Economic Crime: Law Enforcement

Kevin Foster Excerpts

Thursday 7th July 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)]

This is certainly an interesting day to be responding to a debate. As is the case with the shadow Minister, this is not my usual field, but I agreed to respond to this debate about a week ago. [Interruption.] It is always nice to have those comments from the Deputy Leader of the Labour party. It is always a pleasure when she joins us.

I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the right hon. Member for Barking (Dame Margaret Hodge) for securing this debate, and all the other Members who have contributed. It was good to have the rare chance of hearing from my good friend, the hon. Member for Strangford (Jim Shannon).

We all agree that economic crime poses a threat to the integrity of our economy, and to the security and prosperity of the UK and our allies. Let us not forget the innocent victims who suffer both emotionally and financially at the hands of unscrupulous fraudsters. Economic crime, as outlined by many who contributed, affects more UK citizens more often than any other crime type, and we have heard many examples of that today.

The UK has one of the world’s largest and most open economies, and London is one of the world’s most attractive destinations for overseas investors. Those factors make the UK attractive for legitimate business and contribute to our prosperity, but the Government accept that they also expose the UK to the risk of money laundering via some of those processes.

The public/private economic crime plan published in 2019 provided impetus and direction for our collective efforts in this area, including strengthening law enforcement and increasing domestic and international co-operation. There has been progress in tackling the threat. For example, in recent years we have built some key capabilities, including the creation of the National Economic Crime Centre and substantial reform of the suspicious activity reports regime.

As a number of hon. Members touched on during the debate, we have enacted the Economic Crime (Transparency and Enforcement) Act 2022, introducing reforms to enable law enforcement to take more effective action against kleptocrats who launder their funds in the UK. We have also legislated for a levy on the anti-money laundering regulated sector, which from next year will raise £100 million a year to help us to combat economic crime.

I hear some of the concerns expressed by colleagues about the potentially fragmented nature of the enforcement landscape, yet I would emphasise that that does not mean there is not joint and co-ordinated working between the law enforcement agencies concerned. The ever-evolving and clandestine nature of economic crime requires a multi-agency response, drawing together the relevant expertise, capability and resources to effectively tackle this challenge head-on.

The Government believe that the National Economic Crime Centre plays a leading role in setting strategic priorities for the enforcement response to economic crime and bringing agencies together. The NECC leads intensification campaigns to prevent, prepare for and protect against economic crime and to pursue those responsible for it. Co-ordinated by the NECC, the joint money laundering intelligence taskforce serves as a world-leading model of best practice, enabling tactical and strategic intelligence sharing between the public and private sectors to better tackle economic crime and support high-priority operations. However, we recognise the need to go further, as many hon. Members have set out.

[Dame Margaret Hodge]

I note the Minister’s theoretical description of what happens, but the practice, for anybody who puts any allegation that we get from whistleblowers into the system, is that it just gets passed from one agency to another and it then falls down a black hole and we never hear about it again. While theoretically co-operation and co-ordination take place, in practice they do not. The other thing I would say is that, if in practice the system is working so brilliantly, why are prosecutions and convictions down by so much when we know economic crime is going in the opposite direction?

[Kevin Foster]

We would accept there is a need to go further and certainly, following today’s debate, we look forward to the debates we will have on the forthcoming Bill. From what we have heard today, I think Members across the House will have thoughts, opinions and valuable contributions to make on how we can strengthen our regime, in both its legal construction and its direct impact.

We recognised in the 2021 spending review the need to invest in this area. The economic crime levy, combined with public contributions, is now an overall package of £400 million to tackle economic crime over the next three years. In the wake of Russia’s invasion of Ukraine, the National Crime Agency established a new combating kleptocracy cell specifically to combat corrupt elites, their dirty money and those who enable them to abuse our financial system. We also recognise that we need to further empower law enforcement through the forthcoming economic crime and corporate transparency Bill, which will be designed to tackle economic crime and protect our national security while supporting enterprise. The Bill will include much-needed reforms to Companies House and limited partnerships, with additional powers to seize suspect crypto assets more quickly.

[Alison Thewliss]

I welcome all reforms of Companies House, but will the Minister put it on a proper footing and make Companies House an anti-money laundering supervisor in its own right, so that it does not have to rely on third parties to fulfil that function?

[Kevin Foster]

We will set out the details in the Bill and we look forward to the debates on it, but certainly we are clear that the registrar of companies should become more of an active gatekeeper for company creation and a custodian of reliable data, including powers to check, remove or decline information submitted to it. In her contribution, the hon. Lady rightly gave the example of someone setting up a company in the name of “Donald Trump”. Clearly that was not a legitimate company being established—[Interruption.] Some hon. Members may have missed that particular example.

Some of the changes are on identity verification. In my normal role talking about immigration, we do quite a range of work on ensuring that people can validate who they are and what their status is, and we want to bring a lot of that practice into the area of company formation to remove some of the worst examples we have heard about today. I accept that many people will see that as overdue, but it needs to be done and it is something we intend to legislate on and bring forward as a key change to our enforcement structure, to ensure there are fewer opportunities to abuse the system of company registration here in the UK.

Comments have been made about the resources of the National Crime Agency. We have increased its budget year on year since 2019. Taking all NCA funding into account, its budget has increased by 32% since 2019.

In response to concerns on corporate criminal liability laws, which a number of colleagues picked up on in the debate, we have sought to establish whether there is a case for change. I think it was my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) who referred to the Law Commission and the review we asked it to undertake. As he rightly says, it sets out several options for reform; he outlined his view that he would like to see us accept them, and we are assessing them. Certainly, that is something we specifically asked the Law Commission to do because we believe it is an area that needs careful consideration.

[Sir Robert Neill]

I know the Minister wants to assess the options, but he will be aware that that debate has been ongoing for a number of years now, well in advance of its referral to the Law Commission. The matter has been debated in political circles and in legal and judicial circles for a great deal of time and there is a huge amount of information there, so I hope he can come to his assessment very quickly.

--- Later in debate ---

[Kevin Foster]

Obviously, it would be tempting for me, at the Dispatch Box in the current situation, to make a raft of pledges on behalf of the Government about all the things I might like to see happen. At this stage, I will say that I share my hon. Friend’s enthusiasm for coming to a conclusion on our assessment fairly quickly.

My hon. Friend the Member for Cheadle (Mary Robinson) in particular talked about whistleblowers. We recognise the value of whistleblowers’ being prepared to shine a light on wrongdoing and we believe they should be able to do so without fear of recrimination. I want to make it clear that workers can seek redress through the whistleblowing regime if they are dismissed or suffer detriment because they have made a protected disclosure. It is worth noting that uncapped compensation can be awarded by an employment tribunal to reflect this.

If a whistleblower does not feel they can blow the whistle to their employer, they may make a disclosure to a prescribed person. There are over 80 prescribed persons and the Department for Business, Energy and Industrial Strategy regularly publishes guidance for them and updates the list of prescribed persons.

[Kevin Hollinrake]

I appreciate the fact that the Minister is covering this brief. On the point he makes, if whistleblower legislation works, then why has my constituent Ian Foxley, who blew the whistle on GPT Special Project Management in 2011—a company that was found guilty last year and faced £28 million in financial sanctions—been without a single penny of compensation or a single penny of earnings for 11 years? The legislation is not broad enough or all-encompassing, and it needs urgent reform.

[Kevin Foster]

As always, my hon. Friend makes a powerful case for going further. He will be aware that the Government have committed to a review of the whistleblowing framework, and we are considering the scope and timing of that review. We would certainly be happy to engage with him about how that could be taken forward effectively, particularly given examples such as the one he has cited, although he will realise that I do not necessarily want to comment on individual cases from the Dispatch Box.

This has been a helpful and productive debate. I reassure colleagues that the Home Office and the Treasury, when leading the policy response for Government, ensure that we do so through a governance structure that oversees activity across the system. This is not the only area where our two Departments work together in the national interest to deliver the overall objectives we wish to see.

In closing, I again thank all right hon. and hon. Members for their contributions to this debate. This is an immensely important subject and an area in which we will shortly see significant legislation brought before the House for colleagues to scrutinise, examine and develop, as I know they will want to. Certainly, from what we have heard in this debate, there will be many positive and constructive engagements in that debate. That is something we very much look forward to, because, as has been said, this is not just about tackling crime; it is ultimately about keeping our nation and its allies safe.