Economic Crime

Lee Rowley Excerpts

Thursday 2nd December 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

Thank you, Madam Deputy Speaker, for the opportunity to contribute to this debate; it has been a good and constructive one and I am grateful to all those who have contributed. In particular, I congratulate the right hon. Member for Barking (Dame Margaret Hodge), who has done extraordinary work in this area for so many years, first on the Public Accounts Committee—I had the privilege of sitting on it a few years after the right hon. Lady, but her reputation went beyond her time there—and now in the all-party parliamentary group on anti-corruption and responsible tax that she is pursuing. I also pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for the extraordinary work he continues to do for so many people, referred to by other hon. Members today, through his all-party parliamentary group on fair business banking. I thank them both for securing this important debate.

I have heard many important points today underlining the evils and dangers of all forms of economic crime—fraud, corruption, tax evasion, laundering, terrorism, potential people-trafficking, organised crime, drugs and the expropriation of public money. I agree with them. Economic crime is every bit as insidious as hon. Members have so cogently argued today. I reiterate that the Government are committed to continuing to build a framework that will deter such crimes and provide the genuine accountability that hon. Members have so accurately outlined through this short debate.

Several hon. Members have outlined some of their own personal experiences from their constituencies, and I know and accept that economic crimes not only represent a significant cost to the economy, but have real-life implications for individuals out there. That is something we must not forget about. I have seen it in my own constituency; just a few months ago I dealt with a gentleman from one of my towns, Killamarsh, who had had £20,000 taken from him in a telephone-based scam. We had to struggle to get that money back from the bank in the first place, but it should not be the responsibility of the individual, and the individual should not have to engage with their Member of Parliament, to get that money back through those processes. The money should never be taken in the first place, and we should prevent such problems before they happen.

On that basis, I accept the challenge here but, without taking anything away from the valuable and important points made today by all hon. Members, I highlight that it is important that the Government pursue a targeted and proportionate level of enforcement, focusing on achieving compliance from companies. I do not think anyone here today would disagree with that in principle. We must seek to counter financial crime, but we must also seek to protect the dynamism of the UK’s business environment.

The overwhelming majority of the UK’s 4.5 million companies contribute productively to the UK company, abide by the law and make a valuable contribution to society, and our responsibility to them is as important as the absolute requirement to crack down on the small minority who misuse the system. We must not undermine the strengths of our current systems nor overburden the law-abiding majority.

Notwithstanding that, the Government are committed to increasing the transparency of business so that those behind the abuse of companies can be identified and our law enforcement bodies can access the information to support their investigations. I know the main question today is one of timing; it is a question of how quickly we get there, and I appreciate the exhortations from hon. Members across the House. I assure them that both the Department I represent and the Government as a whole are working hard to bring forward appropriate measures as soon as we are able. We are taking it seriously, and further information will come forward on that as soon as possible.

I highlight that because it should be clear, based on things we have already done, that the intention is moving in the direction hon. Members want. Consultations were published a couple of months ago, and the Department has published responses on limited partnership reform, increasing transparency, and reforming the powers and role of Companies House—something the right hon. Member for Barking has highlighted throughout the debate. Members have seen a draft Bill to increase the transparency of overseas companies that own property in the UK, as referenced throughout the debate. As Members will know—many Members in the Chamber have been here longer than I have—by convention, the Queen’s Speech outlines the point at which the legislative programme comes forward, and we will do that in due course. I assure the House of the Government’s commitment in that regard.

[Kevin Hollinrake]

The Minister is making a good and important speech. His Department is looking at a review of whistleblowing regulations and legislation. We have heard evidence from across the House that fraud now accounts for something like a third or even 40% of all crimes, and around 40% of those crimes are identified only because of the work of whistleblowers. It is widely acknowledged that whistleblower legislation is falling behind that in other countries. Does the Minister agree that we must focus on that issue in the context of this debate? Whistleblowers are key to finding the information, so that we can crack down on crimes that are facilitated within these organisations.

[Lee Rowley]

I am grateful to my hon. Friend for highlighting that important point. Whistleblowing is a vital part of an ecosystem that works and has appropriate checks and balances. He correctly highlights the need to ensure that our frameworks are appropriate for that, and I know that Ministers responsible for that area of policy are listening to this debate and will take his points on board.

Let me take a moment or two to talk about context. Context is important because, even in a good-natured and constructive debate such as this, it is important to acknowledge some of the work that has been done, while also recognising that Members are keen for us to move further and quicker. In 2015, the Government legislated to ban bearer shares and create a public register of beneficial owners of UK companies, and that register has been a template for countries across the world. Indeed, a number of years on, we still get requests from other parts of the world about it. Since 2016 the Government have made significant changes to the way they tackle money laundering, particularly through new powers in the Criminal Finances Act 2017, which include unexplained wealth orders, new seizure and forfeiture powers for bank accounts, and new protections for the sharing of information.

[Dame Margaret Hodge]

We welcomed moves such as the introduction of unexplained wealth orders, but that is the point we are making: they came in with a great bang, we had one successful one, there was then a failure, and since then there has been almost silence and the power has not been used. There is also a fear of failure, which is related to the fear of having to carry the costs of that failure. The Government could legislate on that, as the Americans have done, so that people cannot claim those massive £2 million or £3 million costs if they succeed in the courts. There is also a lack of resources within the enforcement agencies properly to prepare for such cases. After the case that we lost, investigative journalists showed clearly that falsehoods were told in the courts that led to the failure of that provision. Unexplained wealth orders are a great idea, but they are not being used.

[Lee Rowley]

I am grateful to the right hon. Lady, who is an expert in this area. I hope we all agree that having such legislation in place is a step forward, and that the opportunity and ability to use it is a positive thing. As she has outlined, such measures have been used in some instances, but there have also been challenges. I hope that that use will continue to be made in appropriate areas, and I will certainly pass back her comments to the Ministers who are reviewing this issue.

In 2018, the UK’s anti-money laundering regime was reviewed by the Financial Action Task Force, and the UK received the best rating of any country assessed in that round of evaluations. None the less, there is an acceptance that more needs to be done, and as a number of Members have said, a number of months ago we published the economic crime plan. Progress was updated on top of that, with 52 actions to tackle economic crime, and the Government are on track to deliver 49 of those.



There have been achievements as well, including the commencement of reforms to the suspicious activity reporting regime, with £172 million frozen or removed from potential criminals in a recent reporting year, and the creation of the National Economic Crime Centre, which a number of Members referenced. Its work in the fusion cell in April 2020 highlighted potential criminality, potential challenges and potential investment fraudsters. We are also legislating in the current Finance Bill for the economic crime levy. I hope all hon. Members have seen the action to secure a unified position in the G7 on international anti-corruption efforts, including an agreement to implement and strengthen beneficial ownership registers.

[Stephen Timms]

The Financial Conduct Authority, which reports to the Minister’s Department, has made the case for the Online Safety Bill to be widened to include online fraud. Does he accept the strength of that argument?

[Lee Rowley]

I am just coming to that point, so the right hon. Gentleman pre-empts me, but I am grateful for the opportunity to do so.

We have heard some very good speeches in this afternoon’s debate. The right hon. Gentleman highlighted that point about the Online Safety Bill and the importance of tackling online fraud, which was also referenced by the hon. Member for Glasgow Central (Alison Thewliss), the hon. and learned Member for Edinburgh South West (Joanna Cherry) and—albeit, if he does not mind me saying so, once he got through the cheap shots—the right hon. Member for Wolverhampton South East (Mr McFadden). It is an important point to highlight.

Obviously, a specific Department is pursuing that legislation at the moment. The hon. Member for Glasgow Central, who sits on the Treasury Committee, heard on Monday that there is a variety of views about how best to deal with online fraud and which part of the legislation it should go in; I know that there was an active discussion about that in the Committee a few days ago. I will certainly pass back the comments made by the right hon. Member for East Ham (Stephen Timms). I understand the importance of the matter that he highlights. I think all of us in the House agree about the challenge; the question is what it is appropriate to do and where it is appropriate to do it, but I absolutely heard what he and other Members said about the importance of trying to make progress in that area.

My hon. Friend the Member for Barrow and Furness (Simon Fell) brings to the House a wealth of knowledge and experience in this area, which his very good speech highlighted. He highlighted the extensive work that has been under way for many years, notwithstanding the requirement for more to be done, and, again, the important point about the real impacts on real, ordinary people. This is not a theoretical crime; it is one that has real impacts in all our constituencies, which we will return to this evening and tomorrow.

I know hon. Members are keen to talk about where we are going. The spending review announced just a few weeks ago highlighted a significant amount of taxpayer spending specifically to reform Companies House, to improve the accuracy of the register, to clamp down on fraud and to strengthen the register in the long term. I hope that that announcement and the real money associated with it demonstrate the Government’s intention to make progress in this regard. On top of that, next year the Government will publish a fraud action plan and an updated economic crime plan, we will report on the review of UK money laundering regulations and the supervisory regime, and we expect to receive a corporate criminal liability options paper from the Law Commission. Officials continue to work on the three consultations from the start of 2021.

A constant theme throughout the work on reform has been a mantra from business and transparency organisations alike that the reforms are important and supported, but that they want to get them right. That does not mean we should delay unnecessarily, but we want to make sure that whatever we bring forward—I accept the challenge from hon. Members that they wish to see that happen quickly—we do it in the right way and as quickly as possible.

Let me spend a few minutes on the specific reforms and proposals that have been outlined today, particularly by the right hon. Member for Barking and my hon. Friend the Member for Thirsk and Malton, who secured the debate. The Government will legislate to expand the function of the registrar of companies to include a new function to maintain the integrity of the register of companies and the UK business environment. The registrar will be equipped with new powers to carry out that function, including powers to query suspicious appointments or firings, and in some cases to request further evidence or reject the filing. Companies House will have more extensive legal gateways for data sharing with law enforcement, other Government bodies and the private sector. That will result in more efficient sharing of information on suspicious activity with law enforcement, and the establishment of feedback loops with other Government bodies and the private sector. It will make anonymous filings harder and discourage those who wish to hide their company ownership through nominees or opaque structures.

Alongside the legislative changes I have outlined, Companies House will change. The combination of legislative reform and the transformation of Companies House will help to ensure that the UK is the best place to start and to grow a business, and that companies on the UK register are run responsibly, transparently and with accountability. Hon. Members have noted the draft Registration of Overseas Entities Bill, which has already received prelegislative scrutiny. That legislation will ensure the transparency of ownership and control of overseas entities that own property in the UK, about which concern was expressed.

The right hon. Member for Barking talked about proposed new corporate criminal liability offences. That is still under consideration. As hon. Members will be aware, the call for evidence a few months ago did not prove to be conclusive, so the Government have asked the Law Commission to undertake an in-depth review of the laws around that and to consider recommendations on proportionate opportunities for reform.

I recognise that hon. Members are keen for us to make progress—that desire was expressed very clearly today—but I hope they recognise that much work has been done. This debate has been a timely reminder of the view of this House on an important area and on the desire to make progress. I thank Members who have spoken today and the Backbench Business Committee for the opportunity to discuss this issue. I look forward to making further progress in the months and years ahead.