Sanctions and Anti-Money Laundering Bill [Lords]

Peter Dowd Excerpts

2nd reading: House of Commons
Tuesday 20th February 2018 Commons Chamber

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

It is a pleasure to follow the hon. Member for Amber Valley (Nigel Mills), who made a thoughtful contribution on some of the gaps in this Bill. Perhaps it is because I am, with him, the co-chair of the all-party group on anti-corruption, perhaps it is because in the last Parliament I was our Front-Bench spokesperson on the Criminal Finances Bill or perhaps it is because I am in front of the TV too much at the weekend, but I get the sense that money laundering is everywhere of late.

As the hon. Gentleman has just mentioned, we heard this morning of the record £6.2 million fine slapped on William Hill for not being vigilant enough in the prevention of money laundering. We have seen how the proceeds of crime have been funnelled through its channels, and the Gambling Commission has said that it must do better—as if it did not have enough on its plate with responsible gambling.

It has just finished, but for a while Sunday night was “McMafia” night—it is now “Homeland” night again in our house—and as the plot unfolded, we saw how billions of pounds can be transferred internationally very quickly, at the click of a mouse on a laptop. It also showed corrupt politicians, violent police, counterfeit goods hawked around high streets and all sorts of other things. It was fiction, but there was some factual basis.

No one so far has spoken against the idea of having such a Bill. The principle is good. No one is saying that we should turn a blind eye to dirty money. My worry is that, as right hon. and hon. Members from all parties have said, the Bill could do better and go a lot further. It is a good start, but the Paradise papers and Panama papers shone a light on a murky world of international finance and taxation working for the benefit of those with access to vast wealth and an army of lawyers—for the few, not the many—when ordinary citizens just want a fair and transparent financial system. So two cheers for the Bill.

The glaring omission, which has been mentioned many times, is that the Government need to work a lot harder to persuade the UK’s overseas territories—and one day, I hope, the Crown dependencies, too—to adopt the same level of transparency as we have in the UK and introduce public registers of beneficial ownership.

It is not for nothing that London is frequently named as the world’s money laundering capital. In 2016, the Home Affairs Committee concluded that the London property market was the primary avenue for the laundering of £100 billion of illicit money a year. As a London MP, that is particularly galling to me, because my inbox and postbag are full of housing issues, which also come up a lot when people come to my surgeries. We have a housing crisis, with people who want to get a foothold on the ladder and people in substandard accommodation.

It is not enough to think that it is not our problem; otherwise, silence equals complicity in what are becoming industrial levels of tax avoidance and evasion. The Bill will allow us to set our own sanctions and anti-money laundering policy, but our leaving the EU will inevitably damage our ability to influence the policies of the bloc. Britain’s voice will be quieter on the world stage and its global footprint will diminish. We will shrink in our role fighting corruption globally.

Some progress has been made in the adoption of private registers, but not all overseas territories have even adopted one, and if they have, they have not been centrally located or fully populated. Four and a half years on from when the Government tried to persuade the overseas territories to adopt public registers, none has so far done so, and the Government seem to have given up on them. As has been said many times in this debate, only Montserrat has made the commitment.

The ghost of David Cameron seems to have been ever present in this debate. He invited the world to an anti-corruption summit in London in May 2016—how long ago it all seems—and talked about how the public register model should be a “gold standard”. He said that tax avoidance schemes

“are quite frankly morally wrong”.

Again, there is that disjuncture between what is legally possible and what is morally correct.

Fast forward to 2018 and the Foreign Office expects the UK tax havens to adopt the public register model only when it becomes a “global standard”. There is a definite shift there. It is hardly leadership; it is followership, backtracking or a dereliction of duty, if we are being blunt.

[Peter Dowd (Bootle) (Lab)]

It is uselessness.

[Dr Huq]

Absolutely; my hon. Friend is so correct, as ever.

We all know what happened to David Cameron next: his ill-judged referendum was his downfall. Ironically, the EU seems to be taking the lead as it prepares to implement the fifth anti-money laundering directive. Our chaotic approach to Brexit and the slippage—we do not know what will or will not apply—is why the Bill is necessary. Last December, the EU agreed that all its 28 member states should establish public registers of the beneficial ownership of companies. We can all get behind the reasons: they allow greater scrutiny of information and contribute to preserving trust and integrity in the financial system. More and more countries are committed to implementing, or have implemented, public registers—I am talking about sovereign countries and not necessarily our overseas territories. There were 35 countries with registers at the last count, and with all EU member states required to have them by 2019, I suggest that this is a golden opportunity to build a new global standard.

When that happens in 2019, the UK Government should seize the opportunity to ensure that our overseas territories follow suit as soon as possible. Regulatory alignment is a popular watchword these days, and we should apply it in this situation. The territories that rely on wealth being stashed away from taxpayers are astute. They do it because they can get away with it, and they use the arguments of competitiveness and security against a centralised register. Our Government continue to drag their feet after so much promise, which is shameful.

The Government’s anti-corruption strategy was hastily rushed out—some Conservative Members did not notice it—because of harrying by people such as my right hon. Friend the Member for Barking (Dame Margaret Hodge), who had several debates on it at the end of last year. We kept saying, “Where is that anti-corruption strategy?” and the strategy was hurriedly rushed out at the end of last year. There is full awareness of the importance of public registers, but the strategy states:

“Our ultimate aim is that public registers become the norm. If this were to happen”—

suddenly it has become conditional—

“we would expect the Overseas Territories to follow suit. The government will continue to work with these Overseas Territories to strengthen their beneficial ownership arrangements”.

The Government also promise a statutory review by December 2018. Why not now? It seems we have had a year of nothing, with the smokescreen of a consultation thrown in. People have consultation fatigue and we know what the issue is.

How can the Government aim for something if they are taking no action? It is not good enough. Only when the UK mandates the overseas territories to create the registers will transparency flow, and only then will the big question be sorted out, with all its constitutional, ethical and international dimensions—people have talked about foreign aid. It is right to hold the Government to account on the promises they have made, as the all-party parliamentary group will continue to do. I hope that the anti-corruption tsar, the hon. Member for Weston-super-Mare (John Penrose), who has gone from his place—I would have liked a tsarina—will continue to hold the Government’s feet to the fire.

I should give a short plug for the APPG. We recently had an event where we had the cast and crew of “McMafia” in the building—my hon. Friend the Member for Oxford East (Anneliese Dodds) was there. It is not just fiction, but is happening in the real world. They launched an app. If people enter their postcode, they can see how many secretive jurisdictions are near them. The programme showed Kensington and these smart central London properties, but it is happening in Ealing. I put in my own postcode: Ealing is the 14th most secret neighbourhood in the country.

We are lucky enough to live in one of the most desirable cities in the world, but it is desirable for the corrupt, too—those with dirty cash to stash and launder. The Government agreed to fix that at least two years ago, but no concrete progress has ultimately been made. There are loads of examples—I will not go into them all now because we could be here forever. There were stories of “from Russia with cash”, Magnitsky was mentioned in the debate, and there is the pop princess from Uzbekistan. My right hon. Friend the Member for Barking had a debate on the Azerbaijan laundromat case, and we have had Bywater Investments and North Korean shell games. The list goes on and on.

This country has a real choice ahead in defining what kind of country we want to be post Brexit. We can put an end to the millions of pounds of stolen money flowing through London’s luxury property market or we can continue turning a blind eye, kicking the can down the road, saying that we are doing a consultation, pushing these things into the long grass and making London an even more appealing playground for the corrupt.

Thankfully, the other place wants significant concessions on the Henry VIII powers that might have come to pass. We have heard mention of statutory instruments, but this House must be vigilant and ensure that the Government do not try to sneak in more secondary powers through the back door, giving Ministers carte blanche.

Leaving the EU will undoubtedly affect our ability to sanction regimes properly. We will be vulnerable to legal challenges because corporations will see us as an easy target outside the EU. They will have an easier task suing a smaller state. Despite the Bill’s title, only one and a half of its 59 pages are dedicated to anti-money laundering. The Bill is a disappointment and a missed opportunity from a Government who promised much but are short on delivering. It is not just me saying that; ask Christian Aid, Global Witness and Transparency International. My verdict is, “Could do better.”