Economic Crime and Corporate Transparency Bill

Peter Dowd Excerpts

Report stage
Tuesday 24th January 2023 Commons Chamber

[Kevin Hollinrake]

Again, I think it would be wrong to comment on individual cases, but I take the right hon. Member’s point. In general terms, the UK sanctions regulations permit the OFSI to license reasonable legal fees. That is clearly something on which officials make decisions, rather than Ministers—I think it is important to say that—and the merits of any case are for the appropriate court to judge. However, he has certainly campaigned extensively for making sure that people cannot close down the raising of understandable concerns. In essence, I absolutely support that and the work on SLAPPs—strategic lawsuits against public participation—to which my hon. Friend the Member for Isle of Wight (Bob Seely) referred in introducing his ten-minute rule Bill earlier. So that is work in progress, rather than anything that relates specifically to this legislation.

We are taking a power to expand the registrar’s data-sharing ability. That will future-proof the legislation and provide scope to expand the data-sharing gateway, if needed. We are also strengthening the range of sanctions for non-compliance with the register of overseas entities. Our new clause 8 will mean that a director can be disqualified if they breach an obligation under part 1 of the Economic Crime (Transparency and Enforcement) Act 2022, ensuring a consistent approach to tackling non-compliance between that Act and the Companies Act 2006. Following discussions in Committee, we are also removing the power to exempt certain individuals from identity verification requirements, having concluded that it is not essential.

As well as those important amendments, we are making improvements to the limited partnership reforms. We will ensure that a limited partnership’s dissolution and deregistration is transparent and properly drawn to the attention of the public. There will be a legal requirement for these to be published on the Companies House website as well as in the Gazette. Again, this was discussed by Opposition Members in Committee.

[Peter Dowd (Bootle) (Lab)]

I understand that every year there are about 1,200 disqualifications of unfit directors. Does the Minister have any indication of how that number may expand? We have the qualitative element. How about the quantitative element?

[Kevin Hollinrake]

I did not quite hear the hon. Member’s whole point. Is it about the quality and quantity of information in Companies House?

[Peter Dowd]

No. There are about 1,200 disqualifications a year. How many more does the Minister believe may arise from this new legislation?

[Kevin Hollinrake]

We do not have the data to be able to say. It obviously depends on numerous factors. As I say, we are keen to give Companies House the resources it needs, which it currently does not have, to undertake this work. In many ways, this will prove a deterrent against people registering a company for nefarious purposes, rather than necessarily lead to many more disqualifications. It is the transparency element and the scrutiny that is the ultimate deterrent against using these corporate vehicles for the wrong purpose.

Partners of limited partnerships will also have to notify the registrar about a dissolution within 14 days of becoming aware, ensuring that the register can be kept up to date and accurate. New clause 12 clarifies the interactions of the limited partnership reforms with regulation of UK investment funds. That will ensure that the measures work as intended.

Amendments 30, 31 and 32 give the Northern Ireland Department for the Economy and Scottish Ministers powers to petition the courts to wind up a limited partnership registered in their jurisdictions, ensuring a cohesive approach across the devolved nations.

--- Later in debate ---

[Peter Dowd]

I thank the hon. Lady for giving way and wish many happy returns to her mother.

The hon. Lady may recall the passage of the Criminal Finances Act 2017, during which we talked about enforcement and regulatory agencies having the resources to do their job, and us giving them the resources, and the finances, to do it. Does she agree that, following the Economic Crime (Transparency and Enforcement) Act 2022, and the Criminal Finances Act, this Bill, yet again, does not give those agencies the resources, capacity and wherewithal to do the job properly?

--- Later in debate ---

I will talk about the Danske Bank scandal, in which the Minister has consistently expressed great interest and concern. Corrupt trust and company service providers played a key role in enabling massive sums—I have seen figures from £200 billion to £236 billion—to be laundered out of places such as Russia and Azerbaijan into jurisdictions such as the UK, the USA and others.

[Peter Dowd]

The disease of not listening troubles me. I am not saying that the Government are not listening, but they are not listening enough. On my right hon. Friend’s point, there are still thousands of properties in London and across the country that have unknown offshore owners and we do not know where the money comes from. Will the Bill, or its previous incarnations, do anything to resolve that issue? I am not convinced that it will.

[Dame Margaret Hodge]

My hon. Friend makes an important point, because we legislated last year to create a register of properties that are owned through corporations in foreign jurisdictions, but I understand that Companies House is having real difficulty in establishing it, because it is very difficult for it to assess the real beneficial owners of trusts and companies incorporated somewhere such as the British Virgin Islands. That is why the amendments tabled by the Labour Front Bench to ensure that company service providers are located here so that we have better control and supervision are hugely important.

Last week, as I am sure the Minister saw, Danske Bank agreed to forfeit $2 billion in the US courts as part of an agreement to resolve the criminal liabilities facing it. On top of that, civil litigation has led to a fine of more than $400 million and individual employees could yet be charged by the US courts. That is massive. It is worth reflecting on the words used in that court verdict, including that

“Danske Bank, the largest bank in Denmark, deliberately disregarded U.S. law of which it is well aware, facilitated the laundering of criminal and suspicious proceeds through the United States, and placed the U.S. financial network at risk, all in the name of its bottom line.”

The judgment also says that it

“lied and deceived U.S. banks to pump billions of dollars of suspicious and criminal funds through the U.S. financial system… If you want to use the U.S. financial system, you must play by the rules. If you don’t, we will hold you accountable.”