Economic Crime and Corporate Transparency Bill

Lord Davies of Brixton Excerpts

2nd reading
Wednesday 8th February 2023 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, I welcome the Bill. This has been an interesting debate, and clearly issues will be raised in Committee. I have a relatively narrow point and a specific question directed to the Minister. Will his Home Office, the Treasury and the Department for Culture, Media and Sport—as I think it is now—talk to each other? We have three pieces of legislation coming before us. There is this Economic Crime and Corporate Transparency Bill which is having its Second Reading. The Online Safety Bill has had its Second Reading and is waiting for Committee, and the Financial Services and Markets Bill is currently in Committee. There is considerable overlap between these pieces of legislation. As highlighted by the noble Baroness, Lady Bowles, we had to put off a meeting of the Committee on the Financial Services and Markets Bill to take part in this debate.

They overlap as most economic crime or fraud, particularly that affecting individuals, is now committed online. Most fraud is almost by definition financial. People are defended against fraud and financial harm by financial regulators and the rules set for internet providers, so there is a clear overlap between these different pieces of legislation. On the Financial Services and Markets Bill, we had an interesting debate about the Government having a proper fraud strategy, which is clearly relevant to today’s discussions. That is an issue we are likely to return to on Report.

In the Online Safety Bill, there is a problem with the issue of “legal but harmful”. To know something is illegal, you have to wait for it to become illegal—for the fraud to come to fruition—but we need to stop the fraud before that stage. Those familiar with fraud will know that often the markers are there before you get to the stage of illegality. We need to have an overall look at the different issues and at what protection is available before it is too late and the criminal act has been perpetrated. The best way to deal with fraud and economic crime more generally is to make life difficult for the fraudsters. Will the Minister give a commitment to work in the context of this Bill with his colleagues in other departments to ensure that there is an overall view? I am pleased to report that I have finished in a shorter time than the noble Lord, Lord Young.

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[Lord Sharpe of Epsom (Con)]

I will come back to the noble Lord on that in writing.

To respond to the point raised by the noble and learned Lord, Lord Etherton, the inclusion of an explicit regulatory objective will put it beyond doubt that it is the front-line regulators’ duty to promote adherence to the economic crime rules set out in the relevant guidance and legislation, and that they may carry out such regulatory action as appropriate to carry out this objective. That should avoid unnecessary challenge in relation to regulators’ compliance activity, which can make monitoring and enforcement costly. These types of activities could include, for example, the imposition of financial penalties, requesting information—the type of information will obviously differ on a case-by-case basis—awareness-raising and all other supervisory monitoring work that regulators may carry out in promoting the regulatory objectives.

I thank my noble friend Lady Stowell of Beeston for raising the issue of regulation of the legal and accountancy sector. The money laundering regulations 2017 ensure that key professionals identify their customers and understand the purpose behind transactions, including the source of funds. While regulated businesses have legal requirements under the MLRs to implement robust anti-money laundering policies, controls and procedures and to identify and verify the identity of their customer, any money laundering is a criminal offence under the prevention of organised crime Act, and businesses outside the regulated sector may still choose to implement AML controls. Measures in this Bill will aid legal services regulators in upholding the economic crime rules, including for money laundering, and remove the cap on SRA fines for breaches of these rules.

As already acknowledged by my noble friend and colleague Lord Johnson, the Bill forms a key part of the wider government approach to tackling economic crime, sitting alongside the national security Bill, the Online Safety Bill, the Data Protection and Digital Information Bill, and the forthcoming economic crime plan 2 and fraud strategy. The Online Safety Bill is ambitious and forward-looking legislation that will tackle online harms, including fraud and fraudulent advertising. It will bring fraudulent user-generated content and fraudulent online advertising within scope of the online safety regulatory framework in order to increase people’s protection from the devastating impact of scams posted across the biggest websites; that will include social media apps and dating sites. Also included are romance scams, which can cause devastating psychological harm and are estimated to cost £60 million a year.

[Lord Davies of Brixton (Lab)]

My Lords, this has been an interesting debate. Can we have just a couple of words about co-ordination of government policy across these different Bills?

[Lord Sharpe of Epsom (Con)]

I can reassure the noble Lord that there is co-ordination across government departments; we are in conversation with each other about these various Bills.

My noble friend Lady Morgan of Cotes raised the information-sharing clauses and how they work in tandem with the provisions in the data protection Bill. Historically, businesses have faced two challenges in sharing data for the purposes of combating economic crime: the duty of confidentiality that they owe to their customers, which is also known as the Tournier rule, and data protection requirements. The ECCT Bill addresses the first of these, the data protection Bill the second. As the noble Lord, Lord Davies of Brixton, asked, we are in continuous conversation with other relevant government departments to bring a co-ordinated response across all these Bills.

I have endeavoured to address all the contributions made by noble Lords today. I look forward to further debate and discussion—