(3) In this section a “publicly accessible register of beneficial ownership of companies” means a register which, in the opinion of the Secretary of State, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006 (information about people with significant control).”
This new clause would require the Secretary of State to consult with the governments in each Crown Dependency about introducing public registers of beneficial ownership of companies in the Crown Dependencies, and to report to Parliament on the progress of establishing such registers.
Helen Goodman
The issue of the secret jurisdictions of the Crown dependencies and the overseas territories is extremely vexed. The Opposition are disappointed by what has happened, because we felt that considerable progress was made under David Cameron’s Administration on this matter. There are no Liberal Democrats on the Committee—they normally take credit for anything positive that happened when David Cameron was Prime Minister—but my impression from talking to Conservative Members is that many of them were strongly supportive of what the then Prime Minister promised.
I will remind hon. Members what was promised, go through what has happened and the current state of play, say something about why it matters, and then say something about both the counter-arguments and what we are proposing. The Government of the day committed to implementing a central registry of company beneficial ownership information at the G8 conference in Lough Erne in June 2013. It was truly a British initiative; I was criticised on Second Reading for not giving David Cameron credit, but I am not going to fall into that trap today.
The Companies House register contains information on people with significant control, meaning individuals who hold more than 25% of a company’s shares or voting rights. The Department for Business, Innovation and Skills published details of its intention to create such a register in a discussion paper called “Transparency and Trust” and then made a call for evidence. The Government passed the relevant primary legislation—the Small Business, Enterprise and Employment Act 2015—at the end of March 2015 and the new register went live in 2016.
The new register is very interesting. Searching for information at Companies House used to involve trolling through lots of papers without finding anything of interest, but now that we can see who is controlling companies, we can spend a very interesting hour finding out who owns what—we are all interested in companies in our constituencies. The register is not perfect, as will become evident when we debate other Opposition new clauses—there is no process for checking information, and 10% of the 4 million companies have not submitted the information—but it is a big, helpful step forward none the less.
In parallel with the new register, the then Prime Minister wrote to the overseas territories to encourage them to consult on a public registry and look closely at what we were doing in this country. Whereas progress in this country has been good, albeit not perfect, progress in Crown dependencies and overseas territories has been extremely limited. Let me explain the very different situations in each place.
In the British Virgin Islands, legislation is in place and a registry exists, but it is not public—a big weakness. There is information sharing with five or six regulatory or prosecuting authorities in this country, including the National Crime Agency, the Serious Fraud Office and Her Majesty’s Revenue and Customs. Those organisations can phone up and say, “We are suspicious about Bloggs, the Member for Salisbury South.”
Helen Goodman
Yes, indeed. Our authorities can ask the BVI registry to check what is going on, which I understand has been quite helpful. However, unlike our register, the BVI registry is not public, which means that our authorities are not allowed to go on fishing expeditions; they need a reason to ask for information. The problem is that they cannot see the full pattern of ownership. That can make it very difficult to work out what is going on, because people involved in money laundering set up extremely complex structures and relationships. In other areas of organised crime, the NCA maps nodal interconnections, which helps it to find criminals, but a secret register makes that impossible.
Another relevant point is which EU list people are on—whether they are on the greylist, or whether they are not on the list, for lacking transparency. The BVI were given more time in order not to be on the greylist.
The situation in the Cayman Islands is similar. We have an exchange of beneficial ownership information—a central register—but it is done in secret. They are on the European Union’s greylist. The Turks and Caicos have a private register. Like the British Virgin Islands, they were given more time by the European Union because they were affected by the hurricanes. Bermuda has a private register and is on the European Union greylist. The legislation is in place for Montserrat, but no register has been set up. Mind you, Montserrat does not have any particular financial expertise, so it does not matter very much.
Sir Alan Duncan
The hon. Lady is trying to paint a picture of the OTs and we all understand what she is trying to do. She said a moment ago that progress in the Crown dependencies and Overseas Territories was “extremely limited”. However, I think it is undeniable—and I would ask her to confirm that she admits this—that progress in these areas is steps ahead of all the other G20 countries, except the UK. Can she put it on the record that she admits that that is the case?
Helen Goodman
I was going to come to that point at the end, because I anticipated that that was an argument. If the Minister will be a little patient, I will stick to the structure of my speech. In the case of Gibraltar, we have exchange of beneficial ownership information. Gibraltar is in a different situation because it is subject to European legislation. In Anguilla, we have exchange of beneficial ownership information. Like the BVI, it was given more time due to the hurricanes.
In the case of Jersey, Guernsey and the Isle of Man, there is exchange of beneficial ownership information legislation in place, but all three are, unfortunately, on the greylist. This is obviously a matter of regret and it is also extremely damaging to our reputation.
Sir Alan Duncan
It is very important that some of the basic facts are established as either true or false, and I hope the hon. Lady will not object to my pointing out another thing that she has got wrong. She spoke about the greylist. There is no greylist. The EU Council conclusions, which I could explain at length, set out the jurisdictions that have been cleared. She is wrong on the greylist in the way she explained it earlier.
Helen Goodman
I am interested that that is the Minister’s perception, but I think there might be a competing perception.
Anneliese Dodds
I regret to contradict the Minister, but perhaps there is a slight information gap around the procedure operated by the EU in regard to these matters. There is a blacklist of jurisdictions that have definitely been viewed as beyond the pale by the EU. That has followed a very intensive process of consultation through ECOFIN, which is obviously an intergovernmental mechanism. Countries that are not yet on the blacklist, but about which there are concerns, are on the greylist. I suggest that it would be helpful to look at that list.
I am grateful to my hon. Friend for enabling me to intervene. I made a freedom of information request to the UK Government to find out what they had done to try to remove jurisdictions from the blacklist, and the lobbying they had done in that case, which appeared to reveal that our Government had been active on this matter. So I hope Ministers will update us on what the Government have been doing in relation to this issue.
Helen Goodman
Now I turn to why this issue matters. I am extremely grateful to Christian Aid for its very thorough briefing. The problems fall into three categories: tax losses, corruption and crime, and the impact on the least developed countries.
On tax losses, the problem is that people are basically using secret jurisdictions to hide both capital and income, and, in doing so, avoiding tax. A particularly powerful example is the case of Bywater Investments. In November 2016, an Australian federal court found that two anonymous Cayman Islands companies controlled by an Australian accountant had facilitated multimillion-dollar tax evasion schemes, leading to 300 million Australian dollars of repayments and fines. The scam relied on the accountant being able to pretend that the companies were owned and controlled by someone else, thanks to beneficial ownership secrecy in the Cayman Islands. Despite the existence of a legally binding tax information sharing agreement between Australia and the Cayman Islands, Cayman courts and laws had blocked both Australian and UK tax authorities from access to information about the real owner of the companies—and these laws still exist. In that particular case, the tax losses were to the Australian Revenue, but I think that everybody is conscious that we, too, are losing tax in this country.
On corruption, crime and money laundering, I will talk about the problem of the Azeri Government. The first time that I came across Azeri money laundering was about seven years ago, when the hon. Members for Bridgwater and West Somerset (Mr Liddell-Grainger) and for Na h-Eileanan an Iar (Angus Brendan MacNeil) and I all became very concerned that some students had been locked up for putting a video on the internet about some donkeys. Those donkeys had been bought from the Germans and each donkey was worth $250,000. The students made a video and they found that the reason the donkeys were so valuable was that they could play the violin like Menuhin, and there were photographs of them doing so. That kind of creative sarcasm would get somebody a television award in this country, but in Azerbaijan those students were locked up. The hon. Members for Bridgwater and West Somerset and for Na h-Eileanan an Iar and I tabled an early-day motion and we got the students released.
That is not the sort of money laundering that usually goes on in Azerbaijan. My hon. Friend the Member for Oxford East spoke about the laundromat case. When discussing money laundering cases, we may use one example to illustrate a multitude of problems, because there is not just one problem. My hon. Friend, for example, has mentioned Scottish limited partnerships. Secret jurisdictions were also part of the problem, because the beneficial ownership secrecy gave the Azeri politicians the opportunity to circumvent money laundering laws. Two of the four UK-registered partnerships whose control and ownership was concealed were registered in the BVI.
Crime and corruption cases often involve a great deal of violence in the initial corruption and the initial crime. It is easy to take the view that these are white-collar crimes and that nobody really gets hurt, and that it is just about moving money from one bank account to another and clicking on a computer. What is really going on, however, is that people are stealing from weak and fragile states and running big organised crime gangs. For example—this relates to an earlier point made by the Economic Secretary—kidnappers in Mexico requested that the ransom be paid in bitcoin. The Mexican authorities said that they had never come across that before, although they had certainly come across kidnappings before: 70 people a day are kidnapped in Mexico, which is linked to drug running.
Large international organised crime syndicates are involved in extremes of violence and the destruction of societies. Stealing taxpayers’ money from former Soviet Union states or getting involved in big drug deals in Latin America is worth their while only if they can one day get that money and spend it; otherwise, why would they bother? Although these crimes might not seem very serious, they have horrendous consequences for other people. I am not saying that everybody who puts their money in a secret jurisdiction in the British overseas territories is doing so for criminal purposes—that is obviously not the case—but some people are doing that and we need to end the secrecy in order to identify them and track them down.
Last week we discussed sanctions busting and the selling of weapons of mass destruction and their components and materials to North Korea, which also involves shell companies. United Nations investigators and the American courts showed that the North Koreans had used networks of shell companies to evade UN sanctions and to help conceal the origins and destinations of the money that they needed to do so. A significant proportion of those shell company networks have been registered in the BVI and Anguilla. It is unfortunate that the BVI is mentioned a lot, but that is because their specialism lies in this type of registration. It does happen in the other places, but it happens a lot there because it is a world leader in the provision of offshore companies, whereas the Caymans specialise in hedge funds, and Bermuda in captive insurance.
Christian Aid is concerned about the issue because of its impact on developing countries. The former president of Zambia stole $25 million, which he put through an anonymous BVI company and bought property in Brussels. Zambia’s per capita income is $4,000 a year. The Nigerian dictator, Sani Abacha, used a BVI company to hold at least $450 million of the $2 billion he is believed to have stolen from the Government during his time in power. Nigeria has a per capita income of below $6,000 a year. The case of Equatorial Guinea is tragic. It has a much higher average income because of its oil reserves, but those reserves have not been used for the benefit of the people, because the President’s son, Teodorin Obiang, and others have stolen $38 million of their country’s money and spent it on private jets and other luxuries.
The United Nations Conference on Trade and Development estimates that the overall loss to developing countries is some £100 billion a year, which is more than the aid flows going into those countries. If we could sort this out, we would be doing something as useful as all of DFID’s efforts. [Interruption.] I can hear the Minister saying from a sedentary position, “Yeah, but the real fundamental problem is corruption.” He has a point, but we facilitate it. We make it easy, but why? It makes no sense.
We want the Government to set up public registers of beneficial ownership of companies in the British overseas territories. For the purposes of preventing money laundering, the Secretary of State should provide all reasonable assistance to the Governments of the countries we have listed, to enable them to establish a publicly accessible register. The Minister is concerned about the constitutional niceties of making a distinction between the constitutional arrangements in the overseas territories and those in the Crown dependencies. To respect that distinction, we tabled new clause 8, which requires the Secretary of State to consult the authorities of Governments in the Crown dependencies.
The Minister said again this morning that we do not intervene directly. I have two points to make about that: first, we run the foreign policy bit, and secondly, we also run domestic legislation from time to time. We have intervened on gay rights and capital punishment. There was a suspicion that Royal Assent was given to the change to gay marriage laws in Bermuda because it was felt that that was a price worth paying for not having the counter-example of us debating, within a month, these tax privileges—
Helen Goodman
I am grateful to the Minister for that interpretation. I will come now to the counter-arguments. The first is the one the Minister put to me a few minutes ago, that the overseas territories are ahead of others and we should not focus on them.
The problem with that argument is twofold. First, everybody else will catch up soon: there is the EU anti-money-laundering directive, and other countries across the world are introducing public registers. Secondly, we are responsible for what happens, to some extent, and we can influence it. We can make a change if we want to. I will end by asking why Ministers are not making a change. Furthermore, these secret jurisdictions are the most used: the BVI was by far the most popular tax haven in the Panama papers and Bermuda ranked as number one on Oxfam’s list of worst corporate tax havens. So we are talking not about obscure little operations, but about the centre of this financial secrecy problem.
The next counter-argument is that we should wait until public registers of beneficial ownership become a global standard, and then expect swift change. I will not be able to speak as eloquently as the right hon. Member for Arundel and South Downs (Nick Herbert) did on Second Reading, but he put the kibosh on that argument very effectively. We do not say about other crime or problems that we are not going to deal with that thief over there until we have caught this one somewhere else. That is not a sensible way to run policy. The fact is that the UK is at the centre of this problem. Post-Brexit we could do so much to regain leadership on anti-corruption.
The third counter-argument is that the overseas territories’ economies are heavily reliant on financial services. There are a number of things to say about that, but first being that, were we to have more tax revenues, we would be able to support the overseas territories better in trying to shift their economies from where they are now to where we would like them to be. Examples of alternatives include tourism and the geothermal resources in Montserrat. There are a number of ways in which we could support a better and more balanced development of their economies.
Another reason is that, in the long run, people want to use financial services in jurisdictions that are trustworthy, have a high reputation and where the rule of law is enforced. The rule of law is one reason why London is such a successful financial services centre. Some of the overseas territories’ activities—for example, the insurance market—are perfectly legitimate and reasonable, and they can get an income from that. Leaders of large businesses are now calling for that, including at HSBC—notorious for its involvement in the Mexico problem.
We then have the argument that trying to intervene in the overseas territories is neo-colonialist. I think that is a problem of missing the wood for the trees, given that it cannot be neo-colonialist to want to ensure that African countries are not ripped off and lose their tax revenues and the value of their assets. That is not neo-colonialist; it is supportive of their development. That is why, for examples, the South Africans were very pleased with the information they got from the Panama papers, and they used it.
The next argument is that public beneficial ownership registers degrade the quality of information available to law enforcement. I am puzzled by that argument, as that does not seem to be the case, given that the more people are scrutinising something, the more likely it is that the quality of information will be improved.
Another argument is that such a policy threatens the privacy and security of people using the secrecy jurisdictions. There are two things to say about that: first, we seem to be extremely worried about the privacy and security of a very small number of rich people, but not at all worried about the massive and violent crimes inflicted on people who are suffering from human trafficking, drugs gangs or other kinds of violence. Even if we say that we need to address that, though, it is adequately addressed in the British regime; and we are suggesting that they run a similar publication regime. An analysis commissioned by the Government found that the UK register would actually save our law enforcement authorities £30 million a year; so I think that that argument is also extremely weak.
When David Cameron was in power we were making progress on this. I do not know what has changed or why this Government seem to be in a different place. Perhaps it is because there are too many people influencing the Government who keep their money in these offshore havens. For example, the hon. Member for North East Somerset (Mr Rees-Mogg) was referred to in the Paradise papers because of a $680,000 payment he received when the BVI-based investment firm he worked for was bought by a Canadian bank. Everybody knows that the hon. Gentleman is extremely rich and his finances are complex, but his stake in Somerset Capital is managed by subsidiaries in the tax havens of the Cayman Islands and Singapore. Or are we seeking to protect the interests of Philip May, who works for an investment management firm—
Sir Alan Duncan
On a point of order, Mr McCabe, I think these ad hominem attacks are highly inappropriate for this stage of the Committee, or indeed any stage in our Parliamentary proceedings.
The Chair
That is not strictly speaking a point of order. Perhaps we can stick with the detail of the new clause, though.
Helen Goodman
I know what the rules of the House are and I wrote to the hon. Member for North East Somerset yesterday, telling him I would be mentioning him in the Committee today. However, the rules and courtesies of the House do not apply to people who are not Members of the House. It is perfectly reasonable to tell the Committee that Philip May works for an investment management firm, Capital Group, which reportedly used offshore-registered funds to make investments in a Bermuda registered company.
Sanctions and Anti-Money Laundering Bill [ Lords ] (Third sitting)
Helen Goodman Excerpts(6 years, 8 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we resume our consideration of the Bill, I have a few standard announcements to make. Could you all ensure that your mobile devices are switched to silent mode? As usual, amendments on similar issues have been grouped together and we shall take them in the order in which they appear on the selection list. My fellow Chair and I will use our discretion over whether to allow separate stand part debates on individual clauses.
I apologise to Committee members for the unacceptably low temperature in the Committee Room. We have brought in some heaters, and I hope we will bring in some more. You are perfectly welcome to wear outside garments, including headgear, to keep warm. I know that that is very unusual, but I must put it on record, with no word of a lie, that we are working in very low temperatures. I really appreciate everyone’s diligence in being here and agreeing to go ahead with our considerations in these extreme conditions. I have looked at other available Committee Rooms, but they seem also to lack the wherewithal to be heated to a reasonable temperature.
Without further ado, let us consider clause 1.
Clause 1
Power to make sanctions regulations
Helen Goodman (Bishop Auckland) (Lab)
I beg to move amendment 1, in clause 1, page 2, line 16, at end insert
“or
(i) further accountability for, or act or as a deterrent to, the commission of a gross human rights abuse or violation.”
This amendment would enable sanctions regulations to be made for the purpose of preventing, or in response to, a gross human rights abuse or violation.
The Chair
With this it will be convenient to discuss the following:
Amendment 13, in clause 1, page 2, line 16, at end insert
“or
(i) further the prevention of serious organised crime and trafficking, in the United Kingdom or elsewhere.”
This amendment would enable sanctions regulations to be made for purposes which included the prevention of serious organised crime and trafficking.
Amendment 2, in clause 1, page 2, line 37, at end insert—
“(6A) In this section, conduct constitutes ‘the commission of a gross human rights abuse or violation’ if each of the following three conditions is met.
(6B) The first condition is that—
(a) the conduct constitutes the torture of a person or a group of people who have sought—
(i) to expose illegal activity carried out by a public official or a person acting in an official capacity, or
(ii) to obtain, exercise, defend or promote human rights and fundamental freedoms, or
(b) the conduct otherwise involves the cruel, inhuman or degrading treatment or punishment of such a person or a group of people.
(6C) The second condition is that the conduct is carried out in consequence of that person having sought to do anything falling within subsection (6B) (a) (i) or (ii).
(6D) The third condition is that the conduct is carried out—
(a) by a public official, or a person acting in an official capacity, in the performance or purported performance of his or her official duties, or
(b) by a person not falling within paragraph (a) at the instigation or with the consent or acquiescence—
(i) of a public official, or
(ii) of a person acting in an official capacity, who in instigating the conduct, or in consenting to or acquiescing in it, is acting in the performance or purported performance of his or her official duties.
(6E) Conduct that involves the intentional infliction of severe pain or suffering on another person or a group of people is conduct that constitutes torture for the purposes of subsection (6B) (a).
(6F) Conduct is connected with the commission of a gross human rights abuse or violation if it is conduct by a person that involves—
(a) acting as an agent for another in connection with activities relating to conduct constituting the commission of a gross human rights abuse or violation,
(b) directing, or sponsoring, such activities,
(c) profiting from such activities, or
(d) materially assisting such activities.
(6G) The cases in which a person materially assists activities for the purposes of subsection (6F) (d) include those where the person—
(a) provides goods or services in support of the carrying out of the activities, or
(b) otherwise provides any financial or technological support in connection with their carrying out.”
This amendment, which is consequential on Amendment 1, would define what constitutes the commission of a gross human rights abuse or violation. This would include the torture of a person who has sought to expose the illegal activity of a public official, or the torture of a person who had sought to defend human rights or fundamental freedoms, by a public official or a person acting in an official capacity.
Helen Goodman
On this very cold morning, Dame Cheryl, I am grateful to you for allowing me to keep my overcoat on.
Amendment 1 and its consequential amendment, amendment 2, are Magnitsky amendments. I think by now hon. Members understand what they are all about: they would enable us to sanction people who have committed gross human rights abuses. Very briefly, the history is that Sergei Magnitsky, a Russian lawyer who uncovered and tried to expose a big tax fraud, was imprisoned and tortured for a whole year and finally beaten to death. After his death, he was tried for tax fraud, which was obviously completely ridiculous.
I draw Committee’s attention to the wording of amendment 2, which covers not only the perpetrators of torture but the people who manage it and give the orders. Once upon a time, people used to make the excuse, “I was only following orders,” but nowadays we more often hear, “I am only giving the orders,” which is really not acceptable. In the amendment’s definition of “conduct”, we have therefore included
“directing, or sponsoring, such activities…profiting from such activities, or…materially assisting such activities”,
including by providing goods or services. In other words, the amendment covers those who turn the thumbscrews, those who order others to turn them, and those who supply them.
Similar legal provisions have been made in other countries. The Government argued on Second Reading that such a provision would make no difference,but we have seen the Magnitsky list of people who have been sanctioned in the USA but whom we have not sanctioned. It includes a man called Maung Maung Soe, one of the Myanmar generals responsible for the genocide, ethnic cleansing and serious abuse of the Rohingya over the past few months. To be honest, I do not understand why the Government did not say on Second Reading that they thought such a provision was absolutely fine and they agreed with it. Everyone is appalled by such human rights abuses and we do not want to provide any comfort to people who commit them, so I am really puzzled.
I am further puzzled because the Government agreed to include similar provisions in the Criminal Finances Act 2017. The Minister for Security and one of the Justice Ministers, I think—people keep being reshuffled, so I am not sure—argued strongly for such provisions to be included in that Act, so I do not grasp why the Government do not want them in the Bill. The Minister said on Second Reading that the Home Office can ban people and that those provisions are adequate. It is not clear to me that the Home Office has banned the people on the American Magnitsky list, so I am uncomfortable relying on that process. That is why we tabled these amendments.
Amendment 13 is about serious organised crime and trafficking. Amendments 1 and 2 would amend the part of the clause that relates to the purposes for which sanctions can be imposed. We think that serious organised crime and trafficking should be included, because it, too, is a long-standing problem. We had the cockle pickers who died on the beaches of Morecambe bay, and we discussed on Tuesday the hundreds of thousands of people in Libya. The National Crime Agency estimates that between 10,000 and 13,000 people are trafficked into this country every year. One of my constituents was trafficked into this country as a 10-year-old and forced to work in a cannabis farm. The Government are very firm on modern slavery, but they do not seem to want to see it through in other legislation. I do not intend to press amendment 13 to a vote, but the Government need to be a bit more thoroughgoing, consistent and comprehensive when it comes to the victims and perpetrators of serious organised crime and trafficking.
Richard Benyon (Newbury) (Con)
It is a great pleasure to speak in this important debate. I pay tribute to the hon. Member for Bishop Auckland for what she said. I have been involved for some time in the campaign to get the equivalent of the American Magnitsky Act into UK law. It was a considerable surprise to find myself on the Committee—it may have been a surprise to others, too—but it is nevertheless a delight.
To start, I will use the words of David Cameron. In a recent speech to Transparency International, he said:
“One of my regrets of my time in office was that we didn’t introduce the Magnitsky Act. The Foreign Office argument was that Britain’s existing approach was better, because we could sanction all the people on that list—and more besides. And I went along with it.
But I soon realised this ignored the advantages of working together—with other countries—under a common heading. It’s not PR, it’s a fact. You get extra clout from coming together across the world and saying with one voice to those who are responsible for unacceptable acts: ‘We are united in our action against you.’
I pay tribute to my successor Theresa May for adding Magnitsky provisions to the recent Criminal Finances Act. And I also pay tribute to someone who has fought longer and harder and at more risk to himself than anyone else—the man behind that campaign, the legislation and a brilliant book, ‘Red Notice’, on it, Bill Browder.”
It has been a great privilege for me to get to know and work with Bill in his fearless efforts to get equal provisions and consistency. International organised crime is more fluid today than ever, with the ability to move money and take advantage of different activities and opportunities. There are two central reasons why those criminals come to the United Kingdom. One is that we have a prosperous economy with good property and intellectual property rights and a large percentage of the world’s financial institutions based here. The other, to be perfectly honest, is that the kinds of people we do not want investing in our economy—the fellow travellers of the criminals, be they lawyers, accountants or other financiers, who are able and willing to work with them—can exploit gaps and make investments in this country. David Cameron said, with typically honest, self-effacing candour, that the position that has been taken for so long by the United Kingdom Government is that adequate provisions apply. However, we know that they have not been applied.
I pay tribute to the hon. Member for Bishop Auckland. I will always remember her rage of two days ago, and there will be times when I try to find my inner Helen Goodman. However, I have say to her that the last 48 hours have been extremely beneficial to me—I hope they have also been beneficial to the Bill—because they have allowed me to spend a lot of time with human rights lawyers who have brains that are infinitely bigger than mine, and an understanding of international law and human rights law that is infinitely bigger than mine, and to spend time with the Minister for Europe and the Americas, and his officials. I know there is a public perception that the process involves thumbscrews and all kind of threats, but I think the system knew that I, as somebody who has no ambition, was not persuadable on anything.
We have to get this right, and there are two areas of consistency that we need to achieve. First, as I have already mentioned, the Bill that receives Royal Assent must be consistent with similar legislation that has been brought in by other jurisdictions abroad. Secondly, the Bill must be consistent with our own judicial system. I was on the verge of supporting the hon. Lady, had her amendment been tabled at an earlier stage. However, I have a few suggestions that I hope my right hon. Friend the Minister might be able to support.
There are two key elements of Magnitsky: the one we are debating now—essentially, it concerns definitions and a few other bits—and the review structure, which we will talk about later today. A good Magnitsky amendment, of the sort that I would like to see, would put into the Bill a definition of gross human rights abuse. Such a definition is, at present, absent from the Bill, which only refers to generic, undefined
“international humanitarian and human rights law”
and respect for human rights and their promotion. It does not contain any specific requirement for sanctions or accountability for human rights violations.
Richard Benyon
My hon. Friend makes a valid point, which I was coming on to. When we talk about consistency across our judicial system, definitions are important. If we have differing definitions in similar types of Bills that seek to achieve similar things, courts can be worked by clever lawyers to try to find a hole through which to escape. Consistency here is therefore really important.
The people behind the Magnitsky campaign tell me that they would be happy with a definition that accorded with section 241A of the Proceeds of Crime Act 2002. If my right hon. Friend the Minister could assure us that in the few weeks before Report he can produce an amendment that satisfied that requirement, we would have consistency across law. That seems important.
I entirely accept what the hon. Member for Bishop Auckland says about the kind of people we are talking about. One of the many brave people I have met in the campaign is Vladimir Kara-Murza, who has survived being poisoned twice and now works fearlessly for Open Russia. He says that this element of the Bill is the most pro-Russian piece of legislation we could make: it is about helping honest, decent Russians and holding back the chances of the corrupt, wicked people who have made their lives such misery. It builds on what my hon. Friend the Member for Esher and Walton (Dominic Raab) did in driving through the amendment to the Criminal Finances Act 2017, for which he deserves credit.
As the Minister knows, I have been prepared to support amendments that we are debating today, but after burning much midnight oil I suggest to the hon. Lady that consistency is very important, and the two differing definitions could allow for confusion.
Helen Goodman
I have the Criminal Finances Act in front of me, and I am a little unclear as to where the inconsistency is. The conditions in that Act are about:
“a public official, or a person acting in an official capacity…instigating the conduct, or in consenting to or acquiescing in it”,
with conduct connected
“with the commission of a gross human rights abuse…acting as an agent…directing, or sponsoring, such activities…profiting from such activities, or…materially assisting such activities.”
That seems to be the same wording as in the amendment, as does
“provides goods or services in support of the carrying out of the activities, or…otherwise provides any financial or technological support in connection with their carrying out.”
I cannot quite understand where the inconsistency is, but I am sure the right hon. Gentleman can tell us.
Richard Benyon
I am reliably informed that there are inconsistencies. I suggest that, for simplicity, if the Bill were to say that any reference to “gross violation of human rights” is to conduct that constitutes, or is connected with, the commission of a gross human rights abuse or violation, and whether conduct constitutes or is connected with a commission of such an abuse or violation is to be determined in accordance with section 241A of the Proceeds of Crime Act 2002, we would have the consistency that the campaigners—and, I think, the Government—seek.
I understand that the Government want to achieve this. They want to see the full Magnitsky on the statute book. This suggestion offers a way of making sure that we get the definitions right.
Helen Goodman
The hon. Gentleman raises an interesting point. I will tell him why we did that; I do not know whether this was considered when the 2017 Act went through. Gross human rights abuses may involve, as in the case of Magnitsky, one person being tortured and abused, or they may involve—as in the case of the Rohingya, who are being pushed out of Rakhine state across the Bangladeshi border—a whole group of people. We did not want to exclude the latter because the treatment was substantially different. That was our thinking, and it was so that we did not just solely focus on the Russian situation. We are obviously interested in disincentivising human rights abuses across the globe.
Alex Chalk
I entirely commend that intention, but I fear that in reality, the wording risks causing confusion and potentially having precisely the opposite effect. The Interpretation Act 1978 indicates that, in any event, the single includes the plural. In other words, where the text says,
“the torture of a person”
that is apt to include “a group of persons”. Lawyers and judges will look at the insertion and ask why it has been included. On the basis that Parliament does not legislate in vain, they will have to try to allocate a meaning to it, which is simply going to cause confusion. That is the first textual difference, which creates confusion rather than clarity.
Secondly, the amendment, in inserting subsection (6D)(b)(ii), would import another change that will cause worrying inconsistency. That includes the qualificatory words,
“who in instigating the conduct, or in consenting to or acquiescing in it, is acting in the performance or purported performance of his or her official duties”.
In the Bill, that applies only to a person acting in an official capacity. It does not apply to a public official. That inconsistency could lead to the perverse outcome that the net will be drawn more widely in this Bill than in the Proceeds of Crime Act 2002, and that public officials, under subsection (6D)(b)(i), could be off duty but a person acting in an official capacity could not. That would be perverse and would create confusion.
The third and most important confusion is in proposed new subsection (6E). By omitting a key phrase, the amendment would create a vast loophole in the legislation. In its definition of torture, the amendment excludes the following very important text from the 2002 Act:
“It is immaterial whether the pain or suffering is physical or mental and whether it is caused by an act or omission.”
Proposed new subsection (6E) talks about
“the intentional infliction of severe pain or suffering”,
but because that is not defined as including mental suffering and omission, it means that inflicting mental suffering and omitting to provide heat, water, food or light—I hope that hon. Members perceive those things to be torture—would be excluded. They are included in the 2002 Act but would not be included under the amendment.
Helen Goodman
The hon. Gentleman seems to be running two arguments at once. I cannot see any mention of such deprivations in the 2002 Act, so I am not sure whether he is criticising the substantive drafting. Is his overriding concern that he does not like the drafting, or that it is inconsistent?
Sir Alan Duncan
I can certainly say to my right hon. Friend that we will endeavour to work towards that destination. He will appreciate that in Government, agreement to certain processes requires collective responsibility. I want to see what we can do to head in the direction that he has campaigned for, but we will have to wait until the days leading up to Report to get to the point when I can say so for certain. I hope the hon. Lady will withdraw amendment 1.
Helen Goodman
That was a very interesting exchange. I wish to thank and commend the right hon. Member for Newbury for what he has said and for the thought that he has put into this matter. Obviously, we all want legislation to be good, and we do not wish to create a fest for lawyers. That is not the purpose here. The Government might have done the more reasonable thing and accepted amendments 1 and 2 and said, “By the way, they are not absolutely perfect, so parliamentary counsel will have to dot the i’s and cross the t’s and get the drafting absolutely perfect.” The Minister has not done that. In the spirit of compromise and consensus building, in which the Minister has said consistently that he is interested, I would like to draw a distinction between amendment 1 and amendment 2. Questions about the drafting seem to relate to amendment 2, but everybody who has spoken seems to agree with amendment 1. For that reason, I will press amendment 1 to a vote.
Sir Alan Duncan
In my everlasting search for consensus, may I put this logical argument to the hon. Lady? Those who feel fervently about this issue see the two amendments as part of a package. If we were to take one without the other, it would deny us the opportunity to have a broader debate in the whole House on the entire issue known as the Magnitsky Act. Cutting off one from the other would not necessarily please the campaigners, so it would be advantageous to put this matter to the whole House, should it get that far.
Helen Goodman
Our objective is not to satisfy campaigners in this House, but to get the law right.
Richard Benyon
May I assure the hon. Lady that I am not a lone voice in my party? In fact, quite the reverse. There are a lot of people and a head of steam now on these issues. If we get to Report and we are not satisfied, we are prepared to vote accordingly. I will continue to work with her, as I will continue to work with the Government, to make sure we get the measures we need.
Helen Goodman
I appreciate the right hon. Gentleman’s offer. I think that the Committee can take a decision in principle. I am not trying to prevent debate on the Bill—far from it. It was the Government Whip who did that on Tuesday, so I am certainly not going to have that laid at my feet now. We can come back to the matter on Report in the way that the Minister suggests, but I would like—
Alex Chalk
May I respectfully suggest that amendments 1 and 2 do go together? I say that because to legislate for a purpose that would provide
“further accountability for, or act…as a deterrent to, the commission of a gross human rights abuse or violation”
and then not to define what is meant by “gross human rights abuse or violation” would be to legislate for the bow, but not for the arrow. The two things go together. To leave out the definition would be to create such a gaping hole in the legislation that we would be in dereliction of our duty, it seems to me. I hope that saying that will not be perceived as being in any way unsympathetic to the principle, but leaving out the definition would mean that we were left with not just inadequate legislation, but incomplete legislation.
The Chair
It may be helpful if I let the Committee know that if amendment 1 is withdrawn or negatived, amendment 2 falls as well.
Helen Goodman
But I did not necessarily think that it would be helpful for the whole Committee to understand all the interstices of this. There is an issue of principle here. The Government are perfectly capable of sorting out the drafting. They have had since 20 February—10 days ago—when these matters were raised on Second Reading by several right hon. and hon. Members, notably the right hon. Member for Sutton Coldfield (Mr Mitchell). The Government have had ample time to sort out the drafting and therefore I wish to have a vote on amendment 1.
Question put, That the amendment be made.
Helen Goodman
I beg to move amendment 14, in clause 1, page 2, line 21, at end insert—
‘(3A) Regulations under this section must be accompanied by the publication of a written memorandum by the appropriate Minister, and such a memorandum must set out—
(a) how the relevant sanctions are consistent with the overall foreign policy objectives of the UK government, including any specific regional objectives where appropriate;
(b) clear objectives for the relevant sanctions, including well-defined and realistic demands against which compliance can be judged;
(c) a coherent overarching diplomatic strategy for achieving the relevant objectives, including steps to actively and systematically communicate with targeted countries or persons on the specific concerns underpinning the sanctions against them;
(d) a clear exit strategy, including specific and measurable changes in the behaviour of any target or targets to be required as a precondition of any future suspension or lifting of the relevant sanctions; and
(e) specific steps to be taken by Ministers to promote co-operation with, and where possible the adoption of, any autonomous UK sanctions by other countries.”
This amendment would require the Government to publish a memorandum setting out the objectives of any sanctions issued under this Act, and how they are consistent with the UK’s foreign policy objectives.
This amendment is about making coherent and sensible plans when we impose sanctions. We want the Government to lay before the House a public document that sets out how the relevant sanctions are consistent with the Government’s overall foreign policy objectives; clear objectives for the relevant sanctions; a coherent overarching diplomatic strategy for achieving the relevant objectives; an exit strategy; and specific steps to be taken by Ministers to promote co-operation with or adoption of any autonomous UK sanctions by other countries.
Lord Ahmad said in the other place that through sanctions we are looking to change people’s behaviour. We are not interesting in hitting ordinary people rather than regimes. We want to minimise the humanitarian impact on innocent civilians. That is why we think that being a bit clearer about the aim of particular sanctions on particular regimes is extremely important.
Hannah Bardell (Livingston) (SNP)
I commend the hon. Lady on the amendment. Does she agree that public perception is very important—people understanding why we have sanctions and what they look to achieve? Her amendment speaks to that. It will be absolutely vital to have that detail set out by Government, which they so often do not do.
Helen Goodman
I am grateful to the hon. Lady for her remarks. Let me give a couple of examples about two different sanctions regimes where the content of sanctions and object of the sanctions are quite different. Sanctions on the Democratic People’s Republic of Korea are aimed at preventing it from developing weapons of mass destruction. That is a really big foreign policy objective for all of us. Nobody wants the proliferation of nuclear weapons, and not in that region; it is an extremely destabilising occurrence. At the same time, we need a parallel diplomatic strategy. The South Koreans are doing quite well on that following the Olympics, with efforts to shift the discussion from sport to politics. I am not absolutely clear what the Government’s view is on the exit strategy and precisely what changes in behaviour they want. This has been difficult and fraught and the Government have made serious efforts at the UN, but we are trying not to starve the North Korean people, who anyway have an extremely low standard of living and a horrible quality of life; we are trying to stop the regime from developing weapons of mass destruction.
The situation in Myanmar and its risks and problems are different. Those sanctions are aimed at preventing the ethnic cleansing of Rohingya and ensuring their safe, voluntary and dignified return to their homeland in Rakhine state. We want the UN to be able to oversee that return and the full implementation of the Annan commission recommendations. Again, we are trying to influence the regime to do something. We have an aid programme to other parts of Myanmar and we are not trying to undermine that, but we want to shift the military, which is why the position of Her Majesty’s Opposition on sanctions on Myanmar is different from the Government’s position. We agree on the North Korean sanctions, but not on Myanmar, because we would like the sanctions to cover the whole of that part of the Myanmar economy that is controlled by the military.
Those two examples show that different problems need different approaches. We need to be clear about that. We will be better at running our foreign policy if we are clearer. This co-operation was very strongly commended by UK Finance, which is the collaboration between banks and financial service providers. For them, life just becomes extremely difficult if we do not have the same approach as the Europeans and the Americans. They have said to us that they want us very much to maintain our integration with the EU on our sanctions policy, because they are worried that if we were to have a different tweak here and there, other international finance actors would be very risk averse, and would not want to put money into British banks and then find that they were suffering second round sanctions, particularly from the Americans.
To be honest, I thought that the speech the Foreign Secretary made on Second Reading—it was typical of him—did not really take that into account. It began and ended with a lot of Brexity rhetoric, but it did not really focus on the detailed policy reality of what to do when we are operating sanctions. He said:
“The Bill will give us the freedom to decide on national sanctions as we see fit”.—[Official Report, 20 February 2018; Vol. 636, c. 77.]
He went on to say that “Britain can act independently”, that we will have “freedom of manoeuvre”, be an independent global power, and be able to
“exert our rightful influence on the world stage”.—[Official Report, 20 February 2018; Vol. 636, c. 80.]
The thing about this is that we can and we will, but the truth is that we do that much better by collaborating with other countries. Everybody knows that sanctions are much more effective when we co-operate with other countries. That is why we included paragraph (e) in this amendment.
Richard Benyon
I am confused by this one. I may be a member of the Intelligence and Security Committee, and I would not want anyone in this Committee to think that I have gone native and that somehow we want everything hushed up. I am entirely in favour of transparency of strategy, because that is the easiest way for Parliament to hold the Government of the day to account. But it seems to me that elements of this amendment would make it unworkable. It would favour the kind of state that we might seek to sanction, by laying bare before the world a strategy that, at times, it is worth while keeping within the corridors of power. I am sure some people will accuse me of being part of some sort of elite or believing in closed government, but it is absolutely not true.
The amendment calls for a memorandum that would show
“clear objectives for the relevant sanctions, including well-defined and realistic demands against which compliance can be judged…a coherent overarching diplomatic strategy”.
That is available, to an extent, and is discussed. It is part of our national security strategy. But to communicate in a way that would be helpful to—the actual words used in this amendment—“targeted countries,” would burden future Governments and that of today in a way that concerns me. I hope we may get some clarification on this, either from my right hon. Friend the Minister or the hon. Member for Bishop Auckland.
Sir Alan Duncan
I can confidently say that if anyone has a hot water bottle, I am prepared to offer them very good money for it. I have not got quite as many layers on as some others in the Committee. I will respond to the points made about this amendment and in large part concur with the comments made by my right hon. Friend the Member for Newbury.
The Bill as drafted already requires a Minister to lay before Parliament a report alongside the introduction of any sanctions regulation. Amendment 14 appears to duplicate that duty, setting out a number of specific factors to be included in such a report. I have some sympathy with the aim of the amendment. Given the potential effects of sanctions, they should only be used where it is appropriate and where the Government have thought through all of the consequences. It is right and proper that the Government can and should be held to account over the use of this power. As I have said, clause 2 already requires the Government to lay a report before Parliament alongside the introduction of any sanctions regulation.
The report would set out why a Minister considered the sanctions regulations to be consistent with the purposes outlined in the Bill, and why they were a reasonable course of action. I assure hon. Members that it will clearly state the objectives of the sanctions, their place within a broader diplomatic and foreign policy strategy and, if appropriate, the conditions under which they might be lifted—for example through the resolution of an armed conflict to which they were designed to apply.
In addition, the Government have committed to publishing an annual review of each of the sanctions regimes, which will be laid before Parliament as set out in clause 27. That report will explain why the sanctions regimes continue to be appropriate and how they meet the objectives set out in the original report.
Sir Alan Duncan
Clause 27. I hope that helps the hon. Lady.
The requirements in the Bill demonstrate that we are committed to being open before Parliament about the objectives of our sanctions regimes. To that extent, I do not disagree with the principle behind the amendment; rather, it is our view that the provisions are already sufficiently covered by clause 2 and the annual report under clause 27.
I want to make it clear that the Government will ensure that we have a coherent diplomatic strategy in place as part of the process by which we consider whether sanctions are appropriate; but to set that out publicly on the introduction of the regime, as would be required under new subsection (3A)(c), which the amendment would add to the clause, would, as my right hon. Friend the Member for Newbury has said, risk exposing our hand in sensitive areas and at inopportune times. It could be counterproductive and result, therefore, in less effective sanctions and foreign policy overall.
That is also the case with setting out an exit strategy at the start. Sometimes an exit strategy is clear from the purpose of the regime—for example, as I have said, promoting the resolution of an armed conflict. However, it might be inadvisable to oblige the Government to be so explicit in advance, especially where doing so might prejudice sensitive negotiations or affect our work with international partners.
The same is true for the amendment’s new subsection (3A)(e), which would oblige the Government to take the steps that we are taking with our international partners to promote co-operation on our individual sanctions regimes. As we have said many times, sanctions are most effective when they are implemented multilaterally, and we are committed to working closely with our partners to ensure that sanctions are implemented by the widest possible groupings. Setting that out in Parliament in advance risks undermining those discussions, which, by their nature, are private and sensitive. Therefore, while we respect the intentions behind the amendment, I urge the hon. Lady to withdraw it, on the basis of the detailed explanation I have given.
Helen Goodman
I was interested to hear what the Minister said. In the previous debate, on Magnitsky, he prayed in aid of his position paragraphs (f), (g) and (h) of clause 1(2), which were of course tabled by Labour Lords and added to the Bill in the other place. I notice that he has just done the same thing again: he prayed in aid clause 27, which was also added.
I take seriously the points about not being foolhardy in being open. It is a difficult, tricky balance, but in view of the arguments made by the right hon. Member for Newbury and the Minister, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
I have been making inquiries about whether there is a warmer Committee Room for this afternoon’s proceedings, but I am sad to report that this is now one of the warmest rooms on the corridor. It is with some dismay that I put on the record that it is still absolutely freezing in here.
Sir Alan Duncan
Dame Cheryl, the clause gives the Government the ability to create sanctions regulations and to ensure that we can do so in order to continue to comply with our international obligations, such as UN Security Council resolutions, after we leave the European Union. Alongside allowing us to meet our international obligations, it will ensure that we can continue to use sanctions to meet our foreign policy and national security goals.
As a result of the amendment in the other place, the clause now specifies a range of other purposes for which sanctions can be imposed, including to promote compliance with international humanitarian law and international human rights law and to promote respect for human rights, democracy, the rule of law and good governance. That list shows that we can continue to implement sanctions for the purposes for which they are currently used. I reassure colleagues that the UK will also be able to implement measures in the same sectors as currently—financial, migration, trade, aviation and maritime. The clause is the foundation of the legislation, so I ask that it stand part of the Bill.
Helen Goodman
This is the most important clause in the Bill, and it was much improved in the Lords. I am slightly disappointed that we have not been able to make more progress, but it was clear from the debate that the right hon. Member for Newbury felt that he had been given assurances that progress will be made between now and Report. We hope very much that that progress is made. We take the Minister at his word on that, and we will undoubtedly come back and look at these issues on Report. For now, we are completely happy for the clause to stand part of the Bill.
Question put and agreed to.
Clause 1, as amended, accordingly ordered to stand part of the Bill.
Clauses 19 and 20 ordered to stand part of the Bill.
Clause 21
Periodic review of certain designations
Helen Goodman
I beg to move amendment 32, in clause 21, page 18, line 34, leave out “3 years” and insert “12 months”.
The Chair
With this it will be convenient to discuss the following:
Amendment 33, in clause 21, page 18, line 36, leave out “3 years” and insert “12 months”.
Amendment 34, in clause 25, page 20, line 14, leave out “3 years” and insert “12 months”.
Amendment 35, in clause 25, page 20, line 16, leave out “3 years” and insert “12 months”.
Helen Goodman
The purpose of these amendments is to increase the frequency of the periodic review of designations from every three years to every year. I owe this idea to the hon. Member for Glasgow Central, who suggested it on Second Reading. I thought that she might table amendments but that I had better do so in case she did not. It was a very sensible suggestion, and I am sure she wishes to explain why it is a good idea.
Alison Thewliss (Glasgow Central) (SNP)
I thank the hon. Member for Bishop Auckland for tabling these amendments—she was just a little swifter getting them in than I was.
I spoke about this issue on Second Reading. First, there is an important point about consistency: the EU has a 12-month review period for its sanctions, and we ought to make the Bill consistent with that. There seems to be no reason why we should want to leave it as long as three years to review sanctions, particularly given that situations can change rapidly and that we should hope that sanctions take effect in a shorter period than three years. We are trying to promote good behaviour and resolution, and we should hope to achieve that within three years, making the three-year period redundant in some cases.
It makes sense to maintain consistency and allow constant review by keeping the review period to 12 months. If things take longer than that, it makes sense to look at them within 12 months to ensure that the Government’s foreign policy objectives are making progress and that things are actually happening. If they are not, perhaps they ought to be reviewed. A 12-month period would give us a good deal more flexibility and accountability. It certainly seems logical to me, and I very much hope the Government accept the amendments.
Sir Alan Duncan
We do things as part of the EU, so it is not possible to segregate the cost in the way the hon. Lady asks. What we are doing is setting up an autonomous regime instead of being part of a collective regime.
I hope that the arguments that I have put to the Committee have persuaded the hon. Member for Bishop Auckland to withdraw her amendment.
Helen Goodman
I think the Minister has noticed some scepticism towards the points he made. We will press the matter to a vote.
Question put, That the amendment be made.
International Development Committee: Burma Visas
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Mark Field
I thank my right hon. Friend for his contribution. Obviously, he was a predecessor in the role that I now hold. This must all be very depressing, given the high hopes that we had during the period he was in office. I can imagine that after the visits he made to Burma at that time, there was a sense that, after decades of military rule, we were moving towards some sort of democracy. In many ways, to be absolutely honest, there are some lessons that we have learned. There was perhaps a small amount of democracy, but, as many will be aware, the Rohingya were not included in the census and they were not allowed to vote in the elections, and in many ways we are seeing elements that are the consequences of that, so there are great lessons to learn.
In relation to my right hon. Friend’s initial point about the Burmese ambassador, we will of course summon him, probably over the next week, to express our deep displeasure at his Government’s action.
Helen Goodman (Bishop Auckland) (Lab)
The refusal of visas for the International Development Committee by the Myanmar Government is obviously shocking. It seems to be a response to the Committee’s critical report on the situation of the Rohingya, although it might also be a response to the tightening of EU sanctions, which the Minister mentioned. Banning people seems to be the Burmese Government’s stock response to criticism: they have also banned the UN fact-finding mission, the special rapporteur, and the UN Refugee Agency. The UK has a £100 million aid programme and significant development investments, and we have our own parliamentary strengthening programme. It is completely reasonable for the International Development Committee to visit Myanmar to see how these are going. The Chair is right to say that we need to think again about the parliamentary strengthening programme, but what is the Foreign Office going to do to secure access both for British parliamentarians and for the United Nations agencies?
Mark Field
The hon. Lady will appreciate that these are very difficult issues. We are doing our best to work bilaterally and within the international community to secure that sort of access. We are also working quietly behind the scenes. Individuals known to Aung San Suu Kyi over many years have paid visits to Naypyidaw at least to advise her of the displeasure and concerns of the international community. As I think we both agree, the truth really is that the military to a very large extent have the whip hand in all that is going on in Burma.
We will continue to work tirelessly to ensure that we move forwards. We want to see some accountability for the crimes that have been committed. The UN fact-finding mission will come forward with an interim report in the weeks to come. With Mr Speaker’s permission, I hope that we will then have a statement in the House setting out our position regarding the issue of impunity for the future.
I return to my initial point and the point made by the hon. Member for Liverpool, West Derby (Stephen Twigg). It is my strong belief that we have always to remember that, frustrating though this situation is, the work done for the most vulnerable must continue. The hon. Member for Bishop Auckland (Helen Goodman) pointed out that we spend £100 million a year on aid in Burma. It would be perhaps very easy for us to walk away. To be absolutely honest, we want to try to find more moderate elements within the military that we can begin to work with. We have stopped programmes of training for the military, but we are open-minded. If there are individuals with whom we feel that we should try to keep lines of communication open, we will continue to do so. In many ways, this is one of the frustrations of democracy and diplomacy, but we will continue our work patiently—although with some urgency, for the reasons that I have set out and given the humanitarian catastrophe that is taking place on the Bangladeshi side of the border.
Sanctions and Anti-Money Laundering Bill [ Lords ] (First sitting)
Helen Goodman Excerpts(6 years, 8 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
We now begin line-by-line consideration of the Bill. The selection list for today is available in the room and on the Bill webpage. This shows how selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or a similar issue. A Member who has put their name to the lead amendment in a group is called first. Other Members remain free to catch my eye to speak on all or any of the amendments within that group. A Member may speak more than once in a single debate.
At the end of a debate on a group of amendments, I shall call the Member who moved the leading amendment again. Before they sit down, they will need to indicate if they wish to withdraw the amendment or to seek a decision. If any Member wishes to press any other amendment or new clause in a group to a vote, they need to let me know. I shall work on the assumption that the Minister wishes the Committee to reach a decision on all Government amendments, if any are tabled.
Please note that decisions on amendments do not take place in the order they are debated but in the order they appear on the amendment paper. In other words, debate proceeds according to the selection and grouping list; decisions are taken when we come to the clause that the amendment affects. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules, following the debate on the relevant amendments. I hope that explanation is helpful.
The Committee has just agreed a programme motion that will be reproduced in the amendment paper for tomorrow. The programme motion sets out the order in which we have to consider the Bill.
Clauses 2 to 5 ordered to stand part of the Bill.
Schedule 1
Trade sanctions
Helen Goodman (Bishop Auckland) (Lab)
I beg to move amendment 29, in schedule 1, page 49, leave out lines 39 and 40.
The Chair
With this it will be convenient to discuss the following:
Amendment 30, in schedule 1, page 50, leave out lines 2 and 3.
Amendment 31, in schedule 1, page 50, leave out paragraph 33.
Helen Goodman
May I say what a pleasure it is to see you in the Chair on this bright and sunny, if cold, morning, Mr McCabe? I will not press the amendments, as they are simply a vehicle enabling me to ask a question: on trade sanctions, is there a loophole in relation to the Isle of Man?
Sir Alan Duncan
I thank the hon. Lady for her question. It is never unhelpful to be able to clarify a point of detail of this sort, and I hope I can now do that to her satisfaction.
Amendments 29 to 31 would cause the Bill to deviate from the established practice in export controls and customs matters where transfers of goods to the Isle of Man are not classified as exports and imports. The Isle of Man is part of a joint customs and indirect tax area within the United Kingdom, and across all customs matters goods transferred to the Isle of Man are not said to be exported from the United Kingdom, and goods transferred from the Isle of Man are not said to be imported into the United Kingdom. That is a long-standing customs arrangement and has been reflected in legislation as well as in custom and practice.
The Isle of Man is integrated into HM Revenue and Customs’ CHIEF—customs handling of import and export of freight—computer system, which enables it to operate UK customs. The Isle of Man mirrors UK export control and sanctions legislation and makes licensing decisions on exactly the same basis as the UK. The amendment, if it were carried, would put sanctions policy out of step with export control and customs. Only goods covered by sanctions legislation would be affected by this change and would in essence be subject to the same export controls twice. If a good were travelling to a sanctioned destination, via the Isle of Man under a licence, it would require one licence from the UK and another from the Isle of Man. The amendment would cause procedural and legal difficulties and increase administrative burdens for business and Her Majesty’s Government, and all for no observable benefit
I hope that I have persuaded the hon. Lady and given a satisfactory explanation in response to the amendment, which in any event she does not intend to press.
Anneliese Dodds (Oxford East) (Lab/Co-op)
Like my hon. Friend, I am grateful to you for chairing the Committee, Mr McCabe.
I am also grateful to the Minister for his explanation. Very briefly, he referred to the Isle of Man’s treatment under the CHIEF system, but we are moving to the contractual disclosure system—CDS—for customs policies. That should have happened by last year, but it has been delayed and there are many concerns about it. Will the Minister assure me that the Isle of Man will be treated properly in any new customs arrangements, and that is the Government’s understanding of the situation?
Sir Alan Duncan
Although I am not familiar with the exact details of the system the hon. Lady mentions, I think I can say confidently that the Isle of Man will be treated in the way that I described in my previous remarks.
Helen Goodman
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Clause 6
Aircraft sanctions
Helen Goodman
I beg to move amendment 15, in clause 6, page 5, line 40, at end insert
“unless they are a person, or are doing so to provide legitimate travel to a person, recognised as a refugee under the UN Convention Relating to the Status of Refugees”.
This amendment would prevent sanctions being imposed on recognised refugees who own or operate aircraft registered in a prescribed country.
The Chair
With this it will be convenient to discuss the following:
Amendment 16, in clause 6, page 6, line 33, at end insert “,
unless an aircraft is providing legitimate travel to a person recognised as a refugee under the UN Convention Relating to the Status of Refugees.”
This amendment would mean that aircraft containing a recognised refugee would not constitute a disqualified aircraft under this Act.
Amendment 17, in clause 7, page 7, line 36, at end insert “,
unless the ship belongs to a person or the ship provides legitimate travel to a person, recognised as a refugee under the UN Convention Relating to the Status of Refugees.”
This amendment would mean that shipping sanctions could not be imposed on ships belonging to, or carrying, a recognised refugee.
Helen Goodman
The amendments are rightly grouped together, because they deal with essentially the same issue. Many refugees are coming to Europe at the moment, mainly by sea, but a small number by aircraft. We want a system that has firm sanctions on shipping and aircraft but does not penalise or criminalise refugees. I know the Minister is as keen as I am to achieve that.
The numbers are striking: more than 1 million refugees or migrants reached Europe by sea in 2016, and 1 million arrived in that way last year. Most of them are fleeing conflict and political persecution in three places: Syria, Afghanistan and Africa. Unfortunately, at least 3,000 people died crossing the Mediterranean last year. We need a system that is firm in the sanctions aspect but humane for the individual refugees. The Minister has been a Department for International Development Minister, and I know that he has experience in this area and will be able to tell us what he thinks is the right way to proceed. In the Lords, when the Minister, Lord Ahmad, was asked about this, his response was that it would be covered by exemptions and licences for non-governmental organisations, but these people do not always arrive with the help of NGOs; they arrive in ad hoc ways.
If anybody would like to read about that journey, they would do well to look at “The Lightless Sky” by Gulwali Passarlay. He describes his life as a teenager, going from Afghanistan across Iran, through Turkey, being pushed back from Bulgaria, making the journey again, going through Greece and getting to Italy. Interestingly, at some points he describes the people who travelled with him and who organised the journey for him as “traffickers”, and their treatment of him was extremely violent, unpleasant, negative and exploitative; but it was sometimes a positive experience, and he regarded them as agents who he had paid to help him. The dilemma the Minister faces is that we do not wish to encourage the people traffickers, but we need to protect the people. Our amendments are aimed at squaring that circle. I agree that that will be difficult, but that is what we are trying to do.
There is also the question of incentives and the pull factor. Goldsmiths University and Oxford University have looked at this and they do not believe that the pull factor is strong, so I submit that we need to take a more humane approach. We have had British forces in the Mediterranean and we have had HMS Bulwark picking people up in the Mediterranean. That is what the amendments are driving at, and that is the debate I wish to have on them this morning.
Alex Norris (Nottingham North) (Lab/Co-op)
I rise to speak in support of the amendments, not least so that I do not freeze to my chair, Mr McCabe.
On Second Reading, the rough theme of the discussion was that we wanted a sanctions regime in this country that punished the individuals for their behaviour but did not as a result punish their countrymen and women or people in their care, and what is proposed would seem to fit perfectly with that. The circumstances that might cause us to use sanctions—persecution, human rights abuses or violent conflict at home—are the very circumstances that cause refugees and people to need to leave their country and seek sanctuary elsewhere. We always have to be mindful of unintended consequences, and the amendment seems to offer one way of avoiding them.
Sir Alan Duncan
I will just take this through to the logical conclusion, and then of course I will give way. I am sure the hon. Lady can understand the difficulty that the situation I described would pose in respect of a person on a ship or aircraft making such a claim.
Helen Goodman
I understand the Minister’s point, but since he accepts the humanitarian case we are making, why did he not put down his own amendments to cover those asylum seekers, as well as refugees?
Sir Alan Duncan
Because the provision is already in the Bill. I would argue that it is in the Bill to the satisfaction of the hon. Lady, because the system of licences and exceptions in the Bill offers the best way to maintain the integrity of sanctions, while ensuring that NGOs can provide humanitarian support to refugees, asylum seekers and displaced persons. It is often the displaced persons who are greatest in number.
That is not a difference of principle; that is simply our interpretation of why this proposal would not work in practice and why the Bill does work in practice and achieves the objectives of the amendments that the hon. Lady has tabled. On that basis, I ask her not to press her amendments, because provision is in the Bill to meet the demands that she seeks.
Helen Goodman
I know that the Minister is doing his best and that the idea is to take minimum amendments in Committee as the Bill goes through—I have been a Minister too; I have had those briefings. However, the Minister is not taking into account the scale of the problem and the situation in which people are finding themselves.
The House voted unanimously last month for a foreign policy that had human rights at its very centre. We all acknowledge that there are now a record 66 million refugees around the world. That is more than there have ever been and more than the population of the United Kingdom. The fact is that we know people are fleeing from horrendous situations, and particularly from Libya, where there are reports of people who have come up from sub-Saharan Africa or across from Eritrea being sold in vast markets. I am afraid that to rely on the notion that people in that situation will be able to get to an NGO is completely unrealistic. I am going to test the will of the Committee on amendment 15.
Question put, That the amendment be made.
Sir Alan Duncan
It might be helpful, given the debate we have had, to rehearse the arguments for why we think clause 6 deservedly stands as it does without amendment. Clause 6 introduces provisions to ensure that the Secretary of State has the power to impose sanctions in respect of aircraft, most notably disqualified aircraft. Sanctions on transport form an important part of the suite of measures available to the UK. As a permanent member of the United Nations Security Council, the UK fully supports the imposing of transport sanctions on prescribed countries.
These powers would allow prohibitions and requirements to be introduced and directions to be issued to control the movement of disqualified aircraft as defined in subsection (6). Directions include preventing disqualified aircraft from entering UK airspace or, if they have already done so, detaining them in a UK airport or compelling them to leave UK airspace. More generally, where a designated person has a prescribed interest in an aircraft, the UK will ensure that this aircraft cannot be registered on the UK register. The UK will also have the power to remove such aircraft from the register. This clause also enables the UK to prevent aircraft from being registered in the prescribed country. Finally, the provisions would enable the UK to prevent British-controlled aircraft from overflying or landing in a prescribed country.
These clauses, therefore, will allow the UK to prevent the use of aircraft—where transport sanctions apply—by people connected to sanctioned countries such as North Korea. The powers in this clause are necessary for the UK to be able to develop and enforce transport sanctions and meet its international obligations. The implementation and enforcement of transport sanctions are a crucial element of the UK’s future foreign policy, and I believe this clause should stand part of the Bill.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clauses 7 to 14 ordered to stand part of the Bill.
Clause 15
Exceptions and licences
Helen Goodman
I beg to move amendment 18, in clause 15, page 14, line 41, at end insert—
“(3A) Regulations must include provision for the establishment of a fast-track process for dealing with requests for exceptions and licences for humanitarian purposes.”
This amendment would mean that regulations have to provide a fast-track process for dealing with any requests for exceptions and licences for humanitarian purposes.
The Chair
With this it will be convenient to discuss the following:
Amendment 19, in clause 15, page 14, line 41, at end insert—
“(3A) The Secretary of State must, within six months of this Act coming into force, undertake a consultation on measures to establish an overarching framework for exceptions and licences to be granted for the purposes of subsections (2) and (3).”
This amendment would require the Government to consult on measures to establish a framework for exceptions and licences to disapply the effect of sanctions.
Amendment 20, in clause 15, page 15, line 12, at end insert—
“(c) humanitarian, development, reconstruction and peace-building agencies engaging with sanctioned individuals and entities in order to safely and effectively carry out their activities.”
This amendment would enable exceptions to any prohibition or requirement imposed by regulations for humanitarian, development, reconstruction or peace-building purposes.
New clause 5—Reports on the use of exemptions and licensing—
“(1) Where regulations are made under section 1, the appropriate Minister must—
(a) prepare a report on the matters mentioned in subsection (2) for—
(i) the period of twelve months beginning with the day on which the regulations made under section 1 come into force; and
(ii) every subsequent twelve month period; and
(b) lay a copy of each such report before Parliament.
(2) The matters are—
(a) the number of applications for humanitarian licences made during the reporting period including specific detail about whether licences were requested by EU Member States or the United States of America;
(b) the number of humanitarian licences granted, refused or withdrawn during the reporting period;
(c) the number of non-humanitarian exemptions and licences requested;
(d) the number of non-humanitarian exemptions and licences granted, refused or withdrawn; and
(e) the amount of time taken for each application to be processed during the reporting period.”
This new clause would require the Government to lay a report before Parliament every 12 months reporting on the use of both humanitarian and non-humanitarian exemptions and licensing.
Helen Goodman
We have now jumped to the section on exceptions and licences, which relates directly to our previous discussion about refugees and the treatment of aircraft and ships. On Report in another place there were some amendments relating to the effects of sanctions on humanitarian work and to exceptions for humanitarian work, and an amendment that looked to get the Government to establish an overarching framework.
We are looking to amend three things in clause 15. First, with amendment 18, we would like to see the inclusion of provisions for the establishment of a fast-track process for dealing with requests for exceptions and licences for humanitarian purposes. I will go on to describe a situation where that was not working and had very bad consequences. We also want a consultation on measures to establish an overarching framework for all exceptions and licences within six months of the Bill coming into force. We have had representations on that from NGOs and the banking sector because they are all affected by it. Finally, we want to see exceptions to any prohibition or requirement imposed by sanctions for humanitarian, development, reconstruction and peace-building purposes.
I am pleased that new clause 5 has been put into this group, because it seeks a report on exemptions. I will come on to explain why that is for humanitarian exemptions and other exemptions.
The system of exemptions and licences is of long standing and well intentioned, but it does not always work as well as we would all like. Chatham House, which did a big piece of work on this last year, said:
“British NGOs undertaking humanitarian operations in or near areas where non-state armed groups…are active face increasing restrictions on their access to the financial system, including delayed transfers, the freezing of funds and in some cases the complete closure of bank accounts. These restrictions impede the UK government’s ability to meet its commitment under the 2015 National Security Strategy and Strategic Defence and Security Review to refocus its aid budget to support fragile and broken states and regions.”
We are obviously in a situation where we have large populations moving around a great deal, sometimes under the control of ISIS or al-Qaeda. It is a very unpleasant and difficult situation.
Helen Goodman
Right. The situation has left responsibility for the due diligence required for funds transfers with humanitarian NGOs operating in high-risk zones.
Banks and NGOs must cultivate relationships, with the support of the Charity Commission, that allow for reciprocal education with respect to compliance expectations, operating risks and mitigation steps. The Government therefore have a challenge in this situation. They need to provide guidance and clear messaging where there is ambiguity at the moment with respect to sanctions and counter-terrorism legislation.
I want to give the explanation for the fast-track process. We have a serious situation in Syria. Everyone knows that 400,000 people have died; 5 million have sought refuge overseas; 6 million have been displaced internally; and half a million people are in besieged areas. Yet this is what is going on. Saleh Saeed, the then chief executive of the Disasters Emergency Committee, said a couple of years ago about Syria:
“The DEC is concerned that the current regulatory regime is significantly slowing and seriously complicating legitimate transfers of much needed funds to pay for humanitarian aid operations inside Syria.”
The lengthy process for getting the money means that on one occasion a programme supporting 10,000 people simply had to close in 2013.
Emanuela Rizzo, who works for what I think is a French organisation, Terre des Hommes, is quoted as saying:
“Receiving money from Europe to Syria is a disaster,”.
The report states that the organisation made a request and waited:
“After 15 days of delay, it contacted the bank in Italy, which informed the NGO that the transfer had been rejected…The bank required a long list of documents, including the NGO’s agreement with the UN Office for Coordination of Humanitarian Affairs, its memorandum of understanding with the Syrian Arab Red Crescent, a letter vowing not to fund ‘terrorist’ groups, and a list of implementing partners.
After two months and a 200 euro…fee, TDH was able to get the money transferred through a different Italian bank with an affiliate in Syria. ‘But it’s becoming incredibly difficult’”.
The report states:
“Other aid agencies struggling to transfer money have resorted to wiring money to banks in Lebanon and physically driving across the border to pick it up. Aid coming in via social solidarity networks has had to do the same.
Since the beginning of the Syrian crisis in 2011, the USA, European Union, Turkey and the League of Arab States…have imposed a series of sanctions on Syria’s arms, banking, energy and oil sectors”—
all for perfectly good reasons—
“as well as on specific individuals, with the stated aim of stopping state repression of protests, initially, and later, of weakening the government.”
However, the sanctions regime has had significant unintended repercussions and second-order effects.
About 15 months ago, when I was on the Treasury Committee, we took evidence from the Charities Aid Foundation and UK Finance. We had some interesting exchanges, so I asked the Charities Aid Foundation what representations it had made. The witness said:
“We worked, for example, in changing proposition 8 in the FATF arrangements, which has a presumption that charities are high risk. We have now had that changed to a risk-based approach”.
However, that
“has created terrible distortions in the assessment of charities.”
The witness added:
“The best example that I could give you is in Egypt, which is scored very highly by FATF because it follows explicit rules in the treatment of charities. Yet all we have seen is a closing of civil society space in Egypt, where charities are simply closed down. That produces the best result, as far as FATF is concerned, because there is then no risk, since they are inherently high risk. Many of these charities are the ones that criticise the Government, so there is a real adverse effect coming through from some of these actions.”
On the question of compliance costs, I asked about the Financial Conduct Authority’s report, which had said that one large, well-known
“charity required £40k of advice on sanctions regimes in order to maintain operations in a number of jurisdictions.”
The Charities Aid Foundation witness said:
“The large international NGOs are spending significant amounts of money on compliance...DFID’s own recommendations in terms of the funding that it provides is that 7% of the cost of any grant that it gives may be used on compliance costs.”
In practice, he said, it is often twice that: between 7% and 14%. It is underwhelming for people who write their cheque for £100 to the Red Cross to know that only £86 of it gets through because the other £14 is spent on lawyers in the UK.
The Charities Aid Foundation would also like more guidance about acceptable risk. Its witness said:
“You could have Treasury-approved guidance, developed along the lines of the guidance that is available from the Joint Money Laundering Intelligence Taskforce for other areas of activity.”
There is a question as to whether we want general exemptions for large, well-known organisations such as the Red Cross or UNICEF, or particular, small licences. Our view is that there is a lot of confusion, and that the individual licences system is not working that well. It is not only non-governmental organisations that agree with that, but the banks too.
UK Finance says it is
“imperative that the UK legislative architecture clearly defines how new legislation will be applied…Our members are clear that the UK’s departure from the EU offers a timely opportunity to create a domestic licensing regime”.
It is asking for a consultation, because that is a complex matter. It is not something that we can sort out in five minutes or in a Bill Committee of amateurs—albeit well-intentioned ones—such as ourselves. It needs expertise.
Alongside the legislation, UK Finance is asking for consideration through
“a wider dialogue on longer-term sanctions implementation.”
It says that
“the impending UK legal sanctions framework will…introduce a new and extremely important dynamic…This will result in an increased scrutiny among globally operating corporate and financial institutions on the approach that will be taken by the UK towards pursing unilateral sanctions and extra-territorial enforcement activity…we would not wish either EU or overseas business to withdraw from the UK due to legal uncertainty, or for it to impede business reacting to potential future relaxation of sanctions”.
The situation is complex. UK Finance does not want people to not use British banks because we have a different and unclear set of rules that might bang up against the risk rules run by the Europeans or the Americans.
To summarise, UK Finance says that banks and international NGOs,
“have increasingly articulated that the current framework permitting humanitarian transactions into sanctioned and conflict environments needs re-thinking and an update.”
It proposes that,
“a new equilibrium be found that recognises the strategic importance of facilitating both humanitarian aid and permissible civilian transactions to higher risk jurisdictions subject to economic sanctions, whilst balancing expectations of appropriate sanctions compliance and counter terrorist controls”
that are required to make such movements of funds.
At the moment, banks and charities are,
“required to navigate a combination of complex multi-jurisdictional regulatory guidance and an inconsistent licensing regime which has led to a significant impact on the funding of humanitarian projects into certain conflict zones”
and other high-risk countries. The banks would like
“mutual recognition for humanitarian licences issued by ‘like minded’ competent authorities”
and
“general exemptions for certain mission critical activities”.
They, too, are interested in having a consultation.
John Glen
I am happy to address those points. I can of course confirm that NGOs in countries subject to sanctions are still able to access these provisions. On the hon. Lady’s point on the fast-tracking process, and the point on fuel sanctions, I said what I said in response to the amendments, but we are obviously living in a very imperfect situation, with highly challenging environments. It will not be possible to get things right every time, but I think the provisions in this legislation give us the best opportunity to do so. I think I have set out the Government’s position clearly.
Helen Goodman
The Economic Secretary is right that the situation is complex, and he is right that we do not want to add to the complexity with new requirements and new consultations. However, I am sorry to say that I do not think he has made the case for not accepting our new clause 5 on reporting to Parliament.
I want to draw the Committee’s attention to an article from The Guardian of 23 July 2014, which illustrates the problem. It is headed: “UK arms export licences for Russia still in place, despite claims of embargo”. It reported:
“More than 200 licences to sell British weapons to Russia, including missile-launching equipment,”
were still in place at the time,
“despite David Cameron’s claim in the Commons…that the government had imposed an absolute arms embargo against the country”.
I think we have seen a great reluctance on the part of the Government to be more open. What is going on with these sanctions, exemptions and licences is a highly sensitive political area. It seems to me that it would help the Government if we had more openness. We could then have arguments about what was really going on, not about what people might surmise or imagine. I wish to press new clause 5 to the vote.
The Chair
We come to new clause 5 later. At the moment, we are dealing with amendment 18.
Helen Goodman
I do not want to press amendment 18. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 ordered to stand part of the Bill.
Clause 16 ordered to stand part of the Bill.
Clause 17
Enforcement
John Glen
I beg to move amendment 4, in clause 17, page 16, line 12, at end insert—
“( ) Regulations—
(a) may create criminal offences for the purposes of the enforcement of prohibitions or requirements mentioned in subsection (2)(a) or (b) or for the purposes of preventing such prohibitions or requirements from being circumvented, and
(b) may include provision dealing with matters relating to any offences created for such purposes by regulations (including provision that creates defences).
( ) Regulations may not provide for an offence under regulations to be punishable with imprisonment for a period exceeding—
(a) in the case of conviction on indictment, 10 years;
(b) in the case of summary conviction—
(i) in relation to England and Wales, 12 months or, in relation to offences committed before section 154(1) of the Criminal Justice Act 2003 comes into force, 6 months;
(ii) in relation to Scotland, 12 months;
(iii) in relation to Northern Ireland, 6 months.”
This amendment enables sanctions imposed by regulations under Clause 1 to be enforced by criminal proceedings, and limits the terms of imprisonment that such regulations can allow to be imposed for breach of sanctions.
John Glen
The offences provisions are perhaps the most important amendments that we need to debate today, following the Government’s defeat in the other place. Hon. Members should be aware that without the fullest set of enforcement measures available to deal with breaches of sanctions, the UK will not be able to ensure effective implementation and enforcement of sanctions. That would make what are currently key foreign policy and national security tools virtually toothless, and therefore redundant.
It is important to recognise right at the start that the concerns in the other place were not about whether there should be criminal offences for breaching sanctions; it was accepted that there was a need for these offences. What was at issue was the circumstances where Parliament could properly give to Ministers the power to create offences. The Government have listened to those concerns. We understand them and these amendments address them.
Currently, EU sanctions against countries such Russia and Syria are imposed through EU legal Acts. These require member states to put in place enforcement measures at national level. In line with that requirement, the UK routinely creates criminal offences for breaches of sanctions by way of statutory instruments made under powers in the European Communities Act 1972 as modified by the Policing and Crime Act 2017, as well as other legislation such as the Export Control Act 2002. The Government therefore want to maintain continuity in this area by reproducing the powers available under existing legal frameworks for enforcement across the various forms of sanctions in the Bill.
Since the defeat in the Lords, Government officials and lawyers have worked with Lord Judge and others to seek a legislative solution. That has been a deep and meaningful dialogue, and I must express my gratitude to Lord Judge for his engagement in seeking to find a way forward. We believe that can be found in amendment 4, the enhanced procedural requirements, which we will debate later, in new clause 3 and the corresponding offence provisions for money laundering. The Government believe that combination of measures is the best solution to meet the concerns expressed in the other place while being practical to implement, which I think was the intention of those who raised the concerns.
The amendment restores to clause 17 the provisions to create sanctions offences in regulations. It provides for the enforcement of any prohibitions and requirements, to provide for criminal consequences if they are contravened or circumvented. The clause also provides for maximum penalties for breaches of sanctions in regulations. The provision states that regulations may not include offences with maximum penalties greater than 10 years’ imprisonment, which is in line with the maximum penalty available through the 2002 Act, and for offences other than trade sanctions we do not intend to create penalties greater than seven years’ imprisonment, in line with current practice. The clause should be read alongside the safeguards in new clause 3, which I will discuss later.
Even with the safeguards that we plan to introduce in new clause 3, the Government remain very aware that creating criminal offences and setting penalties in regulations is a serious matter, not to be undertaken lightly. I am therefore happy to repeat assurances given in the other place. First, no Government would ever create criminal offences for trivial matters. The powers detailed in clause 17 would be used only to create offences within the categories of offences that already exist for breaches of sanctions, breaches of licences and breaches of disclosure or information requirements. Secondly, Ministers should not use these powers in a way that is incompatible with the basic and fundamental rights of people in the UK—section 6 of the Human Rights Act 1998 expressly forbids it. Thirdly, as I said before, regulations under the Bill cannot create offences for trade sanctions with maximum penalties greater than 10 years, and we do not intend to create offences for financial sanctions and other types of sanctions with maximum penalties greater than seven years.
We have listened to the concerns expressed in the other place, and we have tabled amendments to introduce controls on the use of this power. As I said, I will speak to those amendments later in our consideration in Committee. In conclusion, the amendment will restore our ability to enforce sanctions by reintroducing the provision to create criminal and civil offences and penalties that are proportionate to the scale and nature of sanctions breaches and still effective as a deterrent. It should be read together with the enhanced procedural safeguards in new clause 3, which directly addresses the concerns raised in the other place.
Helen Goodman
I was very disappointed, but not surprised, when I saw that the Government had tabled this amendment before the weekend. I anticipated that they might seek to reverse one of their defeats in the Lords. I think it is striking that the Government are seeking to reverse amendment 45 from the other place, when they lost the vote on that amendment by 80 or 90 votes. It was not a narrow little thing. The amendment in the other place was moved not by some party hack, but by the former Lord Chief Justice of England and Wales. He made a number of speeches about the excessive use of Henry VIII powers.
Oral Answers to Questions
Helen Goodman Excerpts(6 years, 9 months ago)
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The Minister for Asia and the Pacific (Mark Field)
I have just returned from a sun-kissed New Zealand, where I had fruitful discussions—[Interruption.]—indoors in the main, with a range of political figures, including my counterparts the Associate Foreign Minister and the Trade Minister, and with the Foreign Affairs, Defence and Trade Committee. New Zealand is a valued Five Eyes security partner and a priority for a deeper security and trade agreement once we leave the EU. We have the broadest and deepest friendship with New Zealand.
Helen Goodman (Bishop Auckland) (Lab)
The UK is joint guarantor of rights and freedoms in Hong Kong, yet we have seen booksellers abducted, elected legislators barred and student demonstrators imprisoned, and in Guangdong, in December, 10 people were tried in a sports stadium before being executed. Why did the Prime Minister not raise the issue of human rights in public in Beijing? Was it because she does not care or because she is so desperate to get a trade deal?
Mark Field
I reassure the shadow Minister that the Prime Minister did raise these issues, but we do this not through megaphone diplomacy but in private meetings; we relentlessly raise human rights issues, not least in respect of Hong Kong. As the hon. Lady rightly says, it is vital that Hong Kong’s rights and freedoms are respected. Our most recent six-monthly report states that one country, two systems must continue to function well, and we remain concerned by, for example, the rejection of Agnes Chow’s most recent nomination for March’s Legislative Council election.
Boris Johnson
The universal spanner—a device that will solve almost any problem. I truly believe that female education is at the heart of solving so many other global problems, which is why we are putting it at the very centre of the Commonwealth summit in April and the upcoming G7 summit. Across our network, female education is at the heart of everything that we do.
Sanctions and Anti-Money Laundering Bill [Lords]
Helen Goodman ExcerptsTuesday 20th February 2018
(6 years, 9 months ago)
Commons ChamberRead Full debate Sanctions and Anti-Money Laundering Act 2018 View all Sanctions and Anti-Money Laundering Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 78-I Marshalled list for Third Reading (PDF, 72KB) - (23 Jan 2018)
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”.
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.
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.
Same-Sex Marriage in Bermuda
Helen Goodman Excerpts(6 years, 9 months ago)
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Harriett Baldwin
Yes, I will. By allowing the urgent question today, Mr Speaker, you have allowed colleagues to express the views held very strongly in this House. On the ongoing discussions, as my hon. Friend will be aware, there will be a range of opportunities for Government interlocutors from the United Kingdom to interact with those from Bermuda. He will also be aware that this was put into the manifesto of the party that was successful at the last election. Although we in the United Kingdom may disagree with the direction of travel, we have decided in these circumstances not to intervene.
Helen Goodman (Bishop Auckland) (Lab)
Thank you, Mr Speaker, for granting this urgent question. I thank my hon. Friend the Member for Rhondda (Chris Bryant) for so eloquently and passionately putting the case against this shameful piece of legislation, which turns same-sex couples into second-class citizens just a year after they had won their equality through the courts.
Following a year in which Australia and Chile have joined the march towards marriage equality, this legislation is a significant step backwards. For that to happen anywhere in the world would be shameful, but for it to happen in a British territory—with the legislation signed by a British Governor, and permitted by a British Foreign Secretary—makes us complicit in something that this House has repeatedly voted against.
The Government say they are disappointed, that there is a difficult balancing act to be made between the will of Bermuda’s Parliament and the views of the British Government and that this legislation tries to bridge the gap between the two. That is not really the case: the legislation is in conflict with Bermuda’s own constitution and Human Rights Act. When it comes to the rights of British citizens, there should be no such thing as a balancing act.
On the powers of the Governor to veto this legislation, the Foreign Office states that
“British Ministers expect the Governor to observe international obligations and protect key values.”
The Minister has just said that the law should be in line with the constitution. How does the Governor’s decision to sign this legislation square with that expectation of protecting key values? Surely LGBT equality is a key value. How is it right for the Governor to sign legislation that overturns the independent decision of the judiciary, conflicts with the constitution, and enshrines not integrity but rank inequality into Bermuda’s administration of justice?
Harriett Baldwin
The hon. Lady is right to highlight the progress being made around the world on this issue, and our overseas territories observe different states of that legislative progress. Five Caribbean territories—Anguilla, the British Virgin Islands, the Cayman Islands, Montserrat, and the Turks and Caicos Islands—currently have no recognition at all of same-sex unions, and I repeat our disappointment that the Act in Bermuda removes the right for same-sex couples to marry. Against that, however, we must balance issues of self-determination, and having carefully considered those issues, the Secretary of State decided that in this case it would not be appropriate to use his powers to block the legislation. Such powers can be used only where there is a legal or constitutional basis for doing so, and even then only in exceptional circumstances. His judgment was that when engaging with the British overseas territories we must respect the fact that they are separate, self-governing jurisdictions with their own democratically elected representatives that have the right to self-government.
Democracy in Hong Kong
Helen Goodman Excerpts(6 years, 10 months ago)
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Helen Goodman (Bishop Auckland) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter.
As hon. Members have said, one of the privileges of serving in our free Parliament is the ability, and the possibility, to defend the freedoms of those in other countries where things are more difficult. Last year was the 20th anniversary of the joint declaration, and I would just like to remind the Chamber of one of the key paragraphs in it, which says:
“Rights and freedoms, including those of the person, of speech, of the press, of assembly, of association, of travel, of movement, of correspondence, of strike, of choice of occupation, of academic research and of religious belief will be ensured by law in the Hong Kong Special Administrative Region.”
Those are fundamental rights, and Her Majesty’s Opposition totally support the principle of one country, two systems and we totally accept our legal responsibilities as a guarantor of that declaration and of those rights.
I want to pay special tribute to the hon. Member for Congleton (Fiona Bruce) for the way that she introduced this debate. Her speech was excellent and set out the whole picture very clearly. I have to say that she is fearless in defending those whose human rights are abused, however inconvenient it is and wherever we see it. I also congratulate my hon. Friend the Member for Hornsey and Wood Green (Catherine West) on her considerable work on Hong Kong in recent years.
The situation is obviously getting more difficult, as the Government report acknowledges, and we have to ask what is to be done in this situation. We should remind China of a couple of things. One is that while we agree that calls for independence are not ones that we support, clamping down on protests and on free speech, and appearing not to wish to see civil society flourish, can only increase those pressures. That will not reduce those protests. As Lord Ashdown said, will the Chinese enhance their own soft power if they undermine Hong Kong’s freedoms? That is a very powerful point.
I am interested to know what the Government are going to do and what they are going to say to the Chinese. I think that the Prime Minister will have a meeting with President Xi in the next few months. Is the intention to raise these issues? The Government have been objective and open in assessing the situation, but what further do they think that they can do? I would also like the Government to assure us that in the post-Brexit pressure for trade regimes, we will not abandon our commitments and responsibilities to human rights. Taking on board what the hon. Member for Glenrothes (Peter Grant) said about humility, and notwithstanding what happened when we were running Hong Kong, what steps do the Government think it is possible to make to move to universal suffrage, and what is their view on the legality of the immigration checkpoint on the new railway?
The title of the debate is “Democracy in Hong Kong”. Most of the focus has been on individual human rights, and at this juncture I think that is the right focus.
Oral Answers to Questions
Helen Goodman Excerpts(6 years, 10 months ago)
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Mark Field
The right hon. Gentleman is absolutely right. There can be no question at the moment of a safe and dignified return for Rohingya from Bangladesh to Burma. When I was in Thailand last week, I spoke to the chairman of the new standing committee that will oversee the memorandum of understanding between the two countries in order to look at the whole issue of returns. We want people to be able to return. That is currently not possible, but we want to maintain pressure on both sides.
Helen Goodman (Bishop Auckland) (Lab)
As the Minister has acknowledged, the terrible human rights abuses of the Rohingya refugees are continuing. He knows that the Myanmar Government have banned the special rapporteur and that the fact-finding mission is impossible. He has said previously that any return of refugees must be “safe, voluntary and dignified”. Does he think there is any action that the British Government can take to prevent the return of the refugees until those conditions are fulfilled?
Mark Field
Very little can be done without international co-operation. As the hon. Lady will know, Lord Darzi is part of the committee that is trying to oversee the situation, and the committee will have meetings in Nai Pyi Taw within the next week to consider what practical steps can be taken to try to ease the path. However, as the hon. Member for East Dunbartonshire (Jo Swinson) pointed out, these are massive international problems. We have tried to do as much as we can through the United Nations, but—
UK Victims of IRA Attacks: Gaddafi-supplied Semtex and Weapons
Helen Goodman Excerpts(6 years, 11 months ago)
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Helen Goodman (Bishop Auckland) (Lab)
It is a pleasure to serve under your chairmanship, Mr Gapes. First, I bring the apologies of my hon. Friend the Member for Ealing North (Stephen Pound). He has an engagement in his constituency and I am standing in in his place.
I begin by thanking the hon. Member for South West Wiltshire (Dr Murrison) for his work and that of the Northern Ireland Affairs Committee. He made a powerful speech. Excellent speeches have also been made by my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) and the hon. Member for Strangford (Jim Shannon).
We in the Labour party are proud of the role we played in bringing about peace in Northern Ireland. We believe that we have a duty to protect that legacy and move it forward. We in this House must never forget the pain, hurt and destruction that the troubles brought to many people in Northern Ireland and throughout the United Kingdom. The debate focuses our minds on that.
The Labour Government worked to move the Gaddafi regime away from the production of weapons of mass destruction and towards acceding to the chemical weapons convention in 2004 with the hope of providing greater stability in the region. I accept the disappointment expressed by the hon. Member for South West Wiltshire about the treatment of victims by Governments of all stripes.
The Select Committee’s report concerns an important issue. The Committee took evidence from victims and victims advocacy organisations along with their lawyers. The report, “HM Government support for UK victims of IRA attacks that used Gaddafi-supplied Semtex and weapons”, makes some recommendations on what the Government can do to support victims.
The potential use of an estimated £9.5 billion of frozen Libyan assets to provide compensation to victims is mentioned on page 23, where paragraph 62 states:
“The FCO told the Committee that the EU Regulation prohibited the release of frozen assets in the UK without a licence from HM Treasury.”
The hon. Member for South West Wiltshire is lucky that I am responding to this debate, and not my hon. Friend the Member for Ealing North, because I am the Opposition Front Bencher responsible for the Sanctions and Anti-Money Laundering Bill that is coming down the tracks. It is currently in the Lords and will come to our House in February. I accept what the Foreign Office says about the legal framework provided by the EU regulations and the United Nations Security Council limiting the room for manoeuvre, but either in the other place or when the Bill comes to us Ministers could consider the scope for making amendments to the regime to make some progress in the way the Select Committee suggests. I am not saying that that will happen, or that is possible, but Ministers should certainly make an undertaking, because there is clearly a potential legislative vehicle for this.
The Committee is calling on the Government to do more to negotiate a settlement with the Libyan Government and broker compensation arrangements similar to those made by the United States Government. We accept the Foreign Office’s assessment that that cannot be handled speedily and ultimately might not be successful. At the same time, Her Majesty’s Opposition hold to the view that in the immediate term the Government should provide a special pension to all those who were seriously injured as a result of troubles-related incidents, as advocated by many groups that represent the interests of victims.
The Government know they have a duty to ensure that those individuals receive the right assistance and support in coping with life-changing injuries. A victim’s pension would provide for those who may not have been able to build up an occupational pension over the years and may have additional and complex care needs due to their injuries. That should cover not only the victims referred to in the report, but all victims. The Government could consider that now. As the years go by, more victims who have been affected pass away. As the hon. Member for Glasgow North (Patrick Grady) pointed out, the issue is becoming increasingly urgent as time goes on.
It is only right that the Government stand up for the victims of all atrocities that occurred throughout Northern Ireland’s troubled and painful past, both internationally and here at home. We welcome the Committee’s report and the work it does in standing up for people in Northern Ireland and beyond. It is time for the Government to take more action.