Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021

Lord Chidgey Excerpts

Tuesday 27th April 2021 Grand Committee

[Lord Chidgey (LD) [V]]

My Lords, I also thank the Minister for his introduction to this debate. It was very precise and to the point. I declare an interest as a member of the advisory board of Transparency International UK.

The Explanatory Memorandum to the SI makes clear that it is intended to update the provisions of the fourth money laundering directive and the Money Laundering Regulations 2007. A principal policy objective is to update and enhance European legislation in line with international standards on combatting money laundering and terrorist financing. Billions of pounds of suspected proceeds of corruption are laundered through the United Kingdom each year. Money laundering is a key enabler of serious and organised crime. Over 100,000 businesses covered under the regulations are required to know their customers and manage their risks.

The UK Anti-Corruption Coalition believes that in terms of perceived gaps in the Government’s approach, they should bring forward economic crime legislation at the earliest opportunity to implement the reforms, together with the foreign property register. I understand that the legislation for this is now waiting to be put through Parliament, having originally been committed to be completed and in operation by 2021. Perhaps the Minister could provide us with an update in his reply. There is also a call for legislative reform to the Criminal Finances Act to ensure that loopholes in it exposed by the latest unexplained wealth order judgment are addressed urgently.

There is a sense that too many professional body supervisors have no appetite to enforce the regulations and are riven with conflicts of interest. There is also the concern that the money laundering supervisors do not meet the specific criteria for effective supervision laid out by the Committee on Standards in Public Life in 2016. Overall enforcement of the money laundering regulations appears, at best, to be patchy.

Transparency International points out that the United Kingdom banking sector acts as an entry point into the UK economy, with leaked banking data showing the movement of billions of pounds in criminal and suspicious funds. Analysis revealed that clients at 72 UK banks and branches sent or received over £750 million in suspicious funds, mostly between 2005 and 2015. Clients at just 10 banks were responsible for sending or receiving more than 90% of these funds. These transactions involved more than 3,100 British bank accounts. However, more than £575 million was paid into just five bank accounts. Surely, this is a clear, transparent case of money laundering on a grand scale. When questioned, all these banks insisted they had strict anti-money laundering measures in place.

The United Kingdom’s anti-money laundering supervision system is disjointed, with real issues regarding conflicts of interest, the quality of supervision, and insufficient and inadequate civil sanctions. Will the Government take note and act on Transparency International’s recommendations for reforming the anti-money laundering supervisory regime? I asked that question in an earlier debate. In particular, will they strengthen the ability of supervisors to provide a credible deterrent, protect the independence of anti-money laundering oversight and remove conflicts of interest, remove weaknesses in the supervisory regime, and ensure that police and supervisors pursue breaches of money laundering regulations through prosecution?

Finally, an overhaul of the United Kingdom’s anti-money laundering regime is vital for preventing money laundering and protecting the United Kingdom’s international reputation. Revelations in the latest FinCEN files leaks, including that the US Treasury considers the UK a high-risk jurisdiction, should serve as a wake-up call.

Covid-19: Economy

Lord Chidgey Excerpts

Thursday 4th June 2020 Lords Chamber

[Lord Chidgey (LD)]

My Lords, since the start of the UK lockdown, the construction industry has been united in supporting the Government with advice and guidance assembled in a Green Paper for consultation. The paper identifies three phases: restart, after three months; reset, in the next year; and reinvent in 12 months- plus. Various construction industry sectors have been identified, including housing, social infrastructure and economic infrastructure, together with the bodies to take the work forward.

The UK Infrastructure Client Group, which includes all the major economic infrastructure clients, will lead the infrastructure strand of the reinvent programme. This work will be delivered by a secretariat provided by the Institution of Civil Engineers, in which I declare an interest as a fellow of that august body.

The Green Paper is the first stage and provides the vehicle on which to gather evidence. Realistically, the lockdown has had a major impact on the UK’s economy, with the potential for that impact to endure for many years, but it will also throw up opportunities to rationalise by making efficiencies and to implement measures that would have been brought in many years ago through a Keynesian need for economic stimulus to reboot the economy.

There will be a real temptation to turn the infrastructural lever in an unsophisticated way, but the overriding issue will be how we produce a plan that allows us to do both. In that regard, the Green Paper calls for evidence in several areas, including what other factors will determine attitudes to public life as we transition to a new normal. What other system changes driven by lessons from the lockdown can we expect to be important in the new normal? Are our assumptions of the new priorities for infrastructure correct and what other changes to infrastructure provision will be needed when based on those assumptions? Can we anticipate the Government’s response to these questions by 14 June, the date on which the consultation closes?

Income Equality and Sustainability

Lord Chidgey Excerpts

Wednesday 6th May 2020 Lords Chamber

[Lord Chidgey (LD)]

My Lords, I, too, congratulate the most reverend Primate on bringing this debate to us this afternoon. I shall make two points, the first looking at the impact of Covid-19 on the economic patterns experienced by different groups of workers and the second looking at the implications further afield on reaching sustainable development goal 16 on peace, justice and strong institutions.

Everyone’s health is at risk from the virus, which is causing workers’ lives to be altered across the country, some more than others depending on the work that they do. I reinforce the words of my noble friend Lady Tyler. The Resolution Foundation has identified four main groups of workers with similar experiences. Of these, key workers are the most exposed to harmful effects, as they are working in jobs where social distancing is very difficult. On the other hand, people working in shut-down sectors are most likely to be feeling the economic effects of the crisis. The other groups—those who can work from home and those who continue to go out to work—can continue with some sense of normality. Key workers and shut-down workers are suffering the most acute consequences, with lower-paid people, particularly the young and women, being the hardest hit. The virus does not discriminate between the rich and the poor, but the economic impact does. It is important for the Government to recognise the challenges and the sacrifices that some groups are more likely to be making than others.

Even before the devastating impact of Covid-19, only 18% of fragile states were on track to meet the sustainable development goal, and violence and conflict was on the rise. Mercy Corps will be debating this in a virtual discussion on 12 May—particularly the influence of weak governance, weak health systems and often significant displaced populations—in response to the virus. As Covid-19 spreads, the risk of violent conflict may increase, locally at first, and at multiple levels in the medium and long term.