Corporate Transparency and Economic Crime

Seema Malhotra Excerpts

Monday 28th February 2022 Commons Chamber

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I thank the Secretary of State for early sight of his statement and for our call with the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Sutton and Cheam (Paul Scully), this afternoon. The Labour party and the House are united in our support for Ukraine and we take very seriously our role in ensuring that Russia’s unprovoked and unjustifiable aggression fails.

Russia’s invasion of Ukraine has shaken the world, with huge concern across Parliament and the country about the invasion and the unfolding humanitarian crisis. It is clear, however, that it has taken the Russian invasion of Ukraine to shake the Conservative party into finally taking the action that is required. These steps are imperative, not just for financial transparency but for our national security, and the Government’s action on that to date falls far short of the leadership required. That is why we must urgently take the necessary steps to drag illicit finance out of the shadows and make it clear that the UK will no longer be a home to dirty money.

We therefore support the Government in introducing the emergency legislation in the light of the atrocities that we are seeing in Ukraine. The need for it is clear for all to see, but the Secretary of State will recognise that these steps have been needed for a long time. He will know that Labour and, indeed, some Government Members have been calling for years for the measures that the Government have announced. We were first promised this legislation in 2016, and this draft legislation has in fact been ready since 2018. Although we support the Government’s actions today, the Secretary of State needs to take responsibility for the time and progress lost through Government inaction. I hope we will see that lessons are learned for this Bill and future legislation, because time is of the essence.

The UK would have been in a much stronger position to act with speed and our national security would have been better protected if the register had already been up and running. That is why the Government must move quickly, because the dangers of a lack of transparency, particularly in the current climate, are all too plain to see. If the intention, as stated, is to impede Russian money, the register will need to be operational in the coming weeks to have any effect. I assure the Government of Labour’s full support in moving through the Bill’s stages quickly, and hope in turn that they will act quickly to make the register and other measures a reality.

I wish to press the Secretary of State on some key areas in which the Government must go further to make the measures as effective as they could be, and I do that in the spirit of cross-party support. I welcome his announcement that the economic crime transparency and enforcement Bill, or some aspects of it, will finally be introduced tomorrow and welcome the White Paper reforms to Companies House, but frankly, we have to ask whether a White Paper is all he is bringing forward on Companies House—[Interruption.] We have been promised more before, and the Prime Minister announced that more immediate steps would be taken. Will the Secretary of State confirm when other aspects of the economic crime Bill, such as the reform of Scottish limited partnerships and the power to seize crypto-assets, will come before the House?

Will the Secretary of State confirm that the register of overseas entities will be publicly available and that there will be criminal penalties for non-compliance? Will those criminal penalties apply to those who fail to update the register annually, as well as to those who provide false information? Will he confirm when the register will be up and running? Can he give an update on the Crown dependencies and overseas territories, and will he commit to enacting similar reforms and to the Government taking action if they do not take action?

The freedom of our press will be vital throughout this invasion. Will the Secretary of State confirm whether the Government intend to use Monday’s legislation to tackle strategic lawsuits against public participation, so that journalists are not silenced and can freely report on the financial activity of Russian oligarchs? Finally, will he update the House on the discussions that he is having with the devolved Administrations on these important measures? I look forward to his response.

[Kwasi Kwarteng]

I am grateful to the hon. Lady for her points. Clearly, on the time that this has taken, she will remember that in the 2017 to 2019 Parliament, a huge amount of our time was taken up by members of the Labour party and the Opposition parties frustrating Brexit. They absorbed a huge amount of parliamentary time and I am afraid that that was one of the reasons we could not expedite this sort of legislation.

There will be criminal liability for failure to update the register annually and for giving misleading or inaccurate information. We are working with the Crown dependencies to update their transparency; by next year, they will have to have much greater transparency requirements. The hon. Lady will be pleased to know that my Government colleagues and I speak to our counterparts in the devolved Administrations on a very regular basis.