Sanctions and Anti-Money Laundering Bill [HL]

Lord Anderson of Swansea Excerpts

Committee: 4th sitting (Hansard): House of Lords
Tuesday 12th December 2017 Lords Chamber

[Lord Beith]

I am grateful to the noble Lord. At the beginning of my remarks, I said that I was referring specifically to the Crown dependencies and not to the overseas territories, on which a different speech might have to be made. I would also have to say that registers of ownership are only as good as the quality of the information contained in them. The decision of Crown dependencies not to have publicly open registers but to have registers fully open to law enforcement and tax authorities, so long as those registers are of a high quality, is what is most important. It can reasonably be argued—and was argued with a noble Lord with responsibilities in this area during our previous debate—that the registers now in existence in the dependencies are actually better enforced than that of Companies House.

[Lord Anderson of Swansea (Lab)]

Is the noble Lord aware that, for the first time, the European Union has published a list of those countries that are countries “of note” in respect of money laundering? It is sad to say that, of those, Guernsey, Jersey and the Isle of Man appear, which is a matter of concern.

[Lord Beith]

The noble Lord bears out my point. The process of challenging anything found to be unsatisfactory is one to which the dependencies are open. That may come from European Union sources or non-governmental organisations, but these are open and democratic societies, in which those challenges can be made. The UK Government have responsibilities and have the means of exercising them already at their disposal.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Anderson of Swansea Excerpts

Ping Pong (Hansard): House of Lords
Monday 21st May 2018 Lords Chamber

[The Minister of State, Foreign and Commonwealth Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, the abuse of human rights was an issue of significant concern to both your Lordships’ House and the other place, as was made clear by many people who spoke at various stages of the Bill. The Government fully recognise why noble Lords and Members of the other place wished to reference gross human rights abuses explicitly, particularly in reference to the abhorrent case of Sergei Magnitsky. In her speech to the other House on 14 March, the Prime Minister made clear the Government’s intention to bring forward a “Magnitsky amendment” to the Bill. As a result, the Government worked closely and constructively with all sides of the other House to table these amendments, which have captured the maximum possible consensus in this area.

Commons Amendment 1 puts gross human rights abuses in the Bill as a purpose for which sanctions may be imposed. Commons Amendment 5 links the existing definition of a,

“gross violation of human rights”,

to the definition in the Proceeds of Crime Act 2002, and so ensures that it includes the torture of a person,

“by a public official, or a person acting in an official capacity”,

where the tortured person has sought to,

“expose illegal activity carried out by a public official”,

or to defend,

“human rights and fundamental freedoms”.

This makes it clear that all gross human rights abuses or violations are explicitly captured within the Bill. Commons Amendments 2, 3, 6, 7, 8, 14, 15, 19 and 20 are consequential on the changes to Clause 1.

Amendment 17 requires reports to be made about the use of the power to make sanctions regulations. Reports must identify regulations that have been made for human rights purposes. They must also specify any recommendations made by a parliamentary committee about the use of that power in relation to gross human rights violations, and include the Government’s response to any recommendations. It is right and proper that scrutiny of the regulations is carried out by Parliament.

Commons Amendment 16 was tabled in recognition of the concerns, raised by both the Independent Reviewer of Terrorism Legislation and the Joint Committee on Human Rights, that the repeal of Part 1 of the Terrorist Asset-Freezing etc. Act 2010—TAFA—would remove the independent reviewer’s oversight of the UK’s counter-terrorism asset freezes. I can assure all noble Lords that there was never any intention by the Government to remove independent oversight of the UK’s counter- terrorism asset-freezing regulations made under this Bill. That is why a carefully drafted government amendment was tabled in the other place to replicate effectively the scope of the independent oversight currently provided under TAFA. This ensures that there will be no removal or narrowing of the oversight of counterterrorism asset freezes as a result of the Bill.

The amendment also makes the Government’s commitment to this clear by imposing a duty to appoint an independent reviewer. The duty applies to any part of sanctions regulations that imposes asset freezes that are not made for a purpose that implements international obligations in this area but would further the prevention of terrorism. This is consistent with the scope of the independent oversight provided for under TAFA, thereby ensuring there is no removal or narrowing of the oversight of counterterrorism asset freezes as a result of the Bill.

I put it on record again that the Government are committed to promoting and strengthening universal human rights, and holding to account states and individuals responsible for the most serious violations. We will continue to do this after we leave the European Union and we intend that the powers in the Bill should allow us to be part of a global network of like-minded jurisdictions, working together to tackle those who commit gross human rights violations. We will continue to work with international partners to this end. I beg to move.

[Lord Anderson of Swansea (Lab)]

My Lords, it is good to turn to a period of calm after the clash and clamour of Brexit. I congratulate the Government on responding to the pressures in this House and the other place, and on taking a stand that I hope will be followed by other countries where appropriate. The current amendments relate to sanctions on the perpetrators of human rights abuses, wherever committed, and against individuals rather than states. They are therefore smart sanctions and I congratulate Sir Alan Duncan in the other place and those who have worked together. The Minister stressed that it was an all-party group and I believe the amendments in the other place were signed by all parties. This is therefore very important.

I congratulate also Bill Browder, who has worked tirelessly following the murder in custody of Sergei Magnitsky. These amendments are made in the context of the poisoning of Sergei and Yulia Skripal in Salisbury and the murder of Magnitsky in Russia in 2009, but they are clearly not limited to Russia. They are much broader and universal, just as the Magnitsky Act of 2012 in the US was, in 2016, broadened to include perpetrators of gross human rights abuses wherever committed. As the Prime Minister has said:

“There is no place for these people—or their money—in our country”.

--- Later in debate ---

I repeat that the measures called for are not the ideal ones to address anti-money laundering. We certainly need to include all non-local companies and to have verification, and our arrangements lack that. Public registers are rather cheap political playing to the gallery, saying “Aren’t we wonderful to have done this?”, ignoring the fact that what we have established in the UK does not work properly. I hope the Government will think again and find a sensible and reasonable way to implement this legislation but that, if necessary, it will be put to judicial review.

[Lord Anderson of Swansea]

My Lords, the use by Russia of dirty money was highlighted in the report today of the Foreign Affairs Committee in respect of counterterrorism and so on. It is clear that although the two Members who have just spoken did so with great passion and knowledge, they failed to take on board the actual figures. Global Witness says that at the moment there is £34 billion of Russian money in the overseas territories, £30 billion of which is in the BVI. Why does the Russian money go there? Is it suggested that all that money is clean? Noble Lords will recall that when the noble Lord, Lord Faulks, and I among others were pointing out areas of property investment in London, we said there are several streets in the Royal Borough of Kensington and Chelsea, which we both know well, where the lights never go on at night because money—

[Lord Flight]

My Lords, does the noble Lord, Lord Anderson, have the figure for black Russian assets in the UK? I imagine that there is substantially more than £30 billion.

[Lord Anderson of Swansea]

My Lords, with the public register of beneficial ownership it should be possible to obtain those figures. It would be absurd if money that fled from the London property market went to the overseas territories and sought a haven there. Anyway, the figures that are given—I am very happy be told that the they are incorrect—are that £34 billion of Russian money is currently in the overseas territories, £30 billion of which is in the BVI, and there has been over £100 billion over the past decade. Surely a proportion of that at the very least is dirty money, and the question must therefore be posed: are we prepared to countenance dirty money finding a haven in the overseas territories? That is what is suggested.

We have to respond very sensitively. Of course there will be an economic impact, and that will only be exacerbated by the impact of the hurricane, particularly in the BVI. Because of the UK’s responsibility to these overseas territories, we will have to bear at least part of the cost, but surely we should not countenance the position that I have mentioned. If the Minister has figures other than this £34 billion, I am very happy to hear them, and if he suggests that none of that is dirty money then I will be happy to hear his view, but surely it is in everyone’s interest that dirty money be pursued wherever it is and that there be a publicly accessible register.

At the same time, the economic impact should be recognised, along with the possible damage to the constitutional position. If those countries wish to go independent, so be it. Fairly recently there was a report on the contingent liabilities to the British taxpayer of the overseas territories. I wonder where the balance would lie, if a number of these countries went independent, regarding the amount currently spent by the British taxpayer. I am happy with that, but the question must remain: if these figures are correct, and if it must be that a portion of that sum is dirty, are we prepared to allow that to continue?

[Lord Northbrook (Con)]

My Lords, is the noble Lord, Lord Anderson, aware that none of the overseas territories is on the EU blacklist of non-co-operative tax jurisdictions as of December last year?

[Lord Anderson of Swansea]

That may well be the case, but I pose the question again. There is this £34 billion of Russian money. We know that the oligarchs look for areas where they can usefully hide their assets. Are we prepared to continue to allow that?

[Lord Neuberger of Abbotsbury (CB)]

My Lords, I strongly support the amendment of the noble Lord, Lord Naseby. The clause which he seeks to remove from the Bill is a classic example of a proposal which may seem right to many people—for the reasons given so clearly by the noble Lord, Lord Anderson of Swansea—but, after proper consideration can be seen to be very wrong.

Unlike most countries, our constitutional arrangements are based on conventions and mutual respect rather than pieces of paper, and we break those conventions and trample on that mutual respect at our peril. As the 2012 White Paper on the territories recognised, the UK’s legislative power over the territories is in practice and by convention limited to,

“external affairs, defence, internal security (including the police) and the appointment, discipline and removal of public officers”—

and, I would add, compliance with the UK’s international obligations. Accordingly, the proposal would run contrary to the established distribution of powers—quite apart from the points made about the constitution of some of the territories.

Not only that, it would do so in a most inappropriate way. There has been no consultation with the democratically elected Governments of any of the territories about the legislation. There has been no investigation of the effectiveness of this law in relation to any of the territories. There has been no inquiry as to the economic and social consequences of the legislation on any of the territories. That is in circumstances where, to go back to what the White Paper said, the UK Government aim,

“to work with Territories to strengthen good governance arrangements, public financial management and economic planning”,

to work with the territories.

I regret to say that the proposed law appears to be old-style colonialism at its worst: damaging legislation which has no cost for the legislating country but which will cause hardship to the victim countries, and does so not merely without representation but without consultation or full investigation. But it gets worse. The law is imposed in circumstances in which it is indisputable that the BVI, Cayman and Bermuda comply with all current international transparency and taxation requirements, such as those laid down by the OECD. This was recognised by the very full and generally rather critical December 2017 EU Muscovici report, which identifies which countries are unco-operative by hiding assets, and so on, and it does not include any of the territories.

[Lord Neuberger of Abbotsbury]

I believe that is the case, yes. I was going on to say that in many respects it appears that all three territories which I mentioned have a regulatory regime which in many respects is stricter than that of this country.

On top of all this, this proposal imposes a financially damaging regime on at least three territories in the Caribbean area with significant financial service industries for which the UK has responsibility, while not doing so for the Crown dependencies with substantial financial service industries closer to home: Jersey, Guernsey and the Isle of Man, for example. That adds discriminatory insult to unconstitutional and unfair injury. Let me make it clear to the Crown dependencies that I say this to oppose the proposed law applying to the territories, not to support it applying to the dependencies.

Finally, what will happen if this unfair and unjustified law is brought into force, apart from leading to a real sense of grievance and of being let down on the part of small states which it is our duty to protect? It will do no good. If there is the hot money to which the noble Lord, Lord Anderson of Swansea, referred, it will quickly move away from the BVI, Cayman and Bermuda to places which do not have respected democratic Governments and independent and respected courts, where the Judicial Committee of the Privy Council, which I had the honour to chair for five years, has no power. In effect, it will not be upholding the rule of law, it will be undermining it.

It will be only when we have universal acceptance of such regulation that, I respectfully suggest, it will be appropriate to impose it on these territories.

[Lord Anderson of Swansea]

With respect, is that not avoiding the question in an Augustinian way: make me good, but not yet, not until everybody else is good?

[Lord Neuberger of Abbotsbury]

So we have to sacrifice other people many miles away who have no say in it for the purpose of feeling good and leading the way? That seems to me, if I may say so, a very selfish attitude to take. It is simply inappropriate for us to do this for other countries.