Economic Crime and Corporate Transparency Bill

Lord Clarke of Nottingham Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Lord Clarke of Nottingham (Con)]

My Lords, I too congratulate the Minister on his new position, and congratulate the Government on bringing forward this Bill. It is probably the most significant of several steps which have been taken in recent years to begin facing up to the enormous problem that we face of financial crime generally, fraud generally, and money laundering. It also addresses the presence of overseas criminals in this country.

I think that the main point of this debate and of your Lordships’ proceedings will be to make sure that the splendid policy intentions that lie before it, and which I suspect have almost universal support in this House, are turned into something that makes a real, practical difference on the ground. That has not always been the case in the various pieces of legislation that we have had since 2016. For example, one of the most important introductions that the present Government made was to introduce unexplained wealth orders—but we have not had many of them made. They are extremely difficult to enforce. The acquittal of someone charged under the unexplained wealth order is extremely expensive to the prosecuting authority and a considerable deterrent to proceeding. That kind of thing has been repeated in many instances in the more recent legislation.

I am particularly influenced by an experience that I had in my last period in the House of Commons, as Father of the House. I was one of quite a number of Conservatives who voted with Members from all the other parties in the House to defeat the Government and insert in a Bill a requirement that our overseas territories, places such as the British Virgin Islands and the Cayman Islands, should have a public register. The Conservative contribution to that vote was led by Andrew Mitchell. He is now in the Cabinet. I am almost certain that Kevin Hollinrake, now the responsible Minister, also supported that Conservative rebellion.

Of course, its practical effect was practically nil, because shortly thereafter I discovered that the public register that appeared in these places contained information that was almost comically valueless and misleading in the case of those suspicious companies that had registered in those territories. One rapidly discovered of course that Companies House here, which had moved to having a public register, was equally fooled by suspicious companies giving valueless information for those trying to enforce the law and those trying to protect themselves. So we do not want a repeat, whereby the legislation sets out a legal position that makes us all highly satisfied and proud but which on the ground makes remarkably little difference.

In recent years, sadly, I have got into the habit of referring to London as the money laundering capital of the world. Most of the most sophisticated and prosperous financial criminals know perfectly well that London is an attractive place to go to and that, while it has quite a good reputation in most ways, it is a comparatively easy place to find some professionals, lawyers and accountants to help you clean the money, obscure its origins and invest it in a variety of attractive and realisable assets, ranging from very expensive accommodation in Chelsea to football clubs or anything else that takes your fancy. So what we actually need is not attractive legislation on the subject but legislation which turns rapidly into considerable change on the ground, where London is no longer an attractive place for criminals from around the world and is no longer subjecting our society to the ever-increasing volumes of financial crime which we have been experiencing in recent years.

In the Commons, a very large number of cross-party amendments were tabled with this objective. Quite a few have already been referred to today. I find myself in the position of being lucky enough to be allowed to speak fifth in the debate but already having to avoid being repetitive. I hope that the entire debate continues to be repetitive, because that will give the strongest possible message to the Government that, again, while I congratulate them on having been responsive in the House of Commons, adopting some changes and responding to them, we have been promised more and we wait to see what will be done as soon as possible in the Lords to give effect to the intentions already pronounced in the Commons. The Government should take on board that there is almost universal support for their policy but not yet adequate satisfaction that it will make the significant difference that we hope for in rescuing people and rescuing the country from financial crime.

The key part of the Bill, and the only part that I will touch on without repeating what has already been said by the noble Lord, Lord Fox, and others, is the transformation of Companies House, which I think will take place. It will be transformed from being just a registrar of companies to being an accurate registrar of companies, and one that investigates the accuracy and verifies the accuracy of its own register and has enforcement powers. The Bill gives Companies House very extensive new powers. The broad-brush point underlying the changes that are being pressed for is that those powers should be turned into legal obligations to verify the information being given and which Companies House is publishing. Also, Companies House and the registrar should be made accountable to this place and to the public for the delivery of its duty to make sure that it is putting forward a verifiable register that can be of use to individuals who are suspicious and wish to be reassured before they entrust their money to a body that they wish to know more about.

The points that need to be verified are quite clear. Someone should verify that those who are described as the beneficial owners of entities actually are the beneficial owners. Who are the main shareholders? Is the address that is given for the organisation a useful and plausible address? When one reads accounts of frauds in this area, one discovers that the beneficial owners, the main shareholders, are useless nominees who can give no guarantee of security to anybody. It is quite common for a shell company to register some stray residential address in some suburb of London where the residents, quite genuinely, have never heard of the company and cannot assist anybody in moving towards it. So we have been publishing a register since 2016 that publishes what appears to be vital and helpful information but is actually an abuse. People have rather amused themselves by giving the information on the basis that this will help to deceive the victims of their crime. We are going in the same direction.

I will add to the other subjects. A criminal offence of failure to prevent financial crime should be explored seriously. The Government have already said that they are coming back to us on that, so I hope that they come back with something that matches the arguments in the lower House, not something touches on that but is actually trying to move away from it.

The lobbying of professional bodies, such as the Bar Council and the Law Society, disappoints me. In the dim and distant past, for a long time I practised as a barrister at the criminal Bar and I quite understand the cab-rank principle and that it is for the jury, not you, to determine the guilt of the accused, but the moment that you feel you are participating in or furthering a crime, the moment that your client—I never had one do it, actually—admits his guilt to you and asks for your advice on how he should avoid the consequences, you return the brief. It is not a respectable part of the legal profession or the accountancy profession, which at the moment make so much money by offering their services to people from overseas and elsewhere who ask for help, to turn dishonest, dirty money into clean money that they can enjoy the benefits of here.

I have indicated my strong support for the principles of the Bill and expressed my congratulations to the Government on how far they have got. If the debate in this House continues along the same lines, as I expect it will, I hope the Minister who replies will take on board the message that the Government will have to further strengthen the Bill in its process here. We want to turn out a Bill that makes a real difference to the reputation of this country and the financial security of our citizens.