Economic Crime (Transparency and Enforcement) Bill

Baroness Winterton of Doncaster Excerpts

2nd reading
Monday 7th March 2022 Commons Chamber

[Mr Davis]

I am pretty sure that they will hear that warning when they look back at this debate.

I do not often quote Lenin, but it is probably appropriate. As he famously said,

“A bayonet is a weapon with a worker at both ends,”

which is also true of the Bill. It will do great harm to the Russian economy and to our adversaries in Russia, but it will also do some harm to us—or at least, the retaliation will—and it will particularly hit the least well-off. We will see greater price inflation, less growth, less trade and therefore fewer jobs. We must recognise that when we undertake what we are doing here. We can make Russia a pariah state but Putin will retaliate, and we must be ready. We need to be ready for fuel crises, cyber-attacks and ludicrous threats from the Kremlin.

Beyond the Bill, there are many further things that we can do in the west and we should be ready to do them. To pick one example, the allies should be ready to reduce every Russian embassy to a bare minimum—to skeleton status—by the expulsion of diplomats at the first sign of retaliatory action from Russia. It must be clear to Russia that it will pay if it retaliates again.

We have said, and we must keep saying, that the Bill is not aimed at punishing the Russian people—that is incredibly important. It should target the Russian Government, Putin and his henchmen, which is why the actions in the Bill against oligarchs are as important as the actions against Russian banks and commercial institutions. There was some briefing from Whitehall over the weekend that implied that they are not, but that is wrong.

We have all heard the rumours that Putin has something like $200 billion of personal wealth. He does not hold any of it himself; it is held by the 140-plus oligarchs around the world. Targeting them, therefore, is at least as important as targeting the Russian state banks. To do that properly, we must act fast, which is the thrust of my new clause 29, which I will speak to later in Committee.

We should not kid ourselves. This is not an economic crime Bill, but an economic warfare Bill, and it is a war that liberal democracies cannot afford to lose.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call SNP spokesperson Alison Thewliss.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I am going to introduce a five-minute time limit. However, I am sure that right hon. and hon. Members will be aware that, if they take less time than that, we will get to Committee stage more quickly, as they might wish to do. Those who particularly wish to speak in Committee might bear that in mind as well.

--- Later in debate ---

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I have no problem with interventions, but it would be helpful to other colleagues, especially if the House wants to get on to the Committee stage, if Members could stick to their five minutes even if they take interventions.

Economic Crime (Transparency and Enforcement) Bill

Baroness Winterton of Doncaster Excerpts

Committee stage
Monday 7th March 2022 Commons Chamber

[Dame Rosie Winterton in the Chair]

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

The selection paper includes three manuscript amendments that the Chairman of Ways and Means has selected: amendment 63, in the name of David Linden; new clause 41, in the name of the Secretary of State; and amendment 64, in the name of Kevin Hollinrake. A separate paper containing those amendments is available from the Vote Office.

Clause 1

Overview

Question proposed, That the clause stand part of the Bill.

[The First Deputy Chairman]

With this it will be convenient to discuss the following:

Clauses 2 and 3 stand part.

Amendment 24, in clause 4, page 2, line 18, at end insert—

“(aa) a statement either—

(i) of the names of any persons who are registered beneficial owners of the entity and are designated persons listed on the UK Sanctions List, or

(ii) that no registered beneficial owners of the entity are so listed;”

This amendment would require the identity of any sanctioned registered beneficial owners of the entity, or a statement that there are no such persons, to be included in an application for registration.

Clauses 4 to 6 stand part.

Amendment 5, in clause 7, page 4, line 11, after “update period” insert “or trigger event”.

This amendment would extend the duty to update the registrar to certain trigger events.

Amendment 25, page 4, line 11, at end insert—

“(aa) an updated statement in accordance with section 4(1)(aa)”.

This amendment requires statements made under amendment 24 to be updated annually.

Amendment 6,  page 5, line 18, at end insert—

“(8A) For the purposes of this section, trigger event means the date on which an overseas entity has reasonable cause to believe that anyone has become or ceased to become a registrable beneficial owner.”

This amendment defines a trigger event.

Clause 7 stand part.

Amendment 42, in clause 8, page 5, leave out lines 30 to 35 and insert—

“(a) on the first day of contravention, a fine,

(b) on the second continued day of contravention, an additional fine of £500, and

(c) on each subsequent day of continued contravention, an additional daily default fine of the value of the previous day’s fine plus £50.

(2A) If the contravention continues for a period of six months beginning with the first day of contravention, the Court must order the seizure of assets from the person guilty of the offence of the value of the cumulative fines to which that person is liable.”

The purpose of this amendment is to provide progressively higher fines for a registered overseas entity, and every officer of the entity, for an initial default in complying with its duty to update the register, leading to a seizure of assets if non-compliance continues for 6 months.

Government amendment 45.

Amendment 7, page 5, line 31, leave out “£500 and one-tenth of level 4 on the standard scale” and insert

“£2,500 and half of level 4 on the standard scale.”

This amendment would increase the daily default fine for an offence committed under section 8 in England or Wales.

Government amendment 46.

Amendment 8,  page 5, line 35, leave out “one-tenth” and insert “half”.

This amendment would increase the daily default fine for an offence committed under section 8 in Scotland or Northern Ireland.

Amendment 43,  page 6, leave out lines 1 to 6 and insert—

“(a) on the first day of continued contravention, a fine of £500, and

(b) on each subsequent day of continued contravention, an additional daily default fine of the value of the previous day’s fine plus £50.

(6) If the contravention continues for a period of six months beginning with the first day of contravention, the Court must order the seizure of assets from the person guilty of the offence of the value of the cumulative fines to which that person is liable.”

The purpose of this amendment is to provide progressively higher fines for every officer of the entity for a continuing contravention of its duty to update the register, leading to a seizure of assets if non-compliance continues for 6 months.

Government amendments 47 and 48.

Clause 8 stand part.

Amendment 9, in clause 9, page 7, line 14, leave out subsection (8).

This amendment would extend the definition of an overseas entity registered as the proprietor of a relevant interest in land for the purposes of sections 9 and 10 to include such entities irrespective of date of registration of the entity.

Clauses 9 to 11 stand part.

Amendment 41, in clause 12, page 8, line 32, at end insert—

“(3A) If an entity declares that there is no person whom it knows, or has reason to believe, is a registrable beneficial owner in relation to that entity, the registrar of companies in England and Wales must give an information notice under this section to that entity requiring full details of how the entity is controlled.”

This amendment requires an explanation to be given where an entity claims there is no registrable beneficial owner. Making a false statement in purported compliance, or failing to comply, with a notice under this section is an offence under section 15.

Clause 12 stand part.

Clauses 13 to 15 stand part.

Amendment 10, in clause 16, page 10, line 29, at end insert—

“and (d) prior to the registrar taking action under section 5(1).”

This amendment establishes that such verification processes made under regulations should take place prior to the registrar recording the date of registration in the register, allocating an overseas entity ID to the entity and record the overseas entity ID in the register.

Amendment 11, page 10, line 30, leave out “may” and insert “must”.

This amendment requires the Secretary of State to include the specified information in regulations.

Government amendment 49.

Amendment 12, page 10, line 35, at end insert—

“(4) The Secretary of State must make regulations under this section no later than 28 days following the commencement of Part 1 of this Act”.

This amendment would require the Secretary of State to make regulations under this section within 28 days of the commencement date.

Clauses 16 and 17 stand part.

Amendment 4, in clause 18, page 11, line 16, leave out subsection (1)(b).

This amendment removes the ability of the Secretary of State to exempt an individual from the requirements to register their overseas entities on the grounds of the economic wellbeing of the United Kingdom.

Clauses 18 to 20 stand part.

Amendment 37, in clause 21, page 13, line 1, leave out from beginning to end of line 2 and insert—

“(3) No cause of action in civil proceedings shall lie against a person in respect of the making of a protected disclosure as defined in section 1 of the Public Interest Disclosure Act 1998 in relation to information from the register.

(3A) In a prosecution of a person for any offence prohibiting or restricting the disclosure of information it is a defence for that person to show that, at the time of the alleged offence, the disclosure was, or was reasonably believed by the person to be, a protected disclosure.”

Clause 21 stand part.

Clauses 22 to 25 stand part.

Amendment 44, in clause 26, page 16, leave out lines 10 to 15 and insert—

“(a) on the first day of contravention, a fine,

(b) on the second continued day of contravention, an additional fine of £500, and

(c) on each subsequent day of continued contravention, an additional daily default fine of the value of the previous day’s fine plus £50.

(2A) If the contravention continues for a period of six months beginning with the first day of contravention, the Court must order the seizure of assets from the person guilty of the offence of the value of the cumulative fines to which that person is liable.”

The purpose of this amendment is to provide progressively higher fines for a registered overseas entity, and every officer of the entity, for providing inconsistent information for the register, leading to a seizure of assets if non-compliance continues for 6 months.

Government amendments 50 and 51.

Clause 26 stand part.

Clauses 27 to 30 stand part.

Amendment 26, in clause 31, page 18, line 13, leave out “knowingly or recklessly”.

This amendment removes the requirement that a false statement to the registrar needs to be proven to have been given knowingly or recklessly for that statement to constitute an offence.

Amendment 27, page 18, line 18, at end insert—

“(1A) If the registrar has reason to believe that a person may have committed an offence under section 31 the registrar may require—

(a) any person connected with the entity, including in any professional or advisory capacity,

(b) any public body, or

(c) any other person

to provide information in connection with that potential offence.

(1B) A requirement under subsection (1A) applies notwithstanding the data protection legislation (within the meaning in section 25).

(1C) A person who fails to comply with a requirement under subsection (1A) commits an offence.”

This amendment gives the registrar powers to demand information in connection with suspected false statement offences.

Clause 31 stand part.

Clauses 32 and 33 stand part.

Amendment 34, in clause 34, page 20, line 20, at end insert—

“, provided that the person can show that he or she was not acting knowingly, recklessly or carefully.”

This amendment would require those giving advice in a professional capacity to show that they were not acting knowingly, recklessly or carelessly if they are not to be caught by the provisions of subsection (2).

Clause 34 stand part.

Clauses 35 to 37 stand part.

Amendment 29, in clause 38, page 21, line 4, leave out from “if” to “the” in line 5 and insert

“it is reasonable to assume that, on the balance of probabilities,”.

This amendment reflects the civil law standard of proof.

Amendment 30, page 21, line 6, at end insert—

“, or conduct which would have been an offence if the word ‘recklessly’ in clause 15(2)(b) were replaced with ‘carelessly’”.

This amendment expands the test to behaviour which may reflect a lack of due diligence as well as deliberate intent.

Amendment 31, page 21, line 6, at end insert—

“(1A) Where the failure relates to the ownership of a qualifying estate (as defined in Schedule 4A to the Land Registration Act 2002), any penalty imposed by the registrar shall be calculated by reference to the market value of that qualifying estate.”

This amendment makes provision for the calculation of penalties by reference to the market value of the qualifying estate.

Amendment 32, page 21, line 9, at end insert—

“(ba) for penalties to be reduced in cases where a person was acting carelessly, and not recklessly or knowingly;”.

Manuscript amendment 63, page 21, line 12, insert—

“(f) disqualifying the person from the electoral roll.”

Amendment 33, page 21, line 20, leave out subsection (4) and insert—

“(4) The regulations must provide that—

(a) if a person is convicted of an offence and is liable to a fine, and is subsequently the subject of a financial penalty under this clause relating to that same conduct, the penalty shall be reduced by the amount of the fine (but not below zero), and

(b) if a person is subject to a financial penalty under this clause, and is subsequently convicted of an offence relating to that same conduct, any fine for which they are found liable shall be reduced by the amount of the financial penalty (but not below zero).”

Clause 38 stand part.

Clauses 39 to 49 stand part.

Amendment 38, in clause 50, page 32, line 9, at end add—

‘(2) The Secretary of State shall establish an inquiry into the use of legal intimidation and strategic lawsuits against public participation (SLAPPs) to prevent such actions from being used to prevent economic crime from being uncovered.”

Clause 50 stand part.

Government amendment 59.

Clauses 51 to 52 stand part.

Government amendments 52 to 54.

Clause 53 stand part.

Amendment 1, in clause 54, page 33, line 7, after “force”, leave out “on such day as” and insert

“at the end of six months from the day on which this Act is passed or on any earlier day that”.

The intention of this amendment is for the Parts 1 and 2 of the Act to come into force no later than 6 months from being passed.

Government amendments 60 to 62.

Amendment 36, page 33, line 20, at end insert—

“(8) The provisions of this Act shall have retrospective effect from the date that the Bill received first reading in the House of Commons.”

This amendment seeks to move forward the provisions of this Bill, backdating them to the day upon which it received first reading.

Clause 54 stand part.

Amendment 2, in clause 55, page 33, line 22, leave out “Economic Crime (Transparency and Enforcement)” and insert “Registration of Overseas Entities, etc”.

The intention of this amendment is for the short title to reflect more accurately the contents of the bill.

Clause 55 stand part.

Government new clauses 31 to 40.

Government manuscript new clause 41.

New clause 2—Report on funding of enforcement agencies—

‘Within 28 days of this Act being passed, the Secretary of State must publish and lay before Parliament a report on the funding of enforcement agencies in connection with the provisions of Part 2 of this Act.’

This new clause would require the Secretary of State to publish and lay before Parliament a report on the funding of enforcement agencies in connection with the reforms to unexplained wealth orders, as provided for in Part 2 of the Bill.

New clause 3—Requirement on entity to register if it owns certain assets—

‘(1) An overseas entity must apply for registration in the register of overseas entities if the entity is registered as the owner of—

(a) a professional football club,

(b) a jet, or

(c) a yacht.

(2) In this section—

“professional football club” means any association football club playing in the English Premier League, the English Football League or the Scottish Professional Football League.

“jet” means any jet aircraft with a value over £500,000.

“yacht” means any medium sized sailing boat with a value over £500,000.’

This new clause would require an overseas entity that owns a football club, jet or yacht to apply for registration in the register of overseas entities.

New clause 4—Registrar of companies for England and Wales: additional duties—

‘(1) The Secretary of State must amend the Money Laundering, Terrorist Financing and Transfer of Funds Regulations (2017/692) to specify that the registrar of companies for England and Wales is a supervisory body in relation to overseas entities as defined in section 2 of this Act.

(2) The Secretary of State must direct the registrar of companies for England and Wales to participate in a government identity assurance scheme.’

The purpose of this new clause is for Companies House to be made an anti-money laundering supervisor and to register as part of the UK Government’s Verify scheme.

New clause 5—Duty to report on representations received by the Government relating to economic crimes—

‘(1) Within 1 month of this Act being passed, the Secretary of State must lay before Parliament a disclosure report detailing all representations received by the Government in the last twelve months regarding the register of overseas entities, as provided for by Part 1 of this Act.

(2) The disclosure report under subsection (1) must include—

(a) the minutes from or any notes of meetings in which such representations were made; and

(b) all correspondence, including submissions and electronic communications, addressed or copied to any Minister or former Minister of the Crown.

(3) Information provided under subsection (2)(b) must include—

(a) the names of entities making representations;

(b) the dates on which representations were made; and

(c) a summary of what the representation was.’

This new clause requires the Government to lay before Parliament a report containing details of all representations made by entities including businesses, regarding the register of overseas entities, provided for by Part 1 of the Bill. The report must be laid within 1 month of the Bill attaining Royal Assent.

New clause 6—Transitional Period for Certain Qualifying Estates—

‘(1) A transitional period of 18 months shall apply to—

(a) an entity that—

(i) is registered in the register of title kept under the Land Registration Act 2002 as the proprietor of a qualifying estate within the meaning of Schedule 4A to that Act, and

(ii) became so registered in pursuance of an application made on or after 1 January 1999,

(b) an entity that—

(i) in relation to a plot of land that is registered in the Land Register of Scotland, is (or is to be) entered as proprietor in the proprietorship section of the title sheet for the plot of land by virtue of an application for registration made on or after 8 December 2014,

(ii) in relation to a lease that was recorded in the General Register of Sasines or registered in the Land Register of Scotland before that date is, by virtue of an assignation of the lease registered in the Land Register of Scotland on or after that date, the tenant under the lease, or

(iii) in relation to a lease that was registered in the Land Register of Scotland on or after that date, is the tenant under the lease, or

(c) an entity that—

(i) is registered in the register kept under the Land Registration Act (Northern Ireland) 1970 (c. 18 (N.I.)) as the owner of a qualifying estate within the meaning of Schedule 8A to that Act, and

(ii) became so registered on or after the day on which that Schedule came into force.

(2) Overseas entities registered as the proprietor of relevant interests in land falling within the scope of subsection (1) must comply fully with all obligations under the Act at the end of the period of 18 months beginning with the commencement date.’

This new clause creates a transition period for certain overseas entities registered as the proprietor of relevant interests in land in order to provide the Government with a time frame to resolve issues with the Land Registry that currently make registration impracticable.

New clause 7—38A Further reforms to Companies House—

‘(1) Not later than 28 days from when Part 1 of this Act comes into force, the Secretary of State must publish draft legislation for the purpose of making further reforms to Companies House, including to support the effective functioning of the register of overseas entities.

(2) The draft legislation must include—

(a) new powers for the registrar to aid the verification of foreign entities applying for registration as set out in section 4 of this Act;

(b) new powers for the registrar to better share data with enforcement agencies; and

(c) reforms that will improve the quality and veracity of the information on the register.’

This new clause would compel the Secretary of State to publish draft legislation on reforms to Companies House, including reforms that would support the operation of the Act.

New clause 8—47A Annual reports on unexplained wealth orders—

‘(1) The Secretary of State must prepare annual reports on unexplained wealth orders made by the High Court on application by an enforcement authority under the Proceeds of Crime Act 2002.

(2) An annual report must —

(a) specify the number of unexplained wealth orders made during the relevant period; and

(b) specify the number of applications by each enforcement authorities during the relevant period.

(3) An annual report must be published and laid before Parliament before the end of the 4 month period beginning immediately after the last day of the period to which the report relates.’

This new clause requires the Secretary of State to make an annual report on the use of unexplained wealth orders.

New clause 9—Review of Act 2022 and adequacy of resources

‘(1) The Secretary of State must publish a review of the operation of this Act by 31 December 2022.

(2) The registrar of companies in England and Wales must publish a report on the operation of this Act by 31 December 2022.

(3) The report by the Secretary of State under subsection (1) must include an assessment of the adequacy of resources allocated for the operations of the registrar of companies in England and Wales, as augmented under this Act.

(4) The report by the Secretary of State under registrar of companies in England and Wales must include an assessment of what the effect on performance of the over the following 12-month period if the real-terms resources after inflation allocated by the Secretary State were increased by—

(a) 10%,

(b) 25% and

(c) 50%.

(5) The Secretary of State must publish a further review of the operation of this Act by 31 December 2023, and at least once in each subsequent calendar year.

(6) The registrar of companies in England and Wales must publish a further report of the operation of this Act by 31 December 2023, and at least once in each subsequent calendar year.’

This new clause would require annual reports from the Government and Companies House on the effectiveness of this Act, and the adequacy of resources allocated to Companies House.

New clause 10—Review of sanctions regulations: requirement for a debate in House of Commons—

‘In section 30 of the Sanctions and Anti-Money Laundering Act 2018 (Review by appropriate minister of regulations under section 1), after subsection (5), insert—

“(5A) An appropriate Minister of the Crown must, not later than ten sitting days after a report under this section has been laid before Parliament, make a motion in the House of Commons providing for a debate in relation to the report.”’

This new clause would require the Government to schedule a debate on reports laid before the House in relation to the continued appropriateness of regulations made under section 1 of the Anti-Money Laundering Act 2018.

New clause 13—Power to require overseas entity to register if it owns property within a freeport—

‘(1) The Secretary of State may by notice require an overseas entity to apply for registration in the register of overseas entities within the period of 6 months beginning with the date of the notice if at the time the notice is given—

(a) the entity is registered as the proprietor of a relevant interest in property within a UK freeport, and

(b) the entity is not registered as an overseas entity, has not made an application for registration that is pending and is not an exempt overseas entity.

(2) A notice under subsection (1) lapses if, before the end of the period mentioned there, the overseas entity—

(a) ceases to be registered as the proprietor of a relevant interest in property within a freeport, or

(b) becomes an exempt overseas entity.

(3) If an overseas entity fails to comply with a notice under subsection (1), an offence is committed by—

(a) the entity, and

(b) every officer of the entity who is in default.

(4) A person guilty of an offence under subsection (3) is liable—

(a) on summary conviction in England and Wales, to imprisonment for the maximum summary term for either-way offences or a fine (or both);

(b) on summary conviction in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both);

(c) on summary conviction in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum (or both);

(d) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both).

(5) In subsection (4)(a) “the maximum summary term for either-way offences” means—

(a) in relation to an offence committed before the time when paragraph 24(2) of Schedule 22 to the Sentencing Act 2020 comes into force, 6 months;

(b) in relation to an offence committed after that time, 12 months.

(6) In this section “exempt overseas entity” means an overseas entity of such description as may be specified in regulations made by the Secretary of State for the purposes of this section.

(7) Regulations under subsection (6) are subject to the affirmative resolution procedure.’

This new clause requires an overseas entity to apply for registration in the register of overseas entities if they have a property within a freeport.

New clause 14—Commission for the Protection of Whistleblowers—

‘The Secretary of State shall establish a Commission for the Protection of Whistleblowers for the purpose of enhancing the transparency and enforcement of economic crime covered by this Act.’

New clause 18—Publication of information during transitional period—

‘(1) The Secretary of State must record the activities of overseas entities that fall within the scope of this Bill which take place during the transitional period, provided for by part 2 of schedule 3 and part 2 of schedule 4.

(2) The Secretary of State must publish on a weekly basis the information gathered under paragraph (1).

(3) “Information” under subsection (2) means details on overseas entities as provided for by Part 1 of this Act.’

This new clause would require the Secretary of State to record and publish the details of companies benefitting from the 18-month transitional period, to facilitate scrutiny as to whether they may be linked with the Russian regime.

New clause 19—Power to require registration of donations to registered political party, etc.—

‘(1) The Secretary of State must by notice require a company or Limited Liability Partnership (LLP) to apply for registration in the register of overseas entities within the period of 6 months beginning with the date of the notice if at the time the notice is given—

(a) the company or LLP has made a donation to—the entity is not registered as an overseas entity, has not made an application for registration that is pending and is not an exempt overseas entity.

(i) a registered political party,

(ii) a candidate at an election,

(iii) a third party (non-party campaigner under Schedule 11 of the Political Parties, Elections and Referendums Act 2000 (PPERA)),

(iv) a permitted participant at a referendum under Schedule 15 of PPERA, or

(v) any other regulated entity under Schedule 7 of PPERA, including holders of elective office, members of political parties, and members’ associations,

and the entity has not made in written form to the recipient the declaration specified in subsection (2) of this section; and

(b) the entity is not registered as an overseas entity, has not made an application for registration that is pending and is not an exempt overseas entity.

(2) The declaration required by (1)(a) is that the company or LLP’s profits generated and taxable within the UK over the previous 12 months are greater than the value of the donation given.

(3) A declaration under this section must also state the company or LLP’s full name, address and registration number.

(4) A person who knowingly or recklessly makes a false declaration under this section commits an offence attracting the following penalties—

(a) on summary conviction in England and Wales or Scotland: to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both);

(b) on summary conviction in Northern Ireland: to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum (or both);

(c) on conviction on indictment: to imprisonment for a term not exceeding 12 months or a fine (or both).

(5) The Secretary of State may by regulations make provision requiring a declaration under this section to be retained for a specified period.

(6) The requirement in subsection (1) does not apply where, by reason of section 71B(1)(b) of PPERA, the entity by whom the donation would be made is a permissible donor in relation to the donation at the time of its receipt by the party.’

This new clause is intended to require that any donations made by UK companies or limited liability partnerships come from sources generating profits made by genuine commercial activity carried out within the UK, and prevent donations of foreign or unknown provenance from being channelled through UK companies or LLPs into regulated political entities (political parties, third parties, campaigners at referendums, candidates etc.)

New clause 21—Report on co-ordination and co-operation—

‘The Secretary of State must lay a report before both Houses of Parliament no later than 31 December 2022, and at least once in each subsequent calendar year, setting out progress in co-ordination and co-operation in relation to this Act and (in particular) an assessment of the effectiveness of information-sharing in relation to entities registered or operating in—

(a) the Crown Dependencies (the Bailiwicks of Jersey and Guernsey, and the Isle of Man), and

(b) the British Overseas Territories (Anguilla, Bermuda, British Antarctic Territory, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat and Pitcairn Islands.’

This new clause requires annual reports on transparency and enforcement in the Crown Dependencies and the British Overseas Territories.

New clause 22—Report on resources for implementing this Act—

‘(1) The Secretary of State must lay a report before both Houses of Parliament no later than 31 December 2022, and at least once in each subsequent calendar year, setting out the funding and achievements in relation to this Act of—

(a) National Crime Agency and

(b) the Office of Financial Sanctions Implementation,

in the most recent year ending 31 March, with an assessment by the Comptroller and Auditor-General of value for money of each of those organisations.

(2) Each report under subsection (1) must be accompanied by—

(a) an assessment from the organisation concerned of the adequacy of the long-term financing provided by the Secretary of State, and

(b) an assessment by that organisation of the expected outcomes in terms of performance and value for money, if funding for the next financial year was increased by 20%

(3) Before laying a report under subsection (1), the Secretary of State must consult the Scottish Ministers.’

The intention of this new clause is to ensure parliamentary oversight of the funding of the National Crime Agency and Office of Financial Sanctions in relation to the implementation of this Act.

New clause 23—Scottish Limited Partnerships—

‘(1) The Secretary of State must consult the Scottish Ministers on the application of this Act to Scottish limited partnerships.

(2) The Secretary of State may make regulations, including supplementary, incidental and consequential provision, to apply any provision in this Act to Scottish limited partnerships.

(3) Regulations made under subsection (2) with the consent of the Scottish Ministers are subject to the negative procedure.

(4) Regulations made under subsection (2) which do not have the consent of the Scottish Ministers are subject to the affirmative procedure.’

The intention of this new clause is to ensure that Scottish limited partnerships are covered by the provisions in the Bill.

New clause 24—Review of funding arrangements for enforcement agencies—

‘(1) The Secretary of State must conduct a review of the suitability of the funding arrangements for enforcement agencies in light of the provisions of this Act and in connection with the wider context of economic crime.

(2) The report of the findings of the review under subsection (1) must be published and laid before Parliament within 3 months of this Act being passed.’

This new clause would require the Secretary of State to conduct a review of the funding arrangements for enforcement agencies in light of the provisions of the Bill and in relation to economic crime more broadly.

New clause 25—Reports on operation of Act—

‘(1) The Secretary of State must lay before both Houses of Parliament no later than 31 December 2022, and at least once in each subsequent calendar year, a report on the operation of this Act.

(2) The Secretary of State must also lay before both Houses of Parliament no later than 31 December 2022, and at least once in each subsequent calendar year, a report from the register of companies in England and Wales on the operation of this Act.’

The purpose of this new clause is to ensure that Parliament is regularly informed about the operation of this Act.

New clause 26—Designation of persons under sanctions regulations: reform—

‘(1) The Sanctions and Anti-Money Laundering Act 2018 is amended as follows.

(2) In section 11 (designation of a person by name under a designation power), leave out subsection (2)(b)(ii).

(3) In section 12 (designation of persons by description under a designation power), leave out subsection (5)(b)(ii).’

This new clause would amend the Sanctions and Anti-Money Laundering Act 2018. It would remove the requirement that a Minister, when designating a person by name or persons of a specified description in regulations made under that Act, to have regard to the likely significant effects of the designation on those persons.

New clause 27—Commission for the Protection of Whistleblowers (No.2)—

‘(1) The Secretary of State shall establish a Commission for the Protection of Whistleblowers for the purpose of promoting transparency in relation to breaches of the provisions of this Act.

(2) The Commission for the Protection of Whistleblowers must work with relevant authorities to ensure that any concerns raised by whistleblowers in relation to breaches of the provisions of this Act are dealt with responsibly and effectively by the relevant authorities.’

New clause 28—Emergency asset-freezing orders—

‘(1) The Secretary of State may make an unexplained wealth order in respect of any property or cash in whatever form, including sums held in blockchain accounts, that is held (or that the Secretary of State has reason to believe that is held) by or on behalf of a designated person.

(2) The Secretary of State may make an interim freezing order in respect of the property or cash in whatever form, including blockchain, if the Prime Minister considers it necessary to do so for the purposes of avoiding the risk of any recovery order that might subsequently be obtained being frustrated, and that it is in the interests of national security that the order be made.

(3) An interim freezing order has the same meaning as in section 362J of the Proceeds of Crime Act 2002.

(4) The Secretary of State may designate under subsection (1) any person whom Secretary of State considers meets, or is likely to meet, the criteria for sanctions to be imposed under the Sanctions and Anti-Money Laundering Act 2018.

(5) The power in this section lapses 6 months after the date on which this Act is passed, unless the Secretary of State makes an order to continue this section in force for a further period of up to six months.

(6) An order under subsection (4) may be made more than once, but every such order may be made only after a draft of the order has been approved by resolution of each House of Parliament.’

The intention of this new clause is to provide a temporary emergency power to freeze the assets of individuals, companies or other entities in order to prevent asset flight before sanctions are in place.

New clause 29—Asset freezing in respect of individuals considered for sanctions—

‘(1) The Secretary of State may by notice publish the name of a person being considered as a subject for sanctions.

(2) A person in respect of whom a notice has been published under subsection (1) is immediately subject to the provisions of this section.

(3) A person in respect of whom a notice has been published under subsection (1) is prohibited from—

(a) selling any assets they own or have an interest in,

(b) moving any assets they own or have an interest in out of the United Kingdom, or

(c) moving any of their funds out of the United Kingdom.

(4) ‘Assets’ in subsection (3)(a) or (b) includes (but is not limited to)—

(a) land;

(b) houses, flats or other private accommodation;

(c) commercial, industrial, agricultural and other buildings, premises or property;

(d) businesses;

(e) personal possessions, works of art, jewellery or collectibles with an individual value of more than £500;

(f) motor vehicles;

(g) yachts or boats; and

(h) aircraft.

(5) ‘Funds’ in subsection (3)(c) means financial assets and economic benefits of any kind, including (but not limited to)—

(a) gold, cash, cheques, claims on money, drafts, money orders and other payment instruments;

(b) deposits with relevant institutions or other persons, balances on accounts, debts and debt obligations;

(c) publicly and privately traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, notes, warrants, debentures and derivative products;

(d) interest, dividends or other income on or value accruing from or generated by assets;

(e) credit, rights of set-off, guarantees, performance bonds or other financial commitments;

(f) (letters of credit, bills of lading, bills of sale; and

(g) documents providing evidence of an interest in funds or financial resources.

(6) A person who breaches any prohibition under this section commits an offence.

(7) A person who engages in an activity knowing or intending that it will enable or facilitate the commission by another person of an offence under paragraph (6) commits an offence.

(8) A person guilty of an offence under subsection (6) is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;

(b) on summary conviction—

(i) to imprisonment for a term not exceeding six months; or

(ii) to a fine which in Scotland or Northern Ireland may not exceed the statutory maximum,

(None) or to both.

(9) A person guilty of an offence under subsection (7) is liable on summary conviction—

(a) to imprisonment for a term not exceeding six months; or

(b) to a fine which in Scotland or Northern Ireland may not exceed level 5 on the standard scale,

or to both.’

This new clause would prevent individuals whom the Secretary of State has named as being considered as a subject for sanctions from selling their assets or moving funds or assets out of the UK.

New clause 30—Proposals for enforcement agencies to retained recovered wealth—

‘Within 28 days of this Act being passed, the Secretary of State must publish and lay before Parliament a report setting out proposals to allow for the wealth recovered in connection with the use of unexplained wealth orders and other anti-corruption powers under the Proceeds of Crime Act 2002 and the Criminal Finances Act 2017 to be retained by the agencies involved in countering economic crime.’

This new clause would require the Secretary of State, within 28 days of the Bill being passed, to publish and lay before Parliament a report setting out proposals to allow for the wealth recovered in connection with the use of unexplained wealth orders and other anti-corruption powers to be retained by the relevant enforcement agencies.

Amendment 28, page 35, line 3, schedule 1, at end insert—

“(1A) The required information about an individual owner who is not a British citizen must include information about whether that individual has ever held a Tier 1 (investor) visa issued in accordance with paragraphs 245E to 245EF of the Immigration Rules.”

This amendment would ensure transparency over the use of overseas entities by individuals who have held so-called golden visas.

Amendment 40, in schedule 1, page 35, line 38, at end insert—

“6 In a case where Condition 5 in paragraph 6 of Schedule 2 is met in relation to the registrable beneficial owner, the required information includes details of the role of the beneficial owner in relation to the trust.”

This amendment would ensure that the required information includes details of the role of the beneficial owner in relation to a trust, where a person controls a trust which owns shares, has voting rights, can appoint or remove directors or exercise significant influence or control over an entity.

That schedule 1 be the First schedule to the Bill.

Amendment 3, in schedule 2,  page 37, line 30, at end insert—

“4A Any individual trust, company, government or public authority wherever resident shall be treated as a registrable beneficial owner in relation to an overseas entity for the purposes of this Act if a beneficial owner of a qualifying estate as defined in Schedule 4A that is held by the overseas entity whether or not the individual trust, company, government or public authority holds itself any interest in that overseas entity.

4B In relation to a trust which is to be treated as a registrable beneficial owner, full details shall be given in the registration of the senior trustees and principal beneficiaries.”

The intention of this amendment is to facilitate the identification of the beneficial owners of registered trusts.

Amendment 18, page 38, line 5, leave out “25%” and insert “10%”.

The intention of this amendment is to define as a beneficial owner a person who holds more than 10% of the shares in an entity.

Amendment 19, page 38, line 8, leave out “25%” and insert “10%”.

The intention of this amendment is to define as a beneficial owner a person who holds more than 10% of the voting rights in an entity.

Amendment 39, page 38, line 23, at end insert—

‘6A (1) A person (“A”) is a beneficial owner of an overseas entity or other legal entity (“B”) if—

(a) A is closely connected to a person (“C”) to whom one or more of the conditions in paragraph 6 applies; and

(b) A—

(i) benefits directly from C’s role in respect of B, or

(ii) previously exercised the role in relation to B that is now exercised by C.

(2) For the purposes of this Schedule two persons are “closely connected” if—

(a) they are married to one another;

(b) they are in a civil partnership with one another;

(c) one person is the parent of the other.

(d) one person is the brother or sister of the other.

(3) Where this paragraph applies, the required information under Schedule 1 must be provided in a single statement in relation to both A and C.’

Amendment 20, page 40, line 34, leave out “25%” and insert “10%”.

This amendment is consequential on Amendment 18.

Amendment 21, page 40, line 36, leave out “25%” and insert “10%”.

This amendment is consequential on Amendment 18.

Amendment 22, page 41, line 1, leave out “25%” and insert “10%”.

This amendment is consequential on Amendment 19.

Amendment 23, page 41, line 2, leave out “25%” and insert “10%”.

This amendment is consequential on Amendment 19.

That schedule 2 be the Second schedule to the Bill.

Amendment 13, in schedule 3, page 45, line 10, leave out paragraph (b).

This amendment would require the registrar to enter a restriction in the register in relation to a qualifying estate in which an overseas entity is registered as the proprietor regardless of the date of the registration.

Government amendment 55.

Amendment 15, page 48, line 20, leave out “18 months” and insert

“save as provided for by section (Transitional period for qualifying estates) 28 days save as provided for by section (Transitional period for qualifying estates)”.

This amendment would reduce the period for registration as an overseas entity within from 18 months to 28 days save as provided for by NC6.

Amendment 14, page 48, line 26, leave out paragraph (b)

This amendment would extend the offence to all overseas entities, and every officer of the entity in default regardless of the date of the registration.

Manuscript amendment 64, page 49, line 9, leave out from “estate” to the end of line 12 and insert “from the commencement date”.

Government amendment 56.

Amendment 16, page 49, line 11, leave out “18 months” and insert

“28 days save as provided for by section (Transitional period for qualifying estates)”.

This amendment would reduce the period from 18 months to 28 days for entering the restriction relating to a qualifying estate save as provided for by NC6.

That schedule 3 be the Third schedule to the Bill.

Government amendment 57.

Amendment 17, in schedule 4,  page 57, line 24, leave out “18 months” and insert “6 months”.

This amendment would reduce the transitional period from 18 months to 28 days save as provided for by NC6.

Government amendment 58.

That schedules 4 and 5 be the Third and Fourth schedules to the Bill.

Economic Crime (Transparency and Enforcement) Bill

Baroness Winterton of Doncaster Excerpts

Consideration of Lords amendments
Monday 14th March 2022 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

Under the Order of the House of 7 March, proceedings on Lords amendments to the Economic Crime (Transparency and Enforcement) Bill may be entered upon and proceeded with at any hour and must be brought to a conclusion one hour after their commencement. Financial privilege is not engaged by any of the Lords amendments.

Lords amendment 1 agreed to.

Lords amendments 2 to 64 agreed to.

[Madam Deputy Speaker]

Under the Order of the House of today, I may not adjourn the House until I have notified the Royal Assent to any Act relating to the Economic Crime (Transparency and Enforcement) Bill, agreed upon by both Houses. We will proceed with the Adjournment debate for no more than 30 minutes. If Royal Assent has not arrived by the end of the Adjournment debate, the sitting will be suspended.