Economic Crime and Corporate Transparency Bill

Debate between Seema Malhotra and Baroness Laing of Elderslie

2nd reading
Thursday 13th October 2022 Commons Chamber

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

It is indeed a pleasure to speak on Second Reading of this important Bill. But before I begin my remarks, let me just mention that, in the Public Gallery today, there are two young dancers from Ukraine, Yeva and Zakhar, who, yesterday, came second in the International Ballroom Dancing Championships. I am sure that we all want to pass on our congratulations to them.

I welcome the Minister to his new role. I very much look forward to working with him in the same spirit as I did with his predecessors. Today, he will have heard Members across the House express their concerns about the time that it has taken to introduce this legislation. Urgency is required not just to bring forward a Bill, but to bring forward the Bill that we need to close the gap between what we are doing now and what needs to happen to tackle the scale of economic crime that exists.

As we heard today, action on economic crime was first promised in 2016 and then again in 2018 and 2019. Even in March, the Government blocked Labour’s amendments, which would have introduced reforms to Companies House and left Russian oligarchs with nowhere to hide. It matters that we have had these delays, because, in six years, we have seen a significant increase in economic crime, much of which could have been prevented had the Government acted earlier.

I thank all the Members who have contributed today from all parts of the House, many of whom have been ahead of the Government in calling for action. I also thank the Minister and his team for our meeting earlier this week. It is also good to have heard about the work going on with the devolved Administrations, because we do indeed need to hear voices from across the nations.

Let me pay tribute to some of the contributions that we have heard today. The right hon. Member for East Hampshire (Damian Hinds) made the important connection between fraud and cyber-crime. He also mentioned the local nature of crime and its links with economic crime nationally. This is not just a debate about a grand scale matter. There is a very deep connection with the lives that we lead in our everyday economies. There is also a need for global action, and it is up to the UK to take the opportunity to lead that action.

The hon. Member for Glasgow Central (Alison Thewliss), with whom it is always an honour to debate from the Front Bench, made some very powerful comments including around false registration, the methods of verification and the need for resources. I commend her work on tackling the issue of Scottish limited partnerships. I also commend the hon. Member for Cheadle (Mary Robinson) on her work on the APPG for whistleblowing; I hope that as we go through Committee we will see more action taken in this Bill to tackle the challenges faced by whistleblowers, who do us a service.

My right hon. Friend the Member for Barking (Dame Margaret Hodge) spoke eloquently, as always, but what stood out for me was her articulation of the scale of the challenge and the fact that there is still just not enough determination or ambition. She was absolutely right to say that warm words need to give way to action—I will come back to some of her other comments.

I will also come back to the speech by the hon. Member for Thirsk and Malton (Kevin Hollinrake), but his comments about legislation with implementation stuck with me. He is right, because we cannot afford to sit on our laurels after passing this Bill, saying we are proud of it, if it does not achieve the change that is necessary and vital. I will also come back to his campaigning on the failure to prevent; his arguments have been heard across the House.

My right hon. Friend the Member for Walsall South (Valerie Vaz) articulated the problem of homes being used fraudulently for the registration of companies when people are not living there, and the lack of redress—an issue also raised by other hon. Members across the House. I want to highlight what that means for the vulnerability of elderly people: we know they are more likely to be victims of scams, but the ability to identify them, often on the electoral register, as people who might be living alone is another source of vulnerability for them and may lead to their being targeted and becoming victims of economic crime.

The hon. Member for Weston-super-Mare (John Penrose), who I also come across in many debates on this and other related topics, is right that the Bill was due, and past due—I think those were his words. I am sure that we will come back in Committee to the arguments he has made about the urgency of proper beneficial ownership transparency and many other points he has raised. I look forward to working with him on those matters.

The hon. Member for Oxford West and Abingdon (Layla Moran), who is not in her place, was right to say that we should get this done in economic crime Bill 2, because we do not want to be back for economic crime Bill 3. This is our chance. She made the point that it is worth taking a little longer to get this Bill through both Houses of Parliament to make sure that it is fit for purpose, and I support that.

My hon. Friend the Member for Hammersmith (Andy Slaughter), speaking from his own deep experience on issues of policing and enforcement, made the point extremely well about the need to ensure that we have the resources, motivation and morale for both policing and enforcement. We cannot have a revolving door. We must have the resources within our public sector to tackle these issues effectively. The hon. Members for Glenrothes (Peter Grant) and for Rutherglen and Hamilton West (Margaret Ferrier) and my hon. Friend the Member for Stretford and Urmston (Kate Green) also made similar and very effective comments in the debate.

I would like to give one final set of thanks, because it is right to pay particular tribute to my right hon. Friend the Member for Barking and the hon. Member for Thirsk and Malton for their leadership in the work of the APPGs on anti-corruption and responsible tax and on fair business banking. Their work serves this House and our nation extremely well on these difficult and complex issues.

I also recognise and thank for their steadfast advocacy the civil society groups that work tirelessly for action on economic crime, including Transparency International, Spotlight on Corruption, the Royal United Services Institute, Open Ownership and the Fair Tax Foundation. That is not an exhaustive list, and many others are worthy of our thanks for bringing insight and clarity to a complex area, which demands that we act in the interests of our national and international security and prosperity.

This Bill is an historic opportunity to put a stop to the UK’s shameful role as a hub of illicit finance and a facilitator of economic crime. This debate is testament to the support of the House for the Government’s going further in tackling money laundering and the illicit use of cryptocurrencies to enable crime.

I am sure the Minister has heard the arguments put forward today, and the motivations for doing so are so clear. Dirty money is a national security threat. It is the lifeblood of corruption, crime and war. Organised crime gangs profiteer from drug smuggling, people trafficking, arms dealing, fraud and environmental destruction. Parliament’s Intelligence and Security Committee has criticised Russian influence in the UK and frankly, as long as Putin and his friends have a safe haven in London, we do a disservice to the brave people of Ukraine, who are fighting with their lives to defend their country and our shared values of democracy and freedom.

Dirty money also causes massive financial damage. In 2020, the National Crime Agency found that money laundering causes at least £100 billion of economic damage to the UK. We have heard other estimates today. Spotlight on Corruption estimates that fraud, now the most commonly experienced crime in the UK, costs us £190 billion annually, hitting businesses and tax receipts and damaging public services. As my right hon. Friend the Member for Barking said, we will never secure sustained growth on the back of dirty money. Every one of us is a victim of economic crime.

Dirty money is damaging the UK’s reputation. The prevalence of economic crime jeopardises our status as a business destination of choice. The United States has designated us as “high risk” for money laundering, alongside Cyprus. That is embarrassing, frankly. Britain must not lose its status as a trusted jurisdiction. The warning signs are there and we need to act urgently.

Finally, dirty money undermines the rule of law and democratic institutions. It corrupts political and legal systems. Oligarchs are clogging up Britain’s already overburdened legal system with vexatious lawsuits to muzzle legitimate critics and whistleblowers. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) made that point extremely well. Democracy, free speech and the rule of law are under threat.

We welcome the Bill. Our argument is not about what is in it, but what is not in it. There are aspects of the Bill that we will want to strengthen and to work with the Government on doing so. Let me lay out some of the areas on which we want to see further action, some of which have also been touched on today. Money launderers use complex financial structures such as shell companies and offshore tax havens to provide the secrecy that allows them to move, hide and spend their money. We must lift the cloak of anonymity that protects criminals and the corrupt.

We are pleased that the Bill begins to tackle the abuse of limited partnerships, including Scottish limited partnerships, by strengthening transparency requirements and enabling them to be deregistered. New research by Transparency International has revealed that more than one in ten limited liability partnerships ever incorporated—over 21,000—have characteristics identical to those used in serious financial crimes, such as bribery, embezzlement of public funds and sanctions evasion. We will review the detail of changes in Committee. Given the mass use of LLPs and other UK legal structures in large-scale money laundering, those networks are ideal platforms for a variety of clients looking to move dirty money.

On Companies House, the Bill is a huge step forward in improving the integrity of our register. That is important as we move from Companies House being a register to being more of a regulator. For far too long, fraudsters have obscured their identities behind shell companies, relying on a lack of verification of the information they submit. It is right that the Bill will make failure to comply with new ID regulations a criminal offence. The identity verification introduced by the Bill can finally begin to close that door, but it needs to be strong and we need further details about how the new powers will be used to close down those fraudulent companies already registered with Companies House.

Experts such as Graham Barrow suggest that there have been a huge number of bogus incorporations over the past decade alone, which will take significant effort and time to retrospectively verify. The Government have yet to clarify the period in which registered companies will be required to meet their new commitments, which, similarly to the Economic Crime (Transparency and Enforcement) Act 2022, will create a window in which those who have engaged in fraudulent activities can dissolve their entities or transfer interests. We do not want to see that happen. Has the Minister considered whether such verification should also be required to strike off and dissolve a company? That would help to prevent entities from dissolving and restructuring to avoid scrutiny under the new regime.

I urge the Minister to consider a mechanism by which parties affected by fraudulent entries—we have heard examples today—can apply to Companies House to have an entity or director struck off. They should not have to wait for Companies House to use its querying power, given the time that it takes. Public accountability is vital, so what plans does the Minister have for reports to Parliament on Companies House activity, which will bring public confidence?

Trust and company service providers are defined as being “of the highest risk” for money laundering by the National Crime Agency. A recent Treasury review found that HMRC, which is responsible for supervising TCSPs, continues to suffer from

“a lack of appropriate AML policies, control and procedures”.

The AML supervisory regime, including of TCSPs, is under review, but the further consultation promised by the Treasury in June is yet to be published. Until this broken supervision is fixed, how can we rely on such third-party agents to effectively act as the gatekeepers of our financial system? Under the Bill as introduced, they can be authorised to carry out ID verification as an alternative to Companies House. Crooks and kleptocrats already rely on these enabling professionals to build and maintain whole systems of shell companies. New measures in the Bill requiring third-party agents who form companies on behalf of someone else to register with Companies House and be registered in the UK with an anti-money laundering supervisor are long overdue. However, unscrupulous TCSPs will simply add ID verification and, potentially, falsification to their menu of law-busting schemes. That must not become a loophole in the legislation.

Could the Minister outline how the legislation will have sufficient teeth to prevent rogue actors from setting up shell companies for money laundering? The detail of verification checks is yet to be defined, but as drafted, third-party agents will simply be able to state that they have verified information on behalf of clients. Will the registrar have sufficient powers to review the documentation of “know your customer” checks if there are concerns?

There are concerns from stakeholders, such as Transparency International, that the Bill does not commit to verifying shareholder data, which could reduce the level of trust in the accuracy of that data. Concerns have also been raised about information sharing. While the measures in the Bill are a step forward, information-sharing measures appear to be reactive, rather than to proactively spot problem areas. This is a complex issue, and I am sure that there will be detailed discussion of it in Committee.

Extending current asset recovery provisions into the realm of cryptoassets is a welcome step forward, with cryptoassets increasingly used to launder the profits of crime and to support terrorism. On seizing and recovering cryptoassets, we will want to work with the Government to ensure that powers in the Bill extend to introducing sanctions on crypto-marketplaces that enable criminal activity. However, we are concerned, as the UK Anti-Corruption Coalition is, that to be effective, any new provisions regarding crypto money laundering and asset seizure need to be executed by a fully trained workforce. What is the Government’s economic crime people and skills strategy, and how is it changing in the light of the new threats we face?

Finally, I want to come back to a point raised by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper) and others. We very much believe that there is a missed opportunity in this Bill, which is extending corporate criminal liability for economic crimes. The powers that exist under the Bribery Act 2010 and in relation to tax evasion could and should be extended to other economic crimes. The Secretary of State for Wales said this week that he considers a new failure to prevent offence for fraud “likely”. The Home Secretary said that the Government are looking at this, so why do they not just get on with it, and bring forward proposals or work with us on amendments to the legislation? I certainly believe, on the basis of the debate today, that there is support for such a move across the House, and we will continue to push for it.

There is much to welcome in this Bill, with long overdue powers for Companies House and law enforcement agencies, but those powers will make a real difference only if the Government provide the resources to use them—legislation with implementation, as the hon. Member for Thirsk and Malton said. We know that the Government committed £63 million in the 2021 spending review to Companies House, which was allocated for the transformation effort that, rightly, must take place. That is £63 million as against the billions that I have described economic crime as costing the UK each year.

The Government have included a new power to set Companies House incorporation fees. We know that the £12 cost of registration is the sixth lowest in the world, so what are the plans to resource those efforts? Does the Minister plan to increase the costs of incorporation to help pay for the effective operation of the new regime as part of the sustainable resourcing model, or to seek an increase in the economic crime levy, and what is the alternative? It would be helpful to understand that as the Bill goes on its passage through the House.

With the Bill’s complexity, it would not be possible to touch on all the issues involved, but I am grateful to have had the opportunity to wind up for the Opposition. We have the power in this country to lead change, and for the sake of our citizens, our children and the international community we must do so now.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call, to make his debut at the Dispatch Box, Minister Dean Russell.

Business without Debate

Debate between Seema Malhotra and Baroness Laing of Elderslie

Wednesday 15th December 2021 Commons Chamber

[Madam Deputy Speaker]

I thank the hon. Lady very much for her point of order. It is lovely that she, as a senior Opposition Front Bencher, and her colleagues are speaking for all their colleagues in giving those good wishes to everybody here. I echo, again, her thanks.

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

Further to that point of order, Madam Deputy Speaker. May I add my thanks? I particularly wanted to mention the Clerks, to whom you have referred, and the work that they know will be coming to them as a result of today’s Second Reading debate. I thank them for the support they continue to give in making sure that we can bring forward the best possible amendments to legislation.

May I also thank Mr Speaker, yourself and the other Deputy Speakers, who deal with all sorts of situations in the House? Every day seems to create a new unique situation to deal with. I can see that all the tools and tricks in the box have been brought out to help manage this Chamber in the best possible way so that we can continue to have the best possible informed debate and deal with the challenges that face us.

[Madam Deputy Speaker]

I sincerely thank the hon. Lady for her point of order and for her kind wishes. I will pass on to Mr Speaker the good wishes that have echoed around the Chamber. He certainly works extremely hard to keep this ship afloat. I echo the very kind good wishes of the hon. Lady and will make sure that Mr Speaker knows of the good wishes that the entire House is sending to him.

Adjournment

Resolved, That this House do now adjourn.—(Andrea Jenkyns.)

Menopause (Support and Services) Bill

Debate between Seema Malhotra and Baroness Laing of Elderslie

2nd reading
Friday 29th October 2021 Commons Chamber

[Seema Malhotra]

I, too, just want to pick up on the point that my hon. Friend made about women and the workplace. We know that, according to the Centre for Ageing Better, 800,000 people over 50 were wanting to work more and were under-employed—that was the case a year ago, at least. Does she agree—

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. The hon. Lady has already had one intervention, which was very long. I allowed that, but her second intervention is heading towards being very long and I cannot construct this debate like that. About 30 people wish to speak this morning. I am sure that the promoter of the Bill wants to make sure that as many people as possible get to speak, but that she also will not want to talk out her Bill. I hope that those who support the Bill will not make long interventions and long speeches, because otherwise the Bill will be talked out and we will not achieve the result we are intending to achieve. So I ask for brevity, please, on all sides.

Post Office Update

Debate between Seema Malhotra and Baroness Laing of Elderslie

Wednesday 19th May 2021 Commons Chamber

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

I thank the Minister for advance sight of his statement. My hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) is not able to attend today but, like me, she welcomes today’s statement, including the much belated conversion of the inquiry to a statutory footing and the extension of its scope, although we believe that it does not yet go far enough.

This is indeed the largest legal miscarriage of justice in our history. It is estimated that there have been 900 false prosecutions in total—each one its own story of persecution, of fear, of despair, of families destroyed, of reputations smashed, of lives lost and of innocent people bankrupted and imprisoned. I thank and congratulate everybody who has campaigned over so many years—for more than a decade—to reveal the truth, including the Justice for Subpostmasters Alliance and the Communication Workers Union. I also congratulate right hon. and hon. Members across the House who have fought for justice for their constituents; I mention in particular my right hon. Friend the Member for North Durham (Mr Jones), who has worked tirelessly on the issue.

The campaign for justice has been long fought, and there is still a long way to go. The Minister’s announcement is a step in the right direction. The Labour party and the Justice for Subpostmasters Alliance have always said that the inquiry must be statutory, but less than a month ago in this Chamber, four days after the Court of Appeal’s decision, the Minister rejected calls for a statutory inquiry on the grounds that it would take

“three, four or five years”—[Official Report, 27 April 2021; Vol. 693, c. 254.]

Can he tell us what has happened to change his mind?

The horrific miscarriage of justice did not happen overnight. For a decade, we have known that there were serious problems with the Horizon system, but the Post Office denied all wrongdoing, pursuing the victims and imposing huge lawyers’ fees on the claimants. Even after the High Court ruling vindicated postmasters in 2019, the Government refused to act. The next step has been delayed and victims’ lives have been disrupted by this Government.

It is important to remember that having a statutory inquiry is not, of itself, justice. There remain a number of urgent questions for the Minister that he did not answer a few weeks ago. The Government are the Post Office’s only shareholder, yet time and again, the Post Office was allowed to abuse its power over postmasters. That was the finding of the Court, and it is a really important point. Will the Minister acknowledge the Government’s failure of oversight and due diligence with regard to public money? Will he apologise to the victims and their families today? The postmasters were criminalised for a culture that assumed technology is infallible and workers dishonest. How will the Minister change that, and what are the implications for the management of human teams relying on AI or computer algorithms?

We welcome any new powers for Sir Wyn and the review. It was reported—and this seemed to be in the statement—that Sir Wyn will have the power to summon witnesses to give testimony under oath and to force the Post Office to hand over documents. Can the Minister confirm that, and will that power apply to any other entity or organisation from which evidence is sought? While the terms of reference have been updated, they do not seem to reflect the issues raised by my hon. Friend the Member for Newcastle upon Tyne Central previously. For example, compensation still appears to be out of scope of the inquiry—why? Who has been consulted on the revised terms of reference?

Fujitsu was the one that provided faulty software. An independent investigator, Second Sight, drew attention to that as far back as 2013, yet the Government do not appear to be doing anything to hold Fujitsu to account. Instead, the Horizon software has been renewed, rewarding Fujitsu with a new £42 million contract. Will ongoing Government contracts with Fujitsu be reviewed? Paula Vennells led the Post Office during this time and was honoured with a CBE, along with a long list of others. Is it right that she and others continue to be honoured?

The Minister has referred to a “full and final settlement” for some postmasters with the Post Office. However, he will know that of the £58 million settlement approved in the High Court case, only £12 million will go to the victims, with the rest taken up in legal fees. Does the Minister agree that they should be considered for appropriate compensation?

The JFSA and Labour want there to be a public consultation to guarantee that the inquiry will deliver for all the victims and provide conclusive answers. The Post Office is a Government-owned company that has been found to be at fault. It is vital that the Government act to improve the corporate structure of the Post Office, to prevent this kind of thing from ever happening again. It should never have been allowed to develop into this scandal, but all we can do now is ensure that we get to the truth, that those wrongly convicted get justice and that lessons are learnt.

Securing this statutory inquiry is a big victory for sub-postmasters, trade unions and justice, but despite the Government’s U-turn, this is only the start. The Government have failed to live up to their responsibility to prevent this scandal from occurring, and they have, until today, stood in the way of justice. I urge the Minister to apologise, to own the Government’s mistakes and to start work to ensure that justice is served and that a scandal of this magnitude can never happen again.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I did not want to interrupt the hon. Lady, but Mr Speaker would be annoyed with me if I did not point out that she has taken a minute longer than she ought to have had, and that is a minute that will not be taken later today by some other Member who wishes to speak.

Points of Order

Debate between Seema Malhotra and Baroness Laing of Elderslie

Thursday 25th March 2021 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

I thank the right hon. Lady for notice of her point of order. As she well knows, and as Mr Speaker has said many times, it is a matter for the Government whether they make a written or oral ministerial statement; the occupant of the Chair has no say in that matter.

The right hon. Lady asks the question always asked during points of order, but I appreciate that it is a way for her to bring to the attention of the House and those on the Treasury Bench her concerns about how this matter can be brought before the House. There are, of course, many ways in which the right hon. Lady can do that: she can seek an Adjournment debate; ask for an urgent question; go to the Backbench Business Committee; urge a Select Committee to have an inquiry; and write to Ministers. I think she knows about all those. I am quite sure that, given her experience and determination—for which she is renowned in this particular matter—she will find one of those ways of bringing this matter to the Floor of the House.

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

On a point of order, Madam Deputy Speaker. I thank you and Mr Speaker for allowing me to make this point of order.

On 8 March, in Department for Work and Pensions questions, the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies), told me that in Feltham and Heston there were 77 kickstart vacancies and 11 starts. She also shared kickstart data for Tower Hamlets with my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali). On 17 March, I tabled a written question asking for kickstart placements and vacancies by constituency; I was surprised to be told that that data is not currently available by constituency.

Three other colleagues—my hon. Friends the Members for Blaenau Gwent (Nick Smith), for Ilford North (Wes Streeting) and for Plymouth, Sutton and Devonport (Luke Pollard)—have been similarly rebuffed when asking about their own constituencies. MPs have also been told that the Department is unable to publish data below regional level.

Madam Deputy Speaker, if the Minister told me figures for my constituency in this House, the data does exist and could be published. Given that young people’s jobs have been worst hit, transparency matters so that Parliament knows where opportunities are reaching and where they are not. Could you advise me on how Members can seek to get this important data published by the DWP?

[Madam Deputy Speaker]

I thank the hon. Lady for giving me notice of her point of order. As I said to her right hon. Friend the Member for Kingston upon Hull North (Dame Diana Johnson) a few moments ago, it is not for the Chair to comment on the accuracy or completeness of ministerial answers; that is a matter entirely for Ministers. But it is fairly obvious that if the Department holds the information that she has requested, it should provide that information to her.

The hon. Lady has used her point of order to draw her concerns to the attention of the House and Ministers. Of course, she will also be aware that the Procedure Committee monitors departmental performance. I suggest that she considers drawing the matter to the attention of the Procedure Committee if the Department’s response remains unsatisfactory.