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.