Sanctions and Anti-Money Laundering Bill [HL]

Lord Beith Excerpts

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

[Baroness Sheehan]

My Lords, I support Amendment 76, to which my name is attached. It would amend Clause 45, which lays out the “Parliamentary procedure for regulations”. The amendment gives substance to the recommendation in the eighth report of the Constitution Select Committee which, at the end of paragraph 6, said:

“If it is the Government’s intention that it would, in practice, liaise with the devolved administrations prior to the exercise of this power, such a requirement could be written into the Bill”.


The Government have argued that this power reflects a reciprocity with that which enables Welsh or Scottish Ministers to amend Acts of Parliament. However, reciprocity can be said to operate only where one is comparing similar powers; this is not the case here. Welsh and Scottish legislation can authorise devolved Ministers to amend UK legislation only within devolved competence, whereas UK legislation can authorise UK Ministers to amend enactments of the devolved legislatures irrespective of devolved competence.

I believe this to be a common-sense amendment, one that seeks the consent of the devolved nations before amending any Act passed by the Scottish Parliament and any legislation passed by the Assemblies of Wales and Northern Ireland. Dare I say it, consultation with the devolved nations may save the Government from further embarrassments such as the fiasco with the DUP that we witnessed, open-mouthed, just last week.

[Lord Beith (LD)]

My Lords, I add to my noble friend’s wise reference to the Constitution Committee the fact that the committee also pointed out that there is ample precedent for the sort of amendment that is being discussed here. For example, certain statutory instruments made under the Legislative and Regulatory Reform Act 2006 and the Public Bodies Act 2011 have comparable provisions, and there seems no reason why the committee’s advice should not be taken in this case.

[Lord Davidson of Glen Clova (Lab)]

My Lords, this amendment is a useful reminder that the Brexit process needs to reflect the devolved nature of the United Kingdom. I take this opportunity of looking at this amendment to make certain observations more broadly and, indeed, to go back to the previous group where the Minister referred to a UK property register. He will be aware—and if he is not aware, he will no doubt be told by those sitting beside him—that the United Kingdom property register covers the whole United Kingdom via three separate registers. Indeed, two of those registers come from jurisdictions which voted by a majority to remain in the EU. Plainly the Minister does not intend to give ammunition to those who wish to withdraw from the UK. This Bill, and this part, are aimed at enabling withdrawal from the EU. That is one objective. There is a body of people who will find ground for complaint in more or less anything that in some way does not take account of the separate nature of various bits of the United Kingdom. With that small warning, I commend this amendment, and leave it at that.

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[Baroness Northover]

I thank the noble Lord for that clarification, which is very helpful.

[Lord Beith]

My Lords, I am bound, which will be no surprise to my noble friend or to the Labour Front Bench, to express some reservation about conclusions that might be drawn from this amendment but which were perhaps not intended in the way in which it is framed. In doing so, I am speaking purely about the Crown dependencies and not about the overseas territories. My interest in the Crown dependencies is minor, and recorded in the register, but my real interest is having been involved in the production of reports which helped to set the framework for the relationship between the Crown dependencies and the United Kingdom. My thanks go particularly to my noble friend Lord McNally, when he was the Minister responsible, for implementing those reports.

It is partly a matter of tone and partly a matter of phraseology, but our relationship with the Crown dependencies recognises that these are democratic jurisdictions that are fully open to media scrutiny—not just local media, but national and international media as well. They have both legislative and administrative autonomy to a significant degree. In the case of their legislative autonomy, it is recognised by this Parliament that it is for the authorities in the Crown dependencies to pass their own legislation. However, the process by which they secure Royal Assent for it, involving the Privy Council, is one that gives Ministers a full opportunity to raise any issues they might need to raise that touch on UK Ministers’ responsibility for the international relations of Crown dependencies. That responsibility is exercised by Ministers who will look at legislation in that light.

What we discouraged at the time I was chairman of the Justice Committee is Ministers merely marking the homework of Crown dependencies, and saying, “If we were legislating in this way about dogs, or whatever, we would not phrase the legislation like this”—a wholly time-wasting and pointless exercise. But where a UK responsibility arises, as it does in the case of international treaties, for example, it is entirely appropriate that Ministers seek to ensure that there is proper compliance on the part of dependencies. Of course, the autonomy that dependencies enjoy also applies to the administration and enforcement of law; that administration is something for which they are democratically accountable and is open to any scrutiny and international criticism that media and non-governmental organisations can produce.

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[Lord Collins of Highbury]

Does the noble Lord not acknowledge that not all overseas territories are compliant in terms of public registers, which this Government have said is a necessary prerequisite, or thing to have, to ensure increased public confidence? Does he not think that that is something we should expect from all our territories?

[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.

[Lord McNally]

My Lords, these exchanges show some of the dilemma of dealing with this issue. I ask a fairly simple question when I look at these things. Why should a financial services organisation decide to base itself on some microdot in the Caribbean to provide its services? Once you ask that question, you begin to wonder whether it is to avoid the kind of rigour and inspection that they get in more well-established centres. As I said in my earlier intervention, I worked for three years with the Crown dependencies, ably aided by the Minister, in his then capacity as a Whip. I made two points. One, which I mentioned earlier, was my advice to them to make sure they answered the various questions put to them with full candour and transparency. I pay tribute to the Justice Committee under the chairmanship of my noble friend, who put forward a range of suggestions. Another point was that the British Government should get their act in better order. Sometimes, the job was to make sure that, when getting this dealt with, Whitehall departments were sufficiently accessible and aware of the particular status of the Crown dependencies.

During those three years of experience, I was impressed by the qualities of the Civil Service and the representatives of the Crown dependencies in dealing with these issues. That does not take away the fact that they, and we, have to face the fact that, as the noble Lord, Lord Collins, said, it is our reputation that is at stake. I had nothing to do with the overseas territories, but there is a qualitative difference which needs to be looked at between their standards of supervision of financial services and those of the Crown dependencies. I take the point made by the noble Lord, Lord Anderson, about the Isle of Man and Jersey. I hope they are both addressing what it is that has landed them on that list. That is something for their processes, because this is damaging to them, although there may be other jurisdictions within the EU which could not bear too close examination.

This is in our national interest. It is not us playing the neo-colonial or trying to order them about. We are defending our national interest when jurisdictions are seen as British Overseas Territories. When I had to learn that very peculiar lesson, the first thing I was told was that we joined them; they did not join us. The difference in constitutional relationship is because they were part of the Duchy of Normandy that conquered us. Nevertheless, the Channel Islands and the Isle of Man have to understand that their meeting the highest standards is going to be a legitimate interest of the British Parliament and British Government, in defence of Britain’s reputation.

Sanctions and Anti-Money Laundering Bill [HL]

Lord Beith Excerpts

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

[Lord Neuberger of Abbotsbury (CB)]

Judging by how the territories have behaved in the past, it seems pretty clear that we would not need to. They would comply, as they are currently doing, as the noble Lord, Lord Flight, said, with all their international requirements—indeed, going further than what is required. I would respectfully suggest that we should be supporting the amendment of the noble Lord, Lord Naseby.

[Lord Beith (LD)]

We should surely consider very carefully when what seems like a very necessary measure to tackle a great evil confronts a constitutional objection; this is not the way in which such a measure ought to be introduced. There are also qualifications I might make about the potential effectiveness of the public open registers to be imposed on these territories in dealing with the evil being addressed. But there is no question that those who are advancing the case are doing so because they see an urgent need to tackle this evil and see this as likely to help.

However when it comes to a constitutional objection, we have to think carefully. There are two constitutional issues at play: one is that the elected House has made a clear decision, following debates in both Houses, that we should proceed along this road. We have to accept that, as the Government have done. But we cannot do so without reflecting on the impact this will have, and in particular on the constitutional status of the territories concerned. They are, of course, a wide variety of territories, defined in Schedule 6 to the Nationality Act. That includes not just the British Virgin Islands, the Cayman Islands and Bermuda but the British Antarctic Territory, the British Indian Ocean Territory and the Pitcairn Islands, with about 50 inhabitants. It is not entirely clear how the Minister with responsibility—the noble Lord, Lord Ahmad, of course—will deal with the situation as it will affect some of those territories.

That variety also illustrates that there is a range of democratic and other development in this list of territories which includes many at different stages. The territories that have attracted most attention are those which, by and large, have well-embedded constitutional arrangements, introduced by this country, of which a major component is legislative autonomy. The question that we now have to answer is: what do we do about the legislative autonomy that we purport to have given to people, if outside the parameters set when we gave that autonomy we then seek to legislate for them? That question remains unanswered in this process.

When Britain decided what its policy towards former colonies would be, it did not take the French approach. The French approach, in relation to a number of territories, including neighbours of the territories we are talking about today, was to treat them as integral parts of France and give them representation in the National Assembly. We are having this argument and nobody from any of the overseas dependent territories is able to take part in the debate; it is all being done by people who, for different reasons, are aware of them, friendly towards them or simply, in my case, see it as a constitutional issue for them.

We did not take that approach. Are we now saying that the idea of developing them as separate democracies through legislative autonomy is not one that we will pursue any more? We will have to give them some kind of assurance if they are to understand what their constitutional relationship is. Britain is not just a franchise brand that we offer and take away at a moment’s notice. It is a country which has promoted the democratic development of its former colonies and we have to ask whether we can really do that if we insist on legislating for them in areas for which we have given legislative autonomy.

There was a question from the Labour Front Bench a moment ago about what would happen if there was an international standard and one of the territories declined to implement it which, as has been pointed out, has not been their practice up to now. They have implemented all the international standards. However, it is a perfectly legitimate question and the answer is that this is an area in which we have not given legislative autonomy to those territories. We have retained UK responsibility to deal with their international relations and their compliance with international treaties. We would indeed impose, in those circumstances, exactly within the parameters of legislative autonomy that has been given.

I pay tribute to the efforts devoted to this subject by the Minister, which I think are partly motivated by the fact that he has to deal with the consequences. He is the person who is responsible for our relations with these territories. But how can we reassert the constitutional relationship between the United Kingdom and those territories to which it has given legislative autonomy in the context presented by the decision that the House of Commons has taken?

[Baroness Butler-Sloss (CB)]

My Lords, I am a vice-chairman of the All-Party Parliamentary Group for Gibraltar, which, apart from one brief mention by the Minister, has not been so far commented on. Listening to the noble Lord, Lord Anderson, I wondered, as between the United Kingdom and many of the overseas territories, where the mote and the beam lay. I will not pursue that any further, but I think that it may be where the noble Lord may not appreciate that it is.

Gibraltar is entirely compliant with all the current requirements. It is bringing a public register into its law early next year. It is unnecessary, unhelpful and inappropriate that Gibraltar should be held under the clause proposed in Amendment 22. It is not an appropriate way in which to deal, as the noble and learned Lord, Lord Neuberger, and the noble Lord, Lord Beith, have already said, with a country that has had its own constitution since 2006 and is entirely compliant. It is sad to find that countries such as Gibraltar should be under a proposed regime that would interfere with its constitution, as has already been set out.

It is obvious that what should have happened—it seems to me that the Minister was making it very clear—is that there should be encouragement to those countries that are not yet sufficiently compliant. However, that does not apply to any of the countries that have so far been referred to. It is very sad indeed that the way in which the other place has behaved on this matter brings us to this unhappy situation, pointed out so admirably by the noble Lord, Lord Beith.