Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2022

Lord Tunnicliffe Excerpts

Monday 25th April 2022 Grand Committee

I do not have any criticism of the UAE being part of this. I would like to know from the Government their understanding of why it is now on the high-risk third country list. The Minister simply stated that it was on it. More information on the record as to why that is the case could be helpful. While the Government are promoting more investment from and more business with the UAE, they cannot be silent as to why they now believe it is a high-risk third country to do that business. At the moment I have not seen anything on the DIT website on GOV.UK for doing trade with the UAE, but given its significance I hope that it will appear. In the meantime—before that arrives on the government website—I would be grateful to hear information from the Minister today.

[Lord Tunnicliffe (Lab)]

My Lords, I am grateful to the Minister for introducing these latest updates to the list of high-risk countries. She will know that we fully support mirroring the list produced by the Financial Action Task Force—the FATF—so we will not oppose these regulations remaining on the statute book beyond the 28-day scrutiny period. As has been outlined, the latest iteration of the FATF list sees the removal of Zimbabwe and the addition of the United Arab Emirates.

I wonder whether the Minister can provide a little more information on the FATF’s rationale for these changes. Although Zimbabwe is no longer listed in the schedule, can she confirm whether the UK has decided to maintain any specific enhanced measures relating to that country? If she is unable to provide these updates today, can she commit to writing and placing a copy of the correspondence in the Library?

The last time this list of high-risk countries was debated, in November 2021, there was much debate around the absence of both Afghanistan and Russia. Is the Minister able to provide any update on the situation regarding Afghanistan, including any steps taken by the UK outside the FATF framework? Just because there have been other geopolitical developments in recent times, we must not forget that Afghanistan continues to undergo significant social and economic change. Much of that is unrelated to this policy framework but some of it may be. Clearly, the events in Afghanistan do not currently meet the FATF’s threshold for the country to be included on this list. However, it would be comforting to know whether and how the UK is keeping these matters under review.

Turning to Russia, the conflict in Ukraine has altered the picture significantly. In response to the actions of Vladimir Putin, the UK Government and other nations have sanctioned a variety of Russian businesses and individuals. The Labour Party has supported this and will continue to do so. Sanctions may act as a brake on Russian money-laundering operations for the time being but can the Minister confirm how such matters will be factored into the eventual winding down of sanctions? We must not return to business as usual.

We all know that the UK has a reputation as a destination for dirty Russian money. After sustained pressure to act, the Government recently brought forward a limited economic crime Bill. That legislation facilitated the creation of a register of overseas entities but it is no secret that it will take time for such a register to be operational. Once it is, it will be a useful tool, but it is no silver bullet. Can the Minister provide any update on the implementation of that register?

The Government committed to a progress report to Parliament within eight weeks of Royal Assent. We have not quite reached that date but we are only a couple of weeks short and mere days away from Prorogation. I would hope that the Treasury and others have made great strides, but have any of the enabling regulations yet been laid? Can the Minister comment on what has become known as the economic crime Bill part II, which has been promised early in the new parliamentary Session? I know that the Government normally resist pre-empting the contents of Her Majesty’s most gracious Speech. However, we know that this Bill is coming, and it is vital to get that follow-up legislation right if we are truly to crack down on the illicit acts that the FATF was established to tackle.

I appreciate that these questions go slightly beyond the contents of this particular SI but I am sure that the Minister will agree they deserve to be asked. I look forward to her reply and to the House playing a constructive role in these matters in the months ahead.

I would like to bring up one or two issues that are related not particularly to the SI but to the Explanatory Memorandum. In the past, I have found the very last part of the memorandum, labelled “Contact”, a useful device when I was having trouble understanding SIs. The contact on this occasion is Stephanie, who has a surname that I fail to be able to pronounce; I hope she will forgive me for not doing so. She is at HM Treasury and

“can be contacted with any queries regarding the instrument.”

The ability to contact a relevant civil servant has been really helpful to me in the past but, on this occasion, there is neither a contact telephone number nor an email address. I put to the Minister that this is utterly unacceptable. It has crept into Treasury Explanatory Memorandums whereas many other departments—including the Department for Transport, which we previously had here today—have maintained the standard of a telephone number and an email address. I do not expect an answer now but I would like a written response.

The problem with reading paragraph 15.1 is that one is then tempted to read paragraph 15.2, which states:

“Emily Bayley, Deputy Director for Sanctions and Illicit Finance at HM Treasury can confirm that this Explanatory Memorandum meets the required standard.”


I am sure that this has appeared before but it is the first time my eyes have got this far through an Explanatory Memorandum. I have been campaigning for years to know what the standard for Explanatory Memorandums is, particularly in terms of the requirement I believe they should have that they can be understood by people other than those seeped in the detail of the subject. Can the Minister forward to me what the required standard is?