Sanctions and Anti-Money Laundering Bill [Lords]

Kelvin Hopkins Excerpts

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

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

I shall speak to amendment 21 and new clauses 8 and 13. I will try to be disciplined, as the Minister was, by keeping my remarks as brief as possible, but I would state that while many of us feel that we have seen some progress in terms of transparency for overseas territories, we need a much broader programme of reform so that we stamp out dirty money from the British financial system.

While the Minister referred to amendment 21, he failed to grasp its significance and intention. As with other Brexit-related Bills, the Opposition have many concerns about the wide-ranging powers that this Bill gives to Ministers, and in particular the way in which it gives Ministers the ability to amend, repeal or revoke legislation through regulations without appropriate scrutiny. We frequently cited Lord Judge in Committee, but it is appropriate that I do so one last time in this Chamber. He was very clear about the dangers of this power. As he said, it gives Ministers

“‘regulation-making powers for this, that and the other’”.

He is a very learned person and, as he put it,

“the secondary will override the primary.”—[Official Report, House of Lords, 17 January 2018; Vol. 788, c. 718-19.]

I do not think that many Government Members could disagree with that. Clearly this is an excessive power. It is not justified by the need for speed, for reasons that were well rehearsed in Committee.

The Government have yet again today maintained that these powers are for the sole purpose of combating money laundering and maintaining a sanctions regime, but we heard just a few moments ago that these issues can be highly contentious. There can be different points of view within our parliamentary system on these matters, and that must be reflected in an appropriately inclusive parliamentary procedure.

The Committee advocated by Her Majesty’s Opposition is necessary precisely because the European Scrutiny Committee will not be operating in its same form after we leave the EU, and our sanctions policy will not be derived from the EU once we have left. That is surely the whole point, so we will need another body that can conduct that scrutiny. We will not want Members turning up on an ad hoc basis to a secondary legislation Committee ill briefed, ill prepared and not expert about the topics at hand. That is why we are making our call, and the arguments for such a body are self-explanatory.

[Kelvin Hopkins (Luton North) (Ind)]

I am a member of the European Scrutiny Committee, and we do take the view that after Brexit there should be a Committee that can continue to keep an eye on what is happening in the EU, because that will still be important and very relevant to what happens in Britain.

[Anneliese Dodds]

And that Committee has been able to develop its expertise around some very complex issues. We will not have such expertise in the future without the kind of Committee that we are advocating. It will be spread across a range of Departments, as is the case with our sanctions, so there is a need for a group in which expertise can be built up among Members. Surely that is enormously important.

As the Minister said, new clause 8 would bring forward the timetable for introducing a public register for foreign-owned property in the UK, but it would do so only in relation to the Government’s current proposals. It would actually be behind the initial timetable that we were given by the Government for introducing such a register, according to which we should have seen developments last month, given that today is 1 May. I will not rehearse all the arguments made by my hon. Friend the Member for Hornsey and Wood Green (Catherine West).

--- Later in debate ---

[Hannah Bardell]

Thank you for letting me speak, Madam Deputy Speaker. I was not expecting to get in, so it is a real privilege to have the opportunity to bring up the rear of the debate.

I thank my hon. Friend the Member for Glasgow Central (Alison Thewliss) for her steadfast work on this Bill. I also thank other Members across the House. In particular, we heard an excellent speech by the hon. Member for Oxford East (Anneliese Dodds), who spoke about SLPs and the negative impact—the devastating impact—they have had across the UK. I recently met a Moldovan human rights lawyer at the Council of Europe. Many Members will be familiar with the nefarious activities of the Moldovan Government and certain oligarchs. She—I will not name her—has experienced huge tragedy in her life, being separated from her young son in trying to fight the Government, who are using an SLP to launder money and are engaged in criminal activities.

The point about reputation is really important, not just for Scotland but for the rest of the UK. The Scottish name is being used, and misused, through a piece of legislation. By and large, those who use SLPs are doing so for legitimate reasons, but a few are spoiling it for the many. SLPs are increasingly being abused by money launderers because of their unique characteristics. The hon. Member for Oxford East mentioned the Russian laundromat case, which extracted £16 billion out of Russia between 2010 and 2014. There were 114 SLPs in the laundromat, two of which were core laundering vehicles. Progate Solutions no longer exists—the Sarajevo-based Organised Crime and Corruption Reporting Project uncovered that company and highlighted its activities—but it is still being used to launder money. The hon. Member for Bishop Auckland (Helen Goodman), who has done a lot of work on this, described there being an “explosion” of SLPs. In terms of the statistics, 82% of all SLPs registered at the end of 2016 and 70% of SLPs incorporated during this period are registered at just 10 addresses.

Getting to the core of the issue of transparency, this is about how business is being done now. We look at gender pay reporting and the impact that that has had on business in this country. That is a move forward. It was interesting to hear some Conservative Members talking about resources for us to have the power to investigate these companies. Our very limited and stretched public resources are being used so that our trained taskforces can investigate them. If we bring about a more transparent system and more transparent laws, our vital resources can be directed towards other crimes to protect our citizens. This is fundamentally about protecting our citizens across the UK.

With regard to Companies House, it is important to put it on record that I do not think anybody would want to criticise the staff or the job that they do, but what has happened to some consumers cannot be right. I have had constituency cases where people have bought services or goods, the company has gone bust, and they are left with nothing—neither their money back nor the items. A constituent of mine followed the individuals concerned through their registration in Companies House, and discovered that they had set up a new company and started trading again within a few weeks. She was told by the police that there was nothing that she could do because this was an entirely legitimate practice. It cannot be right that people are allowed to do that. That is why we feel that new clause 2 is so important.

[Kelvin Hopkins]

We have heard from earlier speakers that Companies House is desperately under-resourced, with a small number of staff. Is under-staffing a body not a simple way to make it ineffectual? It should have many more staff.

[Hannah Bardell]

I thank the hon. Gentleman for that point. It is also important to note the point made earlier about how difficult it was to make Companies House bigger or give it more resources or a greater remit. That seems bizarre. I sat on the Public Bill Committee on the Enterprise Bill, in which the Government, in a welcome move, introduced the Small Business Commissioner, which involved setting up a whole new organisation with new resources. The failings of Companies House, to my mind, will work against the Small Business Commissioner and give it more work.

It would be interesting to hear from the Minister on that point. Companies House needs more resource and better oversight. Companies that are not doing business properly and going about their business in the right way are surely a threat to good businesspeople across the UK. If the Government will not support new clause 2, it would be interesting to hear why.

The Panama and Paradise papers have been mentioned a number of times. We know from them that the Odessa oil mafia controls a number of British Virgin Islands companies collectively known as the Rubicon Group. One of those individuals controlled a number of BVI companies without officially declaring them, and that group owns at least eight high-end London properties worth tens of millions of pounds. The secrecy afforded to those individuals, who have questionable sources of income, has allowed them to hide their identities and their wealth.

In the point I made earlier to the hon. Member for Hornsey and Wood Green (Catherine West), I was not criticising the Labour party in any way. I was trying to get across that after the tragedy of Grenfell and given the housing crisis, the rise in homelessness and the fact that these kinds of people own 40,000 properties across London—that is four fifths of my Livingston constituency—and more than 86,000 across England and Wales, we surely face a huge issue and a massive challenge. If we want to tackle the housing crisis, this is how to do it. The Government should be doing something about it, rather than standing by and saying that we already have the powers, when we clearly do not.

I commend the Government for new clause 6, which is an excellent and positive move. However, if the Prime Minister was really serious when she took office about governing for all the people of the UK, there is a great gulf still to cross. There are some serious and important amendments tabled by Members across the Chamber that the Government could put their support behind and in doing so make a real difference to our citizens.

Question put and agreed to.

New clause 4 accordingly read a Second time, and added to the Bill.

New Clause 5

Retained EU rights

‘(1) If and to the extent that anything in the European Union (Withdrawal) Act 2018 would, in the absence of this section, prevent any power within subsection (2) from being exercised so as to modify anything which is retained EU law by virtue of section 4 of that Act (saving for certain rights etc), it does not prevent that power from being so exercised.

(2) The following powers fall within this subsection—

(a) any power conferred by this Act, or by regulations under this Act, on a Minister of the Crown within the meaning of the Ministers of the Crown Act 1975 (however that power is expressed);

(b) any power conferred by regulations under Schedule 2 on a supervisory authority.

(3) In this section “modify” has the same meaning as in the European Union (Withdrawal) Act 2018.”—(Sir Alan Duncan.)

This new clause is consequential on government amendments to the European Union (Withdrawal) Bill, and makes clear that any restrictions in that Bill on the modification of retained EU law do not prevent powers under this Bill (for example, powers to impose an asset-freeze or immigration sanction) from being exercised in cases where their exercise will interfere with a retained right that a person would otherwise have under clause 4 of the European Union (Withdrawal) Bill.

Brought up, read the First and Second time, and added to the Bill.

New Clause 15

Enforcement: goods etc on ships

‘(1) The provision that may be made by virtue of section 17(2) (enforcement of prohibitions or requirements) includes provision as to the powers and duties of prescribed persons in relation to—

(a) British ships in foreign waters or international waters,

(b) ships without nationality in international waters, and

(c) foreign ships in international waters.

(2) Regulations may make provision by virtue of this section only for the purpose of enforcing relevant prohibitions or requirements.

(3) A prohibition or requirement is a “relevant prohibition or requirement” for the purposes of this section if it is—

(a) a prohibition or requirement specified by the regulations which is imposed by regulations for a purpose mentioned in any of paragraphs 2 to 7, 15(a), (b) or (c) or 16(a) of Schedule 1, or

(b) a prohibition or requirement imposed by a condition of a licence or direction issued by virtue of section 15 in relation to a prohibition or requirement mentioned in paragraph (a).

(4) The powers that may be conferred by virtue of this section include powers to—

(a) stop a ship;

(b) board a ship;

(c) require any person found on a ship boarded by virtue of this section to provide information or produce documents;

(d) inspect and copy such documents or information;

(e) stop any person found on such a ship and search that person for—

(i) prohibited goods, or

(ii) any thing that might be used to cause physical injury or damage to property or to endanger the safety of any ship;

(f) search a ship boarded by virtue of this section, or any thing found on such a ship (including cargo), for prohibited goods;

(g) seize goods found on a ship, in any thing found on a ship, or on any person found on a ship (but see subsection (8));

(h) for the purpose of exercising a power mentioned in paragraph (e), (f) or (g), require a ship to be taken to, and remain in, a port or anchorage in the United Kingdom or any other country willing to receive it.

(5) Regulations that confer a power mentioned in subsection (4)(a) to (f) or (h) must provide that a person may not exercise the power in relation to a ship unless the person has reasonable grounds to suspect that the ship is carrying prohibited goods (and the regulations need not require the person to have reasonable grounds to suspect that an offence is being or has been committed).

(6) Regulations that confer a power mentioned in subsection (4)(e)(i) or (f) must provide that the power may be exercised only to the extent reasonably required for the purpose of discovering prohibited goods.

(7) Regulations that confer a power mentioned in subsection (4)(e)(ii) on a person (“the officer”) may permit the search of a person only where the officer has reasonable grounds to believe that that person might use a thing in a way mentioned in subsection (4)(e)(ii).

(8) Regulations that confer a power mentioned in subsection (4)(g) on a person—

(a) must provide for the power to be exercisable on a ship only where that person is lawfully on the ship (whether in exercise of powers conferred by virtue of this section or otherwise), and

(b) may permit the seizure only of—

(i) goods which that person has reasonable grounds to suspect are prohibited goods, or

(ii) things within subsection (4)(e)(ii).

(9) Regulations that confer a power on a person by virtue of this section may authorise that person to use reasonable force, if necessary, in the exercise of the power.

(10) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a British ship in foreign waters only with the authority of the Secretary of State, and

(b) in relation to foreign waters other than the sea and other waters within the seaward limits of the territorial sea adjacent to any relevant British possession, the Secretary of State may give authority only if the State in whose waters the power would be exercised consents to the exercise of the power.

(11) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a foreign ship only with the authority of the Secretary of State, and

(b) the Secretary of State may give authority only if—

(i) the home state has requested the assistance of the United Kingdom for the purpose of enforcing relevant prohibitions or requirements,

(ii) the home state has authorised the United Kingdom to act for that purpose, or

(iii) the United Nations Convention on the Law of the Sea 1982 (Cmnd 8941) or a UN Security Council Resolution otherwise permits the exercise of the powers in relation to the ship.

(12) The reference in subsection (11) to the United Nations Convention on the Law of the Sea includes a reference to any modifications of that Convention agreed after the passing of this Act that have entered into force in relation to the United Kingdom.

(13) In this section—

“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

“British ship” means a ship falling within paragraph (a), (c), (d) or (e) of section 7(12);

“foreign ship” means a ship which—

(a) is registered in a State other than the United Kingdom, or

(b) is not so registered but is entitled to fly the flag of a State other than the United Kingdom;

“foreign waters” means the sea and other waters within the seaward limits of the territorial sea adjacent to any relevant British possession or State other than the United Kingdom;

“goods” includes technology within the meaning of Schedule 1 (see paragraph 36 of that Schedule);

“home state”, in relation to a foreign ship, means—

(a) the State in which the ship is registered, or

(b) the State whose flag the ship is otherwise entitled to fly;

“international waters” means waters beyond the territorial sea of the United Kingdom or of any other State or relevant British possession;

“prohibited goods” means goods which have been, or are being, dealt with in contravention of a relevant prohibition or requirement (see subsection (3));

“regulations” means regulations under section 1;

“relevant British possession” has the same meaning as in section 7 (see subsection (14) of that section);

“ship” has the same meaning as in section 7 (see subsection (14) of that section);

“ship without nationality” means a ship which—

(a) is not registered in, or otherwise entitled to fly the flag of, any State or relevant British possession, or

(b) sails under the flags of two or more States or relevant British possessions, or under the flags of a State and relevant British possession, using them according to convenience.

(14) In the definition of “prohibited goods” in subsection (13), the reference to goods dealt with in contravention of a relevant prohibition or requirement includes a reference to a case where—

(a) arrangements relating to goods have been entered into that have not been fully implemented, and

(b) if those arrangements were to be fully implemented, the goods would be dealt with in contravention of that prohibition or requirement.”—(Sir Alan Duncan.)

This new clause allows regulations under section 1 to provide for powers to stop and search a ship outside the United Kingdom, and to seize goods or technology found on the ship. The powers are exercisable for the purpose of enforcing prohibitions in sanctions regulations relating to the goods or technology.

Brought up, read the First and Second time, and added to the Bill.

New Clause 16

Goods etc on ships: non-UK conduct

‘(1) Regulations may make provision conferring on prescribed persons powers exercisable—

(a) in relation to—

(i) British ships in foreign waters or international waters,

(ii) ships without nationality in international waters, and

(iii) foreign ships in international waters,

(b) for the purpose of—

(i) investigating the suspected carriage of relevant goods on such ships, or

(ii) preventing the continued carriage on such ships of goods suspected to be relevant goods.

(2) The powers that may be conferred by virtue of this section include powers to—

(a) stop a ship;

(b) board a ship;

(c) require any person found on a ship boarded by virtue of this section to provide information or produce documents;

(d) inspect and copy such documents or information;

(e) stop any person found on such a ship and search that person for—

(i) relevant goods, or

(ii) any thing that might be used to cause physical injury or damage to property or to endanger the safety of any ship;

(f) search a ship boarded by virtue of this section, or any thing found on such a ship (including cargo), for relevant goods;

(g) seize goods found on a ship, in any thing found on a ship, or on any person found on a ship (but see subsection (6));

(h) for the purpose of exercising a power mentioned in paragraph (e), (f) or (g), require a ship to be taken to, and remain in, a port or anchorage in the United Kingdom or any other country willing to receive it.

(3) Regulations that confer a power mentioned in subsection (2)(a) to (f) or (h) must provide that a person may not exercise the power in relation to a ship unless the person has reasonable grounds to suspect that the ship is carrying relevant goods.

(4) Regulations that confer a power mentioned in subsection (2)(e)(i) or (f) must provide that the power may be exercised only to the extent reasonably required for the purpose of discovering relevant goods.

(5) Regulations that confer a power mentioned in subsection (2)(e)(ii) on a person (“the officer”) may permit the search of a person only where the officer has reasonable grounds to believe that that person might use a thing in a way mentioned in subsection (2)(e)(ii).

(6) Regulations that confer a power mentioned in subsection (2)(g) on a person—

(a) must provide for the power to be exercisable on a ship only where that person is lawfully on the ship (whether in exercise of powers conferred by virtue of this section or otherwise), and

(b) may permit the seizure only of—

(i) goods which that person has reasonable grounds to suspect are relevant goods, or

(ii) things within subsection (2)(e)(ii).

(7) Regulations that confer a power on a person by virtue of this section may authorise that person to use reasonable force, if necessary, in the exercise of the power.

(8) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a British ship in foreign waters only with the authority of the Secretary of State, and

(b) in relation to foreign waters other than the sea and other waters within the seaward limits of the territorial sea adjacent to any relevant British possession, the Secretary of State may give authority only if the State in whose waters the power would be exercised consents to the exercise of the power.

(9) Regulations that confer a power by virtue of this section must provide that—

(a) the power may be exercised in relation to a foreign ship only with the authority of the Secretary of State, and

(b) the Secretary of State may give authority only if—

(i) the home state has requested the assistance of the United Kingdom for a purpose mentioned in subsection (1)(b),

(ii) the home state has authorised the United Kingdom to act for such a purpose, or

(iii) the United Nations Convention on the Law of the Sea 1982 (Cmnd 8941) or a UN Security Council Resolution otherwise permits the exercise of the powers in relation to the ship.

(10) The reference in subsection (9) to the United Nations Convention on the Law of the Sea includes a reference to any modifications of that Convention agreed after the passing of this Act that have entered into force in relation to the United Kingdom.

(11) In this section—

“regulations” means regulations under section 1;

“relevant goods” means goods in relation to which relevant non-UK conduct is occurring or has occurred;

“relevant non-UK conduct” means conduct outside the United Kingdom by a person other than a United Kingdom person that would constitute a contravention of a relevant prohibition or requirement if the conduct had been—

(a) in the United Kingdom, or

(b) by a United Kingdom person;

“relevant prohibition or requirement” has the same meaning as in section (Enforcement: goods etc on ships) (see subsection (3) of that section);

“United Kingdom person” has the same meaning as in section 19 (see subsection (2) of that section).

(12) In the definition of “relevant non-UK conduct” in subsection (11), the reference to conduct that would constitute a contravention of a relevant prohibition or requirement if the conduct had been in the United Kingdom or by a United Kingdom person includes a reference to a case where—

(a) arrangements relating to goods have been entered into that have not been fully implemented, and

(b) if those arrangements were to be fully implemented (and if the conduct had been in the United Kingdom or by a United Kingdom person) the goods would be dealt with in contravention of that prohibition or requirement.

(13) In this section, the following expressions have the same meaning as in section (Enforcement: goods etc on ships)—

“arrangements”,

“British ship”,

“foreign ship”,

“foreign waters”,

“goods”,

“home state”,

“international waters”,

“relevant British possession”,

“ship”, and

“ship without nationality”.”—(Sir Alan Duncan.)

This new clause allows regulations under section 1 to provide for powers to stop and search a ship outside the United Kingdom, and to seize goods or technology found on the ship. The powers are exercisable for the purpose of seizing goods or technology where there has been conduct (or suspected conduct) which would be a contravention of a prohibition in sanctions regulations relating to the goods or technology, but for the fact that the conduct falls outside the territorial scope mentioned in Clause 19 of the Bill.

Brought up, read the First and Second time, and added to the Bill.

New Clause 17

Procedure for dealing with goods etc seized from ships

‘(1) The Secretary of State may by regulations make provision about the procedure to be followed in connection with goods seized under a power conferred by regulations under section 1 by virtue of section (Enforcement: goods etc on ships) or (Goods etc on ships: non-UK conduct).

(2) Regulations under this section relating to goods seized on suspicion of being prohibited goods or relevant goods may include provision—

(a) requiring prescribed persons to be notified of the seizure of the goods;

(b) requiring the Secretary of State to determine whether the seized goods were, at the time of their seizure, prohibited goods (where the goods were seized under a power conferred by virtue of section (Enforcement: goods etc on ships)) or relevant goods (where the goods were seized under a power conferred by virtue of section (Goods etc on ships: non-UK conduct));

(c) enabling the making of a claim by prescribed persons in relation to the seized goods;

(d) about the determination by a prescribed court of any such claim;

(e) about the publicity to be given to any such determination by a court;

(f) for and about the return of seized goods to prescribed persons before or after any such determination of a claim by a court;

(g) about the treatment of seized goods not so returned (including, in prescribed circumstances, their destruction or sale);

(h) for and about the payment of compensation by the Secretary of State following a determination by a court that the goods were not, at the time of their seizure, prohibited goods (where the goods were seized under a power conferred by virtue of section (Enforcement: goods etc on ships)) or relevant goods (where the goods were seized under a power conferred by virtue of section (Goods etc on ships: non-UK conduct)).

(3) In this section—

“goods” has the same meaning as in sections (Enforcement: goods etc on ships) and (Goods etc on ships: non-UK conduct) (see subsections (13) of those sections);

“prohibited goods” has the same meaning as in section (Enforcement: goods etc on ships) (see subsection (13) of that section);

“relevant goods” has the same meaning as in section (Goods etc on ships: non-UK conduct) (see subsection (11) of that section).”—(Sir Alan Duncan.)

This new clause provides a power for the Secretary of State to make regulations setting out how goods or technology seized from ships under the new clauses which would be inserted by NC15 and NC16 must be dealt with.

Brought up, read the First and Second time, and added to the Bill.

New Clause 8

Public Register of Beneficial Owners of Overseas Entities

“(1) The Secretary of State must, in addition to the provisions made under paragraph 6 of Schedule 2, create a public register of beneficial ownership information for companies and other legal entities registered outside of the UK that own or buy UK property, or bid for UK government contracts.

(2) The register must be implemented within 12 months of the day on which this Act is passed.

(3) For the purposes of this section “a register of beneficial ownership for companies and other legal entities registered outside of the UK” means a public register—

(a) which contains information about overseas entities and persons with significant control over them, and

(b) which in the opinion of the Secretary of State will assist in the prevention of money laundering.”—(Anneliese Dodds.)

This new clause would create a public register of beneficial ownership information for companies and other legal entities outside of the UK that own or buy UK property, or bid for UK government contracts, within 12 months.

Brought up, and read the First time.

Question put, That the clause be read a Second time.