Sanctions and Anti-Money Laundering Bill [HL]

Lord Rooker Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 6th December 2017 Lords Chamber

[Baroness Bowles of Berkhamsted]

My Lords, I have only a little bit to add on this—you may be relieved to know—because I was present during, and participated in, the debates on the Criminal Finances Bill. I saw that this amendment had been tabled and I was available at the time, and I thought that because there had been so much support for it during the passage of that Bill I had better get my name on this amendment quick, before the list got full up. That is why I am second on the list of names attached to the amendment. I did not table an amendment myself because I did not think that it was right to steal somebody else’s good work when I expected that something like this would arrive.

Almost everything has been said by the noble Lord, Lord Hodgson. This is something that needs to be done, and this is an opportunity to do it. It would need very persuasive reasons for me to concede that it should not be done now. As I did at Second Reading, again I remind noble Lords of the context which stretches across everything to do with money laundering and transparency, and that is that the eyes of the EU are upon us. These issues, such as people purchasing property in London with dubious money, are ones on which I often heard accusations when I was chair of the Economic and Monetary Affairs Committee. I was often trying to do something useful for the UK, and one weapon to try to take out my contribution was to attack the UK for not being such a good place because we allowed money laundering and the proceeds of money laundering to reside here in the UK and elsewhere. It is in that context that I suggest to the Minister that he looks kindly on this amendment and sees too that, as the noble Lord, Lord Hodgson, says, now is the time to do it.

[Lord Rooker (Lab)]

My Lords, I support the amendment. Like the noble Lord, Lord Hodgson, I apologise for not having been involved in previous aspects of the Bill, but I participated in the Criminal Finances Bill, and particularly on this area. As we have a new Minister, I shall use that excuse to develop a bit of what we have from history to assist his briefing. But it is a matter of regret that people still consider the UK, and London in particular, a bolthole for dirty money. London is not nicknamed “Londongrad” for no reason.

There is the legacy of the former Prime Minister, David Cameron, to whom I pay a massive tribute on this issue. He took a bigger stand than any previous Prime Minister, and I shall quote him on the record, because it is important. He made that speech in Singapore in July 2015, and he could not have been clearer. I shall quote three or four paragraphs, because it is important to what I want to say and the examples I want to give.

He said that,

“this is a challenge for everyone – including ASEAN, including Britain. We too must get our house in order – and we are. And that is why the UK government has legislated to ensure that from next year, Britain will become the first major country to establish a publicly accessible central registry showing who really owns and controls all British companies.

This will open up a new era of corporate transparency in Britain. But, of course, it will only apply in Britain and for British companies. So the aim should surely be for others to follow. To really tackle corruption effectively, we need to be able to trace data from one country to another. We don’t want criminals to be able to go unnoticed, just because they move money across borders or have assets in different countries. The torchlight should be able to follow them. If we are to win, we must make sure that there is nowhere to hide.


So I’ll continue to make the case for transparency with international partners – including the British Overseas Territories and Crown Dependencies. And I am willing to go further, and take concrete steps to force the pace. And that includes looking at whether we can get foreign companies investing in the UK to step up to the same level of transparency.


Now with £122 billion of property in England and Wales owned by offshore companies we know that some high-value properties – particularly in London – are being bought by people overseas through anonymous shell companies, some of them with plundered or laundered cash. Just last week, there were allegations of links between a former Kazakh secret police chief and a London property portfolio worth nearly £150 million.


I’m determined that the UK must not become a safe haven for corrupt money from around the world. We need to stop corrupt officials or organised criminals using anonymous shell companies to invest their ill-gotten gains in London property, without being tracked down”.


It was a seminal speech and an incredible read from a British Prime Minister. In some ways, I much regret that we do not get the same thing from the present Prime Minister, because it looks as though things have gone a bit flaky.

As part of the briefing for the Bill, Global Witness and Transparency International produced some of their previous examples. I will not go through them all but there are a couple that I want to raise. The research from Transparency International identified £4 billion-worth of property bought in London with suspicious wealth. Where information is available, Transparency International has found that 98% of the companies involved in the purchases are based in secrecy jurisdictions and that 90% are incorporated in the British Virgin Islands alone. Among this information—Global Witness was a partner—it was revealed that a £147 million property on London’s Baker Street could be linked back to Rakhat Aliyev, the former head of the Kazakh secret police, as referenced by the Prime Minister.

This made me go back to my monopoly chart, which was provided on the first kleptocracy tour of London in February 2016, when Members were invited to go with journalists to various places in London to hear the story of various properties, who bought them and where the money may have come from. The properties in Baker Street of Rakhat Aliyev, the former KGB chief, and their location in the building were pointed out—we had the address and the postcode. He could never have purchased those properties from his salary; it would have been absolutely impossible. We have to be careful about tracking him down because, in 2015, he was found dead in his prison cell in Austria—he had been up to other things and had been arrested.

There were other properties listed on the chart, but I am not going to go through any more of them because the examples are always there. When we have examples like this, we cannot just ignore them. But nothing seems to happen. Journalists, investigators and people who want a democratic, open, transparent and modern rule-of-law Russia come to London to look at the situation and to talk to people. However, there are issues relating to what we have done so far.

I shall come to the Land Registry in a minute, but the brief from Transparency International went on to say that its analysis of the recent Land Registry data, and that of Who Owns England? and Global Witness, revealed that in the two years since the property register was promised, nothing had changed. Financial investigators, civil society and the wider public are still in the dark about the real people behind the 86,397 properties in England and Wales owned by companies registered offshore in the secrecy jurisdictions. The analysis found that, just in 2015, 87% of all the properties owned by overseas companies had an owner in a secrecy jurisdiction, and 57,318 were owned by companies registered in the British Overseas Territories, jurisdictions which do not publish.

Over the last two years the UK Government have made some progress in tackling corruption and money laundering and set the global standard on beneficial ownership transfers by launching a public register of companies—and in the last Parliament, of course, they introduced the unexplained wealth orders. But we need to know who is behind the companies, and where their money has come from. That is absolutely crucial. Otherwise the proceeds of crime will continue to pour into the UK, particularly into London. Evidence has been given to the consultation that closed in March 2017, but as of today there are no results.

Before I make my final point, I advise the Minister, as I did his predecessor, to see the film “From Russia with Cash”—and I think there is also one called “From Ukraine with Cash”. They are easily available, and watching them would benefit the wider debate about what is actually happening here, in this country. I want to refer to the text of the amendment, regarding bids for UK contracts, because the same issue was raised by David Cameron in his Singapore speech. This should not just be about property, but also about overseas companies bidding for contracts in the UK. We should know who owns them.

Let us see how far we have got in the UK. David Cameron said in his Singapore speech that as a first step, he had asked,

“the Land Registry this autumn”,

that is, autumn 2015,

“to publish data on which foreign companies own which land and property titles in England and Wales. This will apply to around 100,000 titles held on the Land Register”.

One evening last week I put that to the test, and applied to the Land Registry for the overseas ownership data. I went through all the seven steps on the website: status, names, date of birth—which I thought was a bit irrelevant, but I filled it in—address and telephone number; I went through the process to prove I was not a robot, and then I agreed the terms. Fortunately, I was able, as I went through it all, to print each page, so I know exactly what information I gave. However, when I came to step 7—downloading the data sets—it said, “Please note these download links will only remain valid for 4 minutes 47 seconds”. After five minutes my little computer said that there were four minutes still to go—at which time, of course, the thing closed down. So I tried it again, and got exactly the same results.

No wonder people cannot find out information, on the basis of things that we have already done, and which we boast about. We are asking the Government to go further than they have already gone with regard to overseas companies, but it is being made difficult to access what is supposed to be there already for public access. There was no cost, and every step was completed, but I ended up with less than five minutes to download. Perhaps that is down to the barmy broadband speeds we have failed to provide. I was in central London when I tried to do this, by the way; I was not at home in Shropshire. This is crazy, and the Minister needs to look at it—although I may have done something completely wrong, in which case I will take advice.

I just want to strengthen what the noble Lord, Lord Hodgson, said, and what the noble Lord, Lord Faulks, said during the earlier attempts to do this. I realise that this discussion will definitely upset a lot of people, as the previous Prime Minister said. However, the fact of the matter is that so much money is piling into London—leaving aside the rest of the country—that there will come a time when it will put our economy at risk. We are talking about huge amounts. The National Crime Agency is concerned about it and people in that agency are on record as having said various things. It looks as though the instruction has been given, “Turn a blind eye to this money coming in because it is good that it comes in”. The fact that it is completely distorting London property prices and making London another country within the UK is beside the point.

--- Later in debate ---

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, my noble friend Lord Hodgson began his remarks by welcoming me as a fresh face to this topic. That will probably turn out to be classic understatement, but I am delighted to be here on a very important topic.

I first pay tribute to all noble Lords—in particular to the noble Lord, Lord Hodgson, for standing in for the noble Lord, Lord Faulks, and for the energy and commitment they have both shown on this topic over some time. I guess noble Lords will want to hear about the current position so let me get straight to it.

This amendment would set down in legislation a commitment made at the 2016 Anti-Corruption Summit, which the UK convened, to establish a public register of company beneficial ownership information for foreign companies which already own or buy property in the UK, or which bid on UK central government contracts. This was a point referred to by the noble Lord, Lord Rooker.

The Government remain committed to this policy and our intention is to act in this space; that intention has not faltered since the noble Baroness, Lady Williams, gave a commitment earlier this year. My noble friend Lord Hodgson is right to table this amendment—just as my noble friend Lord Faulks and other noble Lords are right to support it—to remind the Government of this commitment. I welcome him doing so.

The UK is a world leader in promoting corporate transparency. We legislated in 2015 to establish a public register of company beneficial ownership—that was how we described it, and it was actually done. We remain the only country in the G20 to have established such a register. The noble Baroness, Lady Bowles, said that the eyes of the EU are on us. I hope they are because we are leading on this; we are not following. We have recently expanded the register to include other forms of legal entity established in the UK, and we remain committed to this agenda.

Earlier this year, the Department for Business, Energy and Industrial Strategy published a call for evidence on the design and implementation of the register of overseas companies that own UK property. As that call for evidence noted, this register will be the first of its type in the world, reflecting the Government’s continued commitment to being a world leader in this area.

The innovative nature of the register does, however, bring with it issues of legal complexity. The Department for Business, Energy and Industrial Strategy has identified that it will require complex amendments to the existing company law framework in the UK, with new functions being delegated to the Registrar of Companies, as well as the three land registries in England and Wales, Scotland and Northern Ireland. I will ensure that the comments about downloads are relayed to the Land Registry. Consideration will also need to be given to the acquisition, use and processing of information.

In addition, a robust enforcement mechanism will be essential, and the Government propose to implement this via the land registration system. Careful consideration will be needed as to how this will be applied to new and existing landowners, while ensuring appropriate protection for third parties. It will also require consideration of the appropriate penalty regime to be applied to persons who fail to comply with the obligation to include the necessary details on the register. These and other issues relating to the operation of the register were raised by respondents to the Government’s call for evidence earlier this year. We have been considering these so as to inform the design of the register.

I make it clear that the Government remain committed to establishing this register and to fulfilling our commitment at the 2016 Anti-Corruption Summit. My noble friend Lady Williams reiterated this commitment yesterday, speaking at the inaugural Global Forum on Asset Recovery in Washington DC. The Department for Business, Energy and Industrial Strategy expects to respond formally to the call for evidence early in the new year. That response will focus, as did the call for evidence, on how the register will be established and not on whether it will be established.

So as to fully take account of the extensive work that the Government, private sector and civil society have already conducted, and continue to conduct, on the design of this register, it is right that we allow the Department for Business, Energy and Industrial Strategy to conclude the process that is already well advanced and to publish its response to the call for evidence early in the new year. This will ensure that the register is well designed, takes full account of the representations received and provides a legally robust mechanism for registering the beneficial owners of overseas companies that own UK property. So as to further inform the response from the Department for Business, Energy and Industrial Strategy, I will ensure that it is fully aware of the points made by noble Lords today in support of establishing the register.

I should add that earlier my noble friend Lord Ahmad gave a commitment to meet my noble friends Lord Hodgson and Lord Freeman and other noble Lords who are interested in this area to update them on matters and to get further information on what they would like to see.

I hope that I have given the Committee some reassurance on our intention to act and on the next steps that we have planned, and that noble Lords can have confidence that no provision is required in this Bill to secure the progress that my noble friends Lord Faulks and Lord Hodgson seek. Therefore, I ask my noble friend to withdraw the amendment.

[Lord Rooker]

I am grateful to the Minister and would like to add one point. All these properties have been purchased in this country, so there has been conveyancing and the involvement of estate agents. Looking at the list, it is strange that all the lawyers and solicitors involved are the blue-chip City gang who are purchasing these properties. I know that Global Witness and Transparency International and others have to be acutely careful when they say anything publicly because the next day they get a letter from one of these companies advising them that it has been noted. It is not in these people’s interests that we have a register, but I say to the Minister that we will be watching this. He has given a very firm commitment, which I certainly appreciate, but a lot of people with vested interests—our own citizens and companies here in the City and in the legal structures—will not be happy with this, because all these properties have been purchased. Someone has done the conveyancing of this crooked money that has come into London and we have to be aware of that.