Oral Answers to Questions

Simon Kirby Excerpts

Tuesday 18th April 2017 Commons Chamber

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

6. What discussions he has had with the Secretary of State for Exiting the European Union on the provisions of the EU anti-money laundering directive in the UK’s negotiations on leaving the EU; and if he will make a statement.

[The Economic Secretary to the Treasury (Simon Kirby)]

I reassure the hon. Gentleman that the Treasury and the Department for Exiting the European Union are working closely on that issue. As we exit the EU, we will look to negotiate the best deal possible so that we can continue to work together to maintain justice and security both in the UK and across Europe.

[Gareth Snell]

The Panama papers showed that thousands of UK-based banks, accountants, lawyers and other intermediaries have helped to set up shady and opaque corporate structures to handle illicit cash flows after registering in the Crown dependencies and overseas territories. Almost a year on from the anti-corruption summit, will the Minister commit to a public register of beneficial ownership covering the Crown dependencies and overseas territories?

[Simon Kirby]

If only we could do that; we do not have the ability to do so. What I can say is that in March 2017 we published the draft money laundering regulations and announced plans for a new watchdog to ensure supervisors and law enforcement work together more effectively. Since 2010, law enforcement have seized £1.4 billion in illegal funds.

[James Duddridge (Rochford and Southend East) (Con)]

The EU is to blame for many things, but it is not to blame for money laundering and, in fact, any solution that looks to the EU to solve money laundering is missing the point that it is an international problem. Therefore, will the Minister confirm that he will be engaging internationally and not through the parochial lens of the EU?

[Simon Kirby]

We are of course a founding member of the Financial Action Task Force, which sets international standards for anti-money laundering and counter-terrorism financing. After exiting the EU, the UK will continue to lead in FATF and around the world.

--- Later in debate ---

[Maria Caulfield (Lewes) (Con)]

10. What steps he is taking to support economic growth on the south-east coast of England.

[The Economic Secretary to the Treasury (Simon Kirby)]

Would you mind, Mr Speaker, if I started by sending my congratulations to Brighton & Hove Albion on their promotion to the premier league? They are an important part of the south-east economy.

At the autumn statement, we allocated £351 million to the south-east from the local growth fund, and the south-east will also benefit from more than £21 million from the coastal communities fund.

[Maria Caulfield]

I thank the Minister for his response and I, too, congratulate Brighton & Hove Albion. We have just under six miles of motorway in Sussex, and the Brighton & Hove Albion stadium is on one of our motorway junctions. Does he agree that we need to dual the A27 to make the south coast more economically viable? Will he join me in meeting other Sussex MPs to discuss how we can take that forward?

[Simon Kirby]

I am fully aware of the problems on the A27 and their impact on the A259 in my constituency, and I look forward to doing all I can to work with my hon. Friend to reach a solution.

[Sir David Amess (Southend West) (Con)]

11. What steps he is taking to support regional infrastructure development.

--- Later in debate ---

[George Kerevan (East Lothian) (SNP)]

15. What steps he is taking to support economic growth in all regions and nations of the UK.

[The Economic Secretary to the Treasury (Simon Kirby)]

In addition to the earlier answer to Question 4, in Scotland and Wales the Government are investing almost £1.3 billion in city deals for Glasgow, Aberdeen, Inverness, Cardiff and Swansea, and we are discussing further deals for Edinburgh, Stirling, the Tay cities and north Wales.

[George Kerevan]

Will the Minister guarantee that the city deal specifically for Edinburgh and my East Lothian constituency will be neither aborted nor substantially delayed by the calling of the general election?

[Simon Kirby]

What I can guarantee is that it is about time the Scottish National party started delivering for the people of Scotland. The level of growth in Scotland is a quarter of that across the UK.

[Kevin Foster (Torbay) (Con)]

20. The Minister will be aware of the difference that will be made by the new high-tech and digital centre at South Devon College in Paignton, which is being supported by the third round of growth funding. Does he agree that the facility makes South Devon College an ideal place to be one of the first to offer the new T-level?

[Simon Kirby]

I absolutely agree that it would be an ideal place to be in the first stream.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

When will the UK Government start to consider the Ayrshire growth deal seriously? The SNP Government back the growth deal and the local councils are all working together, so it is the UK Government who are holding back the delivery.

[Simon Kirby]

The Government are focused on delivering the existing deal. If the SNP Government want to do something in addition to that, it is within their power to do so.

[Mr Virendra Sharma (Ealing, Southall) (Lab)]

16. If he will support public registers of beneficial owners for all legal entities, including trusts, during negotiations on the EU anti-money laundering directive.

[The Economic Secretary to the Treasury (Simon Kirby)]

The UK has spearheaded improvements in the transparency of beneficial ownership information. Her Majesty’s Revenue and Customs is already building a register of trusts with tax consequences, which will improve transparency and assist law enforcement agencies.

[Mr Sharma]

We are now a year on from the anti-corruption summit. Will the UK now ensure that the overseas territories and Crown dependencies also have public registers of beneficial ownership?

[Simon Kirby]

We will carefully consider the commission’s proposals for a broader register. If those proposals go forward, the Government will consult on what the register should look like after the negotiations have concluded.

[Stephen McPartland (Stevenage) (Con)]

17. What steps he is taking to improve productivity.

--- Later in debate ---

[Peter Aldous (Waveney) (Con)]

T8. Britain’s coastal communities have enormous potential for sustainable economic growth in the trade, energy, fishing and tourism sectors. Much good work is being done, but I would be grateful if my right hon. Friend gave us an assurance that no stone will be left unturned to ensure that coastal Britain realises its full potential.

[The Economic Secretary to the Treasury (Simon Kirby)]

As someone who also represents a coastal community, I am pleased to say that coastal areas will benefit from nearly £40 million of investment through the latest round of the coastal communities fund, and that we will do all we can to get the very best possible deal.

[Stewart Malcolm McDonald (Glasgow South) (SNP)]

Will the Chancellor tell us which will be the first to go in the upcoming Tory manifesto: the pledge on international aid spending, the triple lock, or the promise not to raise any new taxes?

Contingent Liability Notification

Simon Kirby Excerpts

Tuesday 18th April 2017 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

I can today confirm that I have laid a Treasury Minute informing the House of the contingent liability that HM Treasury has taken on in authorising the sale of a portfolio of Bradford & Bingley loans acquired during the financial crisis under the last Labour Government.

This includes certain remote fundamental market-standard warranties which are capped at 100% of the final sale price. The maximum contingent liability arising from these remote warranties is capped at the total consideration received, giving a maximum contingent liability of £11.9 billion. These fundamental warranties are considered to be so remote that they do not meet the definition of a contingent liability requiring disclosure under International Financial Reporting Standards. However, they are disclosed as remote contingent liabilities under principles of parliamentary accountability.

Further market-standard time and valued capped warranties and indemnities confirming regulatory, legislative, and contractual compliance have been provided to the purchasers. The maximum contingent liability arising is approximately £0.79 billion.

I will update the House of any further changes to Bradford & Bingley as necessary.

[HCWS595]

Breathing Space Scheme

Simon Kirby Excerpts

Wednesday 29th March 2017 Westminster Hall

[The Economic Secretary to the Treasury (Simon Kirby)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Turner. I congratulate my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst) on securing this important debate. There have been many thoughtful contributions and I am particularly pleased that they are on the record.

We all share an interest in helping people who have fallen into serious debt. We have heard some very distressing stories from hon. Members today. Debt can have a devastating impact on the lives of people in our communities, and people can fall into debt at really hard times in their life. Whether it follows the death of a loved one, a separation, or being made redundant, they are difficult times, so we must do what we can to help people who are in that situation to get back on their feet. That is all part and parcel of making a society and an economy that works for everyone. It is important that financial services work for everyone, too.

We have done some really good things to help, particularly on the role of the consumer credit market. The Financial Conduct Authority, which we set up in 2013, now regulates the market to give people much more protection. For instance, firms must provide forbearance—a period of respite—if their customers are unable to make their repayments. They must treat customers fairly and lend money responsibly. Crucially, they must lend money only to those whose affordability checks have proved that they can afford to repay it.

Those measures have had a real effect. Since the introduction of the payday loan price cap, the number of payday loans has fallen by more than 50%, from 4.2 million in 2014 to 1.8 million just a year later. Regulation alone is not the answer, so we are taking direct action to support people who are struggling with their debts, such as through the Money Advice Service, which last year funded more than 380,000 free advice sessions for people in debt. We have also been resourcing our illegal money lending teams to tackle those who seek to exploit and abuse vulnerable people. We are helping to ensure that there is a genuine alternative to ruthless illegal lenders with our support for the credit union sector, which includes £38 million of funding for the credit union expansion project.

We have been exploring carefully whether we could introduce a breathing space scheme to give people time to find a way to deal with their debts. I thank all those debt advice charities and creditors that have given their time and expertise to help us to look into this. It is clear that such a scheme has the potential to help people to get their finances back on track. We are looking at it carefully. I am pleased to say that we entirely support its principles of better debt management and lower problem debt.

However, we have also found that introducing such a scheme could mean costs to the public purse and could have an impact on local authority finances. With the national debt nearing 90% of GDP over the next few years, and while we are still forecast to borrow more than £50 billion this year, we have to assess any new spending proposals carefully. That is why we will continue to look into the various options for implementing a scheme such as this, and will consider closely its costs and benefits.

The Government are committed to tackling illegal money lending, which the hon. Member for Sheffield Central (Paul Blomfield) mentioned. In last year’s autumn statement, we announced that all funds from convicted loan sharks would be used to scale up credit union incentives.

My right hon. Friend the Member for Meriden (Dame Caroline Spelman) mentioned council tax debt. It is important that councils, which are best placed to make judgments about collecting council tax, act proportionately and fairly, and take into account the impact of non-collection on the broader population.

My hon. Friend the Member for Rochester and Strood made a number of very important points during her speech. The Government agree that it is important to ensure that people in financial debt get the help they need. That is why, for example, we are creating a new single financial guidance body. We are keen to address the impacts of debt, including on mental health, and we are working closely with the Money and Mental Health Policy Institute to review practices.

I thank the hon. Member for Makerfield (Yvonne Fovargue). Clearly, she has personal experience of this important area. My hon. Friends the Members for Eastbourne (Caroline Ansell) and for Kettering (Mr Hollobone), and the hon. Members for Blackburn (Kate Hollern), for Aberdeen North (Kirsty Blackman) and for Stalybridge and Hyde (Jonathan Reynolds), made thoughtful contributions. I thank them for being strong voices not only for their constituents, but for the vulnerable people we are discussing.

As I said, we have been carefully exploring the option of introducing a breathing space scheme, working closely with the debt advice and credit sectors. So far, the work has demonstrated that a period of statutory protection from creditors has the potential to give indebted customers the chance to get their finances back on track by giving them time to seek debt advice and move into existing debt solutions. Officials have found that a breathing space could stop consumer paralysis in the face of multiple creditor letters and enforcement action. It could encourage more people to come forward for debt advice earlier.

We will continue to look into the various options for implementing such a scheme and will consider closely its costs and benefits. We are looking carefully at what is happening in Scotland. When we are in a position to consult further, we will do so. I understand that many people, including those struggling with debt, would like to see such a scheme sooner rather than later.

In short, we have to do all we can to ensure we are helping people to get out of debt. We have done a lot already. My hon Friend the Member for Kettering mentioned financial education. He may be pleased when reading Hansard to learn that I had a meeting last week with the all-party parliamentary group on financial education for young people—indeed, I am in the process of writing to the Secretary of State for Education on this matter. The hon. Member for Blackburn (Kate Hollern) mentioned financial shocks. We are providing £45 million of levy funding a year via the Money Advice Service to fund, for example, the 380,000 free-to-client debt advice sessions that I mentioned had taken place last year. We are also working with the Financial Conduct Authority to ensure that the lending sector is better regulated.

We have been looking closely at the idea of a breathing space and will continue to explore its potential. I will do my best to work with my hon. Friend the Member for Rochester and Strood, and indeed anyone and everyone else who has an interest, because this is important and I would like as many people as possible to be involved as we move forward.

We will keep examining all the ways in which people in serious debt can be protected and supported as they get their finances under control. We want them to build happier, more secure futures for themselves and their families. I understand that the costs of debt are bigger than just the financial costs—for some, they have a lifelong impact. I want an economy that works for everyone, and will be doing all I can to move this forward.

UK's Counter-terrorism Asset Freezing Regime (1 July to 30 September 2016)

Simon Kirby Excerpts

Tuesday 28th March 2017 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

Under the Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset freezing regime mandated by UN Security Council resolutions 1373 and 1452.

This report covers the period from 1 July 2016 to 30 September 2016.¹ This report also covers the UK implementation of the UN ISIL (Da’esh) and Al-Qaida asset freezing regime (ISIL-AQ) and the operation of the EU asset freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the ISIL-AQ asset freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the ISIL (Da’esh) and Al-Qaida (Asset-Freezing) Regulations 2011. Under EU regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under Part 1 of TAFA 2010.

A new EU asset freezing regime under EU regulation (2016/1686) was implemented on 22 September 2016. This permits the EU to make autonomous Al-Qaida and ISIL (Da’esh) listings. Once a designation is made under this regime it will appear in the table below.

Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council resolution 1373.

The table available as an attachment online sets out the key asset-freezing activity in the UK during the quarter: 1 July 2016 to 30 September 2016

Legal proceedings

On 8 August 2016, the designation of one individual referred to in previous reports as “A” was lifted by the court with effect from 11 March 2016.

Annexe A: Designated persons under TAFA 2010 by name²

Individuals

1. Hamed ABDOLLAHI

2. Imad Khalil AL-ALAMI

3. Abdelkarim Hussein AL-NASSER

4. Ibrahim Salih AL-YACOUB

5. Manssor ARBABSIAR

6. Usama HAMDAN

7. Hasan IZZ-AL-DIN

8. Mohammed KHALED

9. Musa Abu MARZOUK

10. Khalid MISHAAL

11. Khalid Sheikh MOHAMMED

12. Abdul Reza SHAHLAI

13. Ali Gholam SHAKURI

14. Qasem SOLEIMANI

Entities

1. Basque Fatherland and Liberty (ETA)

2. Ejército de Liberación Nacional (ELN)

3. Fuerzas Armadas Revolucionarias de Colombia (FARC)

4. Hizballah Military Wing, including external security organisation

5. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)

6. Popular Front for the Liberation of Palestine—(PFLP)

7. Sendero Luminoso (SL)

Annex B: Persons designated by the EU under Council regulation (EC)2580/2001³

Persons

1. Hamed ABDOLLAHI*

2. Abdelkarim Hussein AL-NASSER*

3. Ibrahim Salih AL YACOUB*

4. Manssor ARBABSIAR*

5. Mohammed BOUYERI

6. Hasan IZZ-AL-DIN*

7. Khalid Sheikh MOHAMMED*

8. Abdul Reza SHAHLAI*

9. Ali Gholam SHAKURI*

10. Qasem SOLEIMANI*

Groups and entities

1. Abu Nidal Organisation (ANO)

2. Al-Aqsa E.V.

3. Al-Aqsa Martyrs’ Brigade

4. Babbar Khalsa

5. Communist Party of the Philippines, including New People’s Army (NPA), Philippines

6. Devrimci Halk Kurtulu Partisi-Cephesi—DHKP/C (Revolutionary People’s Liberation Army/Front/Party)

7. Ejército de Liberación Nacional (National Liberation Army)^*

8. Fuerzas Armadas Revolucionarias de Colombia (FARC)^*

9. Gama’a al-lslamiyya (a.k.a. Al-Gama’a al-lslamiyya) (Islamic Group—IG)

10. Hamas, including Hamas-Izz al-Din al-Qassem

11. Hizballah Military Wing, including external security organisation

12. Hizbul Mujahideen (HM)

13. Hofstadgroep

14. Islami Büyük Dogu Akincilar Cephesi (IBDA-C) (Great Islamic Eastern Warriors Front)

15. Khalistan Zindabad Force (KZF)

16. Kurdistan Workers Party (PKK) (a.k.a. KONGRA-GEL)

17. Liberation Tigers of Tamil Eelam (LTTE)

18. Palestinian Islamic Jihad (PIJ)

19. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)^*

20. Popular Front for the Liberation of Palestine—(PFLP)^*

21. Sendero Luminoso (SL) (Shining Path)^*

22. Teyrbazen Azadiya Kurdistan (TAK)

¹ Financial institutions update HM Treasury on individual account balances annually. The figures in the first row of the table are based on account balances which were last reported to HM Treasury on 30 September 2015. At the end of each quarter HM Treasury will adjust the figures to reflect any accounts that have been frozen or unfrozen in that quarter.

² For full listing details please refer to https://www.gov.uk/government/publications/current-list-of-designated-persons-terrorism-and-terrorist-financing

³ For full listing details please refer to www.gov.uk

* EU listing rests on UK designation under TAFA 2010

Attachments can be viewed online at:

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-03-28/HCWS562/.

[HCWS564]

Fourth Anti-money Laundering Directive

Simon Kirby Excerpts

Tuesday 28th March 2017 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

The Government have opted in to the Justice and Home Affairs (JHA) provisions within the European Commission’s proposal to amend the fourth anti-money laundering directive. These provisions require sharing of data from registers between Financial Intelligence Units and law enforcement authorities, which we consider falls within the scope of Article 87 of the treaty on the functioning of the EU. As such, the Government believe these are JHA obligations and therefore the UK’s JHA opt-in is triggered. We have informed Council of that fact.

The Government have decided to opt in to these provisions as they improve data sharing between financial intelligence units. This is an important and necessary part of our anti-money laundering and counter-terrorist financing regime.

[HCWS567]

UK’s Counter-terrorist Asset Freezing Regime (1 April to 30 June 2016)

Simon Kirby Excerpts

Tuesday 28th March 2017 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

Under the Terrorist Asset-Freezing etc. Act 2010 (TAFA 2010), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset freezing regime mandated by UN Security Council resolution 1373.

This report covers the period from 1 April 2016 to 30 June 2016.¹ This report also covers the UK implementation of the UN ISIL (Da’esh) and Al-Qaida organisations asset freezing regime (ISIL-AQ) and the operation of the EU asset freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the ISIL-AQ asset freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the Al-Qaida (Asset-Freezing) Regulations 2011. Under EU regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.

Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council resolution 1373. The one individual subject to a designation, which has been notified on a restricted and confidential basis, under sections 3 and 10 of TAFA 2010 is denoted by “A”.

The table available as an attachment online sets out the key asset-freezing activity in the UK during the quarter ending 30 June 2016:

Legal proceedings

On 15 June a hearing was held at the Court of Appeal in relation to the Treasury’s decision to revoke and not quash the designation of Moazzam BEGG. The hearing was in respect of a protective costs order of the appellant.

Annex A: Designated persons under TAFA 2010 by name²

Individuals

1. Hamed ABDOLLAHI

2. Imad Khalil AL-ALAMI

3. Abdelkarim Hussein AL-NASSER

4. Ibrahim Salih AL-YACOUB

5. Manssor ARBABSIAR

6. Usama HAMDAN

7. Hasan IZZ-AL-DIN

8. Mohammed KHALED

9. Parviz KHAN

10. Musa Abu MARZOUK

11. Khalid MISHAAL

12. Khalid Sheikh MOHAMMED

13. Abdul Reza SHAHLAI

14. Ali Gholam SHAKURI

15. Qasem SOLEIMANI

16. A (restricted designation)

Entities

1. Basque Fatherland and Liberty (ETA)

2. Ejército de Liberación Nacional (ELN)

3. Fuerzas Armadas Revolucionarias de Colombia (FARC)

4. Hizballah Military Wing, including external security organisation

5. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)

6. Popular Front for the Liberation of Palestine—(PFLP)

7. Sendero Luminoso (SL)

Annex B: Persons designated by the EU under Council regulation (EC)2580/2001³

Persons

1. Hamed ABDOLLAHI*

2. Abdelkarim Hussein AL-NASSER*

3. Ibrahim Salih AL YACOUB*

4. Manssor ARBABSIAR*

5. Mohammed BOUYERI

6. Hasan IZZ-AL-DIN*

7. Khalid Sheikh MOHAMMED*

8. Abdul Reza SHAHLAI*

9. Ali Gholam SHAKURI*

10. Qasem SOLEIMANI*

Groups and entities

1. Abu Nidal Organisation (ANO)

2. Al-Aqsa E.V.

3. Al-Aqsa Martyrs’ Brigade

4. Babbar Khalsa

5. Communist Party of the Philippines, including New People’s Army (NPA), Philippines

6. Devrimci Halk Kurtulu Partisi-Cephesi—DHKP/C (Revolutionary People’s Liberation Army/Front/Party)

7. Ejército de Liberación Nacional (National Liberation Army)^*

8. Fuerzas Armadas Revolucionarias de Colombia (FARC)^*

9. Gama’a al-lslamiyya (a.k.a. Al-Gama’a al-lslamiyya) (Islamic Group—IG)

10. Hamas, including Hamas-Izz al-Din al-Qassem

11. Hizballah Military Wing, including external security organisation

12. Hizbul Mujahideen (HM)

13. Hofstadgroep

14. Islami Büyük Dogu Akincilar Cephesi (IBDA-C) (Great Islamic Eastern Warriors Front)

15. Khalistan Zindabad Force (KZF)

16. Kurdistan Workers Party (PKK) (a.k.a. KONGRA-GEL)

17. Liberation Tigers of Tamil Eelam (LTTE)

18. Palestinian Islamic Jihad (PIJ)

19. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)^*

20. Popular Front for the Liberation of Palestine—(PFLP)^*

21. Sendero Luminoso (SL) (Shining Path)^*

22. Teyrbazen Azadiya Kurdistan (TAK)

¹ Financial institutions update HM Treasury on individual account balances annually. The figures in the first row of the table are based on account balances which were last reported to HM Treasury on 30 September 2015. At the end of each quarter HM Treasury will adjust the figures to reflect any accounts that have been frozen or unfrozen in that quarter.

² For full listing details please refer to https://www.gov.uk/government/publications/current-list-of-designated-persons-terrorism-and-terrorist-financing

³ For full listing details please refer to www.gov.uk

* EU listing rests on UK designation under TAFA 2010

Attachments can be viewed online at:

http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2017-03-28/HCWS562/.

[HCWS562]

Equitable Life Policyholders: Compensation

Simon Kirby Excerpts

Thursday 23rd March 2017 Commons Chamber

[The Economic Secretary to the Treasury (Simon Kirby)]

I start by associating myself with the earlier comments about yesterday’s terrible events. I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) and the hon. Member for Leeds North East (Fabian Hamilton) on securing this important debate. It is fair to say that their tireless work on this issue and their involvement in the all-party parliamentary group for justice for equitable life policyholders are of great importance to many of our constituents up and down the country. Hon. Members from across the House have done a great deal for their constituents on this matter. It has been a thoughtful debate, and I have listened carefully to the individual cases that have been mentioned. I am also grateful for the opportunity to set out what the Government have done to address this long-standing issue.

This topic has a long and well-documented history, which I do not propose to go over in my limited time. Instead, I will focus on the action we have taken to make payments to the people affected, and these figures are well known. The ombudsman’s findings assess the loss from Government maladministration to be £4.1 billion, and it is worth noting that that is significantly more than the evaluation commissioned by the then Labour Government. That report, known as the Chadwick report, rejected some of the ombudsman’s findings and concluded that only £340 million should be paid to policyholders.

This Government, in contrast and despite the constraints facing the public purse, have agreed that £1.5 billion will be made available, tax free, for payments to eligible policyholders. We consulted carefully on how that £1.5 billion should be paid out and reached the conclusion that we must pay the with-profits, or trapped, annuitants in full. As a result, that group will receive an annual payment for life, with the total cost of those payments assessed to be around £625 million. The £100 million contingency fund, which is often referred to, is to ensure provision for policyholders who exceed the life expectancy forecast. On the advice of an independent commission, the remaining £775 million of available funding was distributed pro rata to other policyholders, representing a payment of some 22.4% of their relative loss. I recognise that, for many, that was disappointing, but it is about striking the right balance while also taking into account the position of the public finances and fairness to all taxpayers.

The point about affordability was raised explicitly by the ombudsman in her report, in which she stated that it was appropriate to take into account the impact on the public purse when considering the funding of the payments. Indeed, the ombudsman has written to the all-party parliamentary group on Equitable Life about the level of funding and said that the Government’s decisions on affordability cannot be said to be incompatible with her report. I also understand it has been suggested that, as the economy improves, further funding should be made available to the payment scheme.

[Robert Neill]

I accept that the decision on funding is not incompatible with the ombudsman’s report, but that is not to say that the decision follows the spirit of the ombudsman’s report or that it is right.

[Simon Kirby]

I repeat that this is about striking the right balance between the position of the public finances and fairness to all taxpayers, and I will cover that point in more detail as I proceed.

I was talking about further funding being made available to the scheme, but with debt at its highest level since the second world war, tackling the deficit and getting debt falling are challenges that call for long-term discipline, which is why we have no plans to reopen the payment scheme or to review its level of funding.

[Fabian Hamilton]

I thank the Minister for giving way because I realise that time is short. I spoke earlier about Icesave and the £50,000 maximum compensation ceiling. Those who lost money with Icesave and other collapsed banks in 2008 received up to £50,000. Given that most of the investments in Equitable Life totalled around £45,000, will the Minister consider looking at those particular individuals who have suffered most?

[Simon Kirby]

I was going to cover the issue of Icelandic banks later, as might be expected, but there is a big difference between the two. Those ex gratia payments were different from the Equitable Life scheme in that the Government expected to recover, and indeed did recover, all the money paid to UK depositors as the banks were wound up. It is not fair to compare the two.

I will now address some of the specific issues that have been raised. My hon. Friend the Member for Harrow East said that the payments were not transparent. Transparency is one of the core principles of the scheme, and the methodology of calculation was published in full along with a simplified explanation for the layperson. I am also aware that Her Majesty’s Treasury has met EMAG to discuss the matter and found there to be no errors.

My hon. Friend sensibly asked why the Government cannot commit to paying Equitable Life policyholders in full when the economy has fully recovered and the debt starts shrinking, and it is right that the Government balance the needs of affected policyholders against those of taxpayers, and of public service users more generally. The Government have to tackle a debt of nearly £1.7 trillion, or almost £62,000 for every household in this country, which is a salient point. He also said that the cost of paying the pre-1992 annuitants would be less than £100 million. No assessment has been made of the pre-92 losses, but the Government recognised the hardship faced by the group so paid lump sums of up to £10,000, at a cost of around £50 million. That was new money over and above the original £1.5 billion.

Several hon. Members, including the hon. Member for Bootle (Peter Dowd), mentioned the failure of regulation and the need to stand behind any failure in a financial services group. It is fair to say that this Government, and the coalition Government before us, have fundamentally reformed financial regulation, including, importantly, through the expansion of the financial services compensation scheme.

The hon. Member for Leeds North East, who has moved places and is confusing me only very slightly, said it was unfair that we excluded pre-92 policyholders. I have every sympathy with the position such policyholders find themselves in during retirement, but the policies commenced before any maladministration could have affected investment decisions. Pre-92 policyholders have instead been affected by falling comparative annuity rates in the light of the issues at Equitable Life. I have already referred to the ex gratia payments of £5,000, or £10,000 for those in receipt of pension credit, that were made in December 2013.

The hon. and learned Member for Edinburgh South West (Joanna Cherry) said that the Government have not done enough—a point also made by others. I sympathise with the plight of her constituents. I am glad she recognises that the coalition Government did more to address the issue than any Government who preceded them. She asked about the Chancellor of the Exchequer; he was clear in his spring Budget that the scheme is closed and no more money is forthcoming.

My hon. Friend the Member for Stafford (Jeremy Lefroy) made some eloquent points about regulation. I agree that trust is vital, and I am proud of the reforms made to the regulatory system. Many people say we have too many regulations; I always think that financial services are there for everyone so it is important that we provide an appropriate level of protection for everyone, big or small.

The hon. Member for Ellesmere Port and Neston (Justin Madders) suggested that the Government had ignored the ombudsman’s recommendations. The ombudsman’s report was the foundation of the payment scheme. As I said, the ombudsman subsequently wrote to the all-party group. Whether or not we agree about the term “incompatible”, the ombudsman said that the Government’s decisions on affordability and eligibility cannot be said to be incompatible with her report. The hon. Gentleman also mentioned the 2010 manifesto. It is worth saying that payments were fair to both the taxpayer and policyholders, with the most vulnerable groups receiving 100% of their losses. The whole scheme is based on the ombudsman’s report.

[Sir Desmond Swayne]

I hate to interrupt the Minister’s flow, but I wish to take him back to my intervention on my hon. Friend the Member for Harrow East (Bob Blackman) about the regulator’s failure to identify problems. My hon. Friend said in response that the Treasury itself was aware of Equitable Life’s problems long before they emerged; does the Minister know whether that is true?

[Simon Kirby]

It is fair to say that there were a lot of issues and that a lot of things were done that we would do differently today. All that was taken into account in the vast number of reports and inquiries, and is now represented in a fair and equitable scheme for payments.

Connaught was mentioned by the hon. and learned Member for Edinburgh South West. As I understand it, I will be meeting her in the very near future to discuss that issue, and I am very pleased to do so. The matter is currently being investigated by the Financial Conduct Authority.

I thank the hon. Member for Strangford (Jim Shannon) for his understanding. He made a very thoughtful contribution in which he mentioned children. I say to him that we must be careful to strike the right balance and that we do not saddle our children and grandchildren with unfair levels of debt. It is about making sure that those people affected receive a fair amount.

The hon. Member for Angus (Mike Weir) set out cases in which constituents have a reduced annuity in their retirement. I have a great deal of sympathy with them, as I know the difficulties that a reduced income in retirement causes. The Government recognised that, which is why annuitants should receive 100% of their losses.

I will, if I may, finish with some figures, because I need to clear up the confusion. To date, the Government have paid out £1.12 billion. They will be paying out another £355 million, totalling £1.47 billion, leaving a balance, for those who can add up, of £25 million. We intend to provide a safety net to ensure that payments to the most vulnerable are maintained as they live longer—let us hope that they all live longer—and so I do not recognise the £140 million figure that was cited.

In conclusion, I appreciate that some policyholders who have carefully invested for their retirement are now not receiving the income they expected, but we have done more than any other Government to resolve the Government’s part in the Equitable Life issue. We have committed £1.5 billion. We have paid out the £1.12 billion, with more to come, and we have struck the right balance, which is fair to the British taxpayer and supportive to those most vulnerable policyholders.

Money Laundering: British Banks

Simon Kirby Excerpts

Tuesday 21st March 2017 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on allegations of money laundering against British banks.

[The Economic Secretary to the Treasury (Simon Kirby)]

We want our financial institutions to lead the way in the global fight against money laundering. This is not only a question of financial crime, with illicit finance used to fund serious organised crime groups, as well as terrorist organisations; this is about keeping our citizens safe. That is why the Government are going to do what it takes to prevent the practice and pursue anyone who might seek to abuse our financial system.

The Financial Conduct Authority and the National Crime Agency take any such allegations seriously and will investigate closely whether recent information from The Guardian newspaper—or, indeed, any other media source—regarding money laundering from Russia would allow the progression of an investigation. Beyond that, we need to ensure that sophisticated criminal networks cannot exploit our financial services industry.

This Government already do more than any other to tackle the global threat of money laundering. Since 2010, we have seized £1.4 billion in illegal funds and put hundreds of millions more beyond the reach of criminals. We have set up the Panama papers taskforce and we hosted the global anti-corruption summit last year. Now, we are preparing the most significant changes to our anti-money-laundering and terrorist finance regime in over a decade. We are strengthening the rules to put the UK at the forefront of international efforts to crack down on money laundering, with new regulations coming into force by the end of June. We are also bringing in a landmark piece of legislation in the form of the Criminal Finances Bill. That will allow banks to share more information than ever to help to uncover money laundering. It will also give law enforcement agencies new powers to bring criminals to justice.

However, domestic changes alone are not enough in a world of global criminal networks, which is why we are working closely with our international partners to stand up to this threat together. Work continues apace in groups such as the G20 and the Financial Action Task Force, whose membership includes all the world’s leading financial centres. We have led the way in getting more than 90 countries to exchange data on offshore accounts and to uphold the global standard of tax transparency. We are determined to make the UK the most difficult place in the world for international crime networks to channel their finances through, and we will not relent in our efforts to do that.

[John McDonnell]

I hope that the Minister recognises the immense gravity of the situation that we are facing, because I believe that his statement reflects complacency on the part of the Government. Let me go through the allegations, which are of the deepest concern. First, it is alleged that, via an operation referred to as the “global laundromat”, banks based in Britain have been used to launder immense sums of money obtained from criminal activity in Russia linked to the FSB spy agency there. This appears to point to an overwhelming failure of basic management on the part of the banks. One of those banks, HSBC, is an institution that has previously faced money laundering charges in the US and across the globe. The direct intervention of this Government helped to block a 2012 US investigation on the purported grounds of its potential risk to financial stability. Money laundering through London and elsewhere threatens the stability of our financial sector and our economy.

In the case of another bank, RBS, the Government directly own a 72% stake. A third bank, Barclays, has been under investigation for its role in LIBOR rigging. Will the Minister give us specific details of what steps are being taken to address this scandal? Can we have an assurance that there is the potential to open criminal proceedings to break up what is effectively a criminal network? Will the Government also undertake that they will not—as they have in the past with HSBC—attempt to intervene in criminal or other investigations taking place elsewhere in the world? The major risk to financial stability is not from investigations intended to clear out criminal activity from our banking system; it is from inactivity on the part of the Government and others, and from failing to act to ensure that our major banks are clean and fit for purpose.

Secondly, all those banks claim to have strict internal policies to deal with money laundering. The Financial Conduct Authority places great stress on the need for banks to self-police and create appropriate internal procedures to prevent money laundering. It is obvious from today’s revelations, however, that the current arrangements are not working to prevent widespread, organised and sophisticated criminal activity. Will the Government tell the House what steps they will be taking to address this matter with the FCA? Will the Government today commit to opening an inquiry with a view to reporting rapidly on measures to be taken that will strengthen the regulations, including introducing tighter controls on and closer monitoring of the banks themselves?

Finally, when the Government own major stakes in the banks involved—RBS in particular, since they are no longer able to sell off that stake—there is an immediate need for them to reassure taxpayers that publicly owned banks are not indirectly involved in criminal activity. What steps will the Government, as a major shareholder in RBS, take to investigate the allegations against it and to reassure taxpayers? Our banks have been found wanting yet again. Urgent action is needed from the Government to protect the standing of our finance sector and to protect our economy. Complacency and inaction are not good enough.

[Simon Kirby]

I assure the right hon. Gentleman that the Government are far from complacent. As I outlined earlier, we have been updating the UK’s money laundering regulations, and I hope that the Criminal Finances Bill, which is currently in the other place, will receive Royal Assent in the near future, creating new powers for enforcement agencies. The FCA takes misconduct seriously and fined Deutsche Bank £163 million only last month. As for whether we should be telling the independent FCA or the NCA what to do, it is worth saying that if the information reveals new findings, the FCA will be able to investigate accordingly. It would not be appropriate for me to comment on potential legal proceedings.

[Sir Desmond Swayne (New Forest West) (Con)]

Does the commitment expressed in our hosting of the anti-corruption summit not a year ago still exist to drive forward its agenda?

[Simon Kirby]

Absolutely. This Government are fully committed to ensuring that taxpayers are fully protected and that we do all we can to stamp out illegal money laundering activity.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

This revelation is shocking, but it is not in the least bit surprising. For over a year, I have been campaigning in this House on associated areas. After the story was released yesterday evening, I undertook research that indicates that at the heart of the issue is the banks’ use of limited partnerships—not only Scottish limited partnerships, but many other forms—that allow the criminals to hide their ownership of companies. It is through that mechanism that these things are happening.

I have several questions for the Minister. First, the Department for Business, Energy and Industrial Strategy closed its review of limited partnerships on Friday. Will the Government allow me and other interested Members to resubmit to the review, although it is formally closed, so that we can raise this important matter and have it considered in the review?

Secondly, when one looks at the outcome and the extent of the situation, it is too much to believe that we are the world leader in money laundering regulation in general, so it is time for another look at that. Thirdly, a key concern of many in the House is that the banks have not had a supportive whistleblowing regime in recent years. We need to encourage, not inhibit, whistleblowing.

[Simon Kirby]

In this alleged case, my understanding is that the bodies used were limited companies, not limited partnerships. Last year, BEIS introduced the register of people with significant control, and we will be consulting shortly on UK property-owning foreign companies. That is a step forward.

The hon. Gentleman mentioned the limited partnership consultation; I am sure that any right hon. or hon. Member who wants to write to the Secretary of State for Business, Energy and Industrial Strategy can do so. It is also appropriate to say that we are world leaders in financial regulation. The FCA does a good job, is held in high regard by the rest of the world and strikes the right balance between consumer protection and fairness.

[David Rutley (Macclesfield) (Con)]

My hon. Friend takes this issue seriously. Will he tell the House how unexplained wealth orders will prevent criminals from using the proceeds of crime in the UK?

[Simon Kirby]

My hon. Friend raises an important part of the Criminal Finances Bill, which is going through the other place as we speak. I look forward to its receiving Royal Assent and becoming law, giving new law enforcement powers to stop any of this activity.

[Ms Angela Eagle (Wallasey) (Lab)]

The Economic Secretary has shown real complacency about the huge and building scandal that has been revealed by The Guardian today. Given that our banking sector is very large and that the consequences of its being destabilised by such criminal behaviour are very serious for our economy, does he not realise that his complacent, process-driven answers today are simply not good enough?

[Simon Kirby]

I do not recognise that at all. The FCA and the NCA are well placed to investigate this, if appropriate. We have not only world-leading financial regulation but world-leading financial services. More than 1 million people across the country are employed in financial services in all our constituencies, and the vast majority of them work hard, do a good job and represent customers as well as they can. We have outlined the measures that the Government are undertaking—[Interruption.] I have addressed everything that the hon. Member for Wallasey (Ms Eagle) mentioned. This Government are doing more than at any time in the past 10 years to tackle this issue.

[Rishi Sunak (Richmond (Yorks)) (Con)]

Given the overlap between money laundering networks and terrorist financing networks, does my hon. Friend agree that this is also an issue of national security and that, furthermore, the only way we can tackle it is with greater information sharing between the private sector, regulatory bodies and enforcement agencies?

[Simon Kirby]

My hon. Friend is absolutely right. Greater information sharing and transparency are the way forward. The register of people with significant control is an important step forward, and I look forward to additional transparency in the future. Ultimately, people with nothing to hide have nothing to fear.

[John Mann (Bassetlaw) (Lab)]

To counter the impression that he has been promoted beyond his competence, can the Minister tell us which British banks have been convicted of money laundering over the past five years? What specific, individual thing has he learned from reading those judgments? [Interruption.]

[Mr Speaker]

Order. The question was discourteous, but it was not disorderly—there is a distinction. The hon. Gentleman has been practising that technique in all sorts of different forums in all the 30 years that I have known him. The question was not one of the more extreme variants on the theme.

[Simon Kirby]

I can tell the hon. Member for Bassetlaw (John Mann) that the FCA has carried out a number of enforcement actions, both large and small, over a large number of different financial services. It is right and proper that a balance between fairness and responsible behaviour is struck at all times.

[Jake Berry (Rossendale and Darwen) (Con)]

If these allegations are proven, particularly against a bank in which the Government own a majority stake, will my hon. Friend commit to using the full powers of the Criminal Finances Bill to clamp down on this type of money laundering, which, if proven, will be a national disgrace and scandal?

[Simon Kirby]

It is worth saying that our shareholding in a number of banks is at arm’s length. We are not operationally in control, as is right and proper. The important thing is that we learn lessons from the past and make sure that the past is not repeated.

[Helen Goodman (Bishop Auckland) (Lab)]

Has the Minister discussed the matter with the former Chancellor, the right hon. Member for Tatton (Mr Osborne), who the US House of Representatives found intervened with the American authorities to prevent HSBC from being prosecuted in 2012? What has the FCA specifically done since the “global laundromat” was discovered in 2013?

[Simon Kirby]

I have not had that conversation with my right hon. Friend. It is fair to say that the FCA has carried out a number of investigations, and it is right and proper that it does so. The FCA is an independent operational body that we set up as asked, and it would not be appropriate for me to comment.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

It seems to me, and to many others, that there is an unwritten deal here: that Russians and others of dubious or illegal means can essentially come to this country, send their kids to our schools, buy our real estate or our sports clubs and get involved in this country on the basis—this is the other side of the deal—that they do no wrong while they are here. That is not an acceptable way forward, if it ever was. Is it not now time to rethink this issue?

[Simon Kirby]

My hon. Friend raises an interesting point. This Government are doing more than ever before to tackle this important issue. When it comes to money laundering, the Department for Business, Energy and Industrial Strategy has called for evidence on the use of limited partnerships, which were raised by the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin), and will in due course consider any action needed to address those concerns.

[Sammy Wilson (East Antrim) (DUP)]

To a long list of misdemeanours committed by the banks for which directors have not been held responsible, we now have this allegation of extensive laundering of funds that were either stolen or of criminal origin. One of the explanations that has been given is that directors of banks see compliance as an expense with no return. Can the Minister assure us that the allegations will be properly investigated by criminal investigators and that, if it is found that directors have encouraged slack compliance for the profit of their bank, they will feel the full weight of the law and realise that slack compliance has a cost in their personal lives?

[Simon Kirby]

The hon. Gentleman is absolutely right that in this country we have not only a world-regarded financial regulation system but a rule of law that is both fair and effective. If there is any wrongdoing or impropriety, it is right and proper that those people face the full weight of the law.

[Mr Philip Hollobone (Kettering) (Con)]

How many money launderers have been sent to prison in the past five years?

[Simon Kirby]

I am not aware of the exact answer to that question, but I will write to my hon. Friend with all the information I have. I am convinced that, across the world and in this country, money laundering is taken very seriously.

[Mr Ben Bradshaw (Exeter) (Lab)]

Are the Government or any other public agency in Britain investigating whether laundered Russian money was channelled to any individuals in either the leave campaign or the Trump presidential campaign? Is the Minister aware of any other investigations?

[Simon Kirby]

I make it clear that I am not aware of any connection. It is right and proper that the FCA and the NCA have been watching that issue for some time. It is a confidential matter; if there is new information, I am sure they will consider it.

[Mr Alan Mak (Havant) (Con)]

Compliance officers across the banking sector play a key role in stamping out some of the behaviour that has been reported. Will the Minister assure the House that the FCA and other regulators are making sure that compliance officers are properly trained and are proactive on the ground?

[Simon Kirby]

I reassure my hon. Friend that that is the case. It is right and proper that the issue of money laundering is addressed from top to bottom. Everyone has a responsible part to play.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Having previously claimed that

“there is little evidence of corporate economic wrongdoing going unpunished”,

the Ministry of Justice is now considering whether it should extend the criminal liability offences to money laundering. Does the Minister now agree that the “global laundromat” allegations clearly highlight that the law needs to be toughened up in this area?

[Simon Kirby]

I am sure that the MOJ will listen carefully to the hon. Lady’s point.

[Antoinette Sandbach (Eddisbury) (Con)]

The report indicates that many of the laundered funds went into shell companies. Can the Minister explain how the world’s first open register of equitable ownership will help prosecuting authorities to bring to justice those who benefit from such funds?

[Simon Kirby]

The people with significant control register is open for everyone to see. Thousands, if not millions, of people are able to see it. Transparency is absolutely the best thing to make people aware of wrongdoing and to make sure that nothing is hidden.

[Greg Mulholland (Leeds North West) (LD)]

It is clear that the current measures, though welcome, are simply not sufficient to tackle this sort of money laundering. Considering that dirty money is channelled through our British banks, how much worse would it be if the Chancellor achieved his vision of this country becoming a corporate tax haven—another Panama—post-Brexit?

[Simon Kirby]

That is not the Chancellor’s vision. The Government are currently consulting on the fourth money laundering directive. I have mentioned the Criminal Finances Bill, which is in the other place. The FCA is also vigilant in enforcing measures, and it takes misconduct very seriously.

[Mr David Nuttall (Bury North) (Con)]

Having witnessed at first hand the anti-money laundering procedures of UK banks, when I tried to keep open an existing bank account, I wonder how any organisation has managed to launder ill-gotten gains through our banks, and I can only conclude that it is because complying with the regulations is seen as no more than a tick-box exercise. Does my hon. Friend agree that banks should adopt a more proportionate and common-sense approach when dealing with members of the public?

[Simon Kirby]

My hon. Friend will be pleased that the fourth money laundering directive, which the Government are consulting on as we speak, includes provision for a more proportionate approach to that very issue, and I hope he takes part in the consultation. I also hope that the banks, with FCA guidance and a Government steer, will have to take a proportionate approach in the very near future.

[Ian Austin (Dudley North) (Lab)]

The Home Affairs Committee estimates that £100 billion is laundered through London every year, but only 0.17% of that has been frozen, so the Minister might as well go to Heathrow and put up a welcome sign for Russian murderers and money launderers. Five criminal complaints have been submitted to UK law enforcement agencies about money laundering connected to the Magnitsky case. Not a single one has resulted in the opening of a criminal case, whereas 12 other countries have opened investigations on the same evidence. So the question is this: what is necessary to get UK law enforcement agencies to do their jobs and prosecute money launderers? Why has that not been working, and what is the Minister going to do about it?

[Simon Kirby]

I hope the NCA and the FCA would, if appropriate, do a considerable amount about it. They are independently operational bodies. It is right and proper that I cannot comment at the Dispatch Box about what may or may not happen. However, if there is wrongdoing, it is right and proper that it is addressed.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

As we have heard, HSBC has been a serial offender on money laundering all around the world. It has had fines in the US and in Switzerland, and it has been mentioned again. There were calls for an investigation into other banks in 2012. The “laundromat” scheme was first reported in The Independent in 2014, so yesterday’s news is not actually new news; it just shows the scale of the problem with people using British banks and shell companies registered in the UK. If the UK really is a world leader in money laundering and other financial regulation, how bad are things in the rest of the world, and what is the UK doing to help stamp out the problem elsewhere?

--- Later in debate ---

[Simon Kirby]

The hon. Gentleman raises an interesting point. It is important to co-operate with countries around the world. We have been very clear that we will work with the Financial Action Task Force and other regulators around the world, and that is important. This is not something we can solve domestically on our own.

[Kerry McCarthy (Bristol East) (Lab)]

Investigators at the National Crime Agency are saying that Russian officials have been hampering their investigations by refusing to co-operate. What discussions has the Minister had, or will he have, with his Foreign Office counterparts to see whether they can broker a better relationship with those Russian officials?

[Simon Kirby]

I would imagine that the FCA is in contact with the Foreign and Commonwealth Office, and, if appropriate, they will have conversations about this issue. What is important is that, if these allegations are correct, and any new information is presented, the NCA and the FCA act on it appropriately.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

May I ask why the Chancellor is not here, because, frankly, the Minister’s answers today have been appalling? Some £80 billion could have been laundered, according to this story. Should we not think again about the powers the FCA and other regulators have to prevent these things from happening? Can he please answer some questions?

[Simon Kirby]

I am very sorry, but I have been doing my very best to answer the questions that have been asked. Sadly, I cannot be held responsible for the quality or the content of the questions. What I would say is that I am the Minister responsible for financial services, and the Government are responsible for legislating in this place and in the other place. To answer the hon. Lady’s question, the Criminal Finances Bill is an example of what we are doing now, as we speak, to improve things. The FCA is in constant dialogue with not only the banks but the Government to make sure it moves with the times.

[Catherine West (Hornsey and Wood Green) (Lab)]

If it is found during the investigation that terrorism has been facilitated, what personal responsibility will the Minister take for that dreadful finding?

[Simon Kirby]

It is important to say that these schemes operated from 2010 to 2014. The hon. Member for Kilmarnock and Loudoun (Alan Brown) mentioned that The Independent first raised the story in 2014. However, if there is new evidence, it is important that the NCA and the FCA look at it and act accordingly. We set up those bodies to act operationally and independently from Government, and that is right and proper.

Money Laundering, Terrorist Financing and Transfer of Funds Regulations

Simon Kirby Excerpts

Wednesday 15th March 2017 Written Statements

[The Economic Secretary to the Treasury (Simon Kirby)]

The Government have today published draft Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“Money Laundering Regulations 2017”). These regulations transpose the EU fourth money laundering directive (and the Fund Transfer Regulation (FTR) which accompanies it), which seek to implement the international standards set by the Financial Action Task Force.

The Government previously consulted on the transposition of the fourth money laundering directive (4MLD) and the Funds Transfer Regulation in autumn 2016 and these regulations are accompanied by the Government response to that consultation.

The overall objective of transposition is to ensure that the UK’s anti-money laundering and counter-terrorist financing (AML/CTF) regime is kept up to date is effective and is proportionate. This will enable the UK to have a comprehensive AML/CTF regime and ensure that the UK’s financial system is an increasingly hostile environment for money laundering/terrorist financing (ML/TF).

The Money Laundering Regulations 2017 introduce a number of new and updated requirements on relevant businesses and changes to some of the obligations found under the third money laundering directive (3MLD). The FTR updates the rules regarding information on payers and payees accompanying transfers of funds, in any currency, for the purposes of preventing, detecting and investigating ML/TF, where at least one of the payment service providers involved in the transfer of funds is established in the EU.

The Money Laundering Regulations 2017 have been informed by the responses submitted to the autumn 2016 consultation, and the call for evidence on the anti-money laundering supervisory regime in 2016. Changes introduced by the Money Laundering Regulations 2017 include:

Her Majesty’s Revenue and Customs (HMRC) acting as a registering authority for all trust and company service providers (TCSPs), who are not registered by the Financial Conduct Authority (FCA);

an extension of the fit and proper test to agents of money service businesses (MSBs), which will be carried out by HMRC;

the exemption of all gambling service providers from the requirements of the directive, except remote and non-remote casinos. The national risk assessment found that, while ML/TF risks exist in the gambling sector, it is relatively lower risk than other regulated sectors, partly because risks are mitigated by licensing conditions and robust supervision. The Government will regularly review their position on the ML/TF risk that gambling providers present;

a decision not to allow pooled client accounts to be automatically subject to simplified due diligence, but instead for this to be applied on a risk-based approach;

clarification and enhancement of the obligations on money laundering supervisors.

So as to address concern about the disproportionate application of enhanced due diligence measures (EDD) to politically exposed persons, their family members and known close associates, the Government are also requiring firms to take a proportionate approach to EDD. The Money Laundering Regulations 2017 make it clear that firms must assess the level of risk associated with a particular person and assess the extent of the EDD to be applied to that person. In the Government’s view it is not acceptable for firms to refuse to establish a business relationship or carry out a transaction based solely on anyone’s status as a PEP and this was never the intention of 4MLD. Firms must form their own view of the risks associated with individual PEPs, their family members, and known close associates on a case-by-case basis, but the Government would expect that PEPs entrusted with prominent public functions by the UK should generally be treated as lower-risk, and that firms should apply EDD accordingly.

This approach will complement the important provisions put forward by my hon. Friend the Member for Broxbourne (Mr Walker) and accepted by the Government in the Bank of England and Financial Services Act 2016. The FCA will also shortly publish draft guidance on how firms should apply EDD to PEPs, their family members and known close associates.

Alongside the draft Money Laundering Regulations 2017, the Government have also published a response to the consultation on the anti-money laundering supervisory regime. Inconsistent supervision was highlighted by the UK’s national risk assessment as a weakness. The Money Laundering Regulations 2017 impose clearer obligations on supervisors and this publication announces a new office for professional body AML supervision to work with professional body supervisors to help, and ensure, compliance with the new Money Laundering Regulations 2017. Views on the powers this new office should have to carry out this task effectively are requested by 26 April.

The draft Money Laundering Regulations 2017 are open to consultation until 12 April. We expect the regulations to come into force on 26 June.

Both documents can be found at:

https://www.gov.uk/government/publications?departments%5B%5D=hm-treasury&publication_filter_option=consultations.

[HCWS537]

Local Banking Facilities: Ampthill

Simon Kirby Excerpts

Wednesday 15th March 2017 Westminster Hall

[The Economic Secretary to the Treasury (Simon Kirby)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Gray. I thank my hon. Friend the Member for Mid Bedfordshire (Nadine Dorries) for securing this important debate on behalf of her constituents. She is clearly a very loud voice for her area, and I am sure that NatWest will be listening carefully not only to what she has said, but to what I am about to say.

What is clear to me from the points made today, which were all very good, and from the many letters that I receive regularly from other hon. Members on this subject, is that we all agree on the vital role that banks and building societies play in our local communities, particularly rural communities. As Economic Secretary, I am committed to a financial services system that delivers for all its customers throughout the UK. It does not matter who people are, where they live, what they do or how old they are; it is important to deliver to everyone. We all need the industry to help us to manage our money and to achieve our life goals. Banks and building societies should be there to help everyone, at every stage of life.

I will talk about adapting to change. Banks have made a lot of progress to adjust to the wider changes to the way in which we are banking in the modern era. The banking industry estimates that the number of people going into branches to do their banking has fallen by roughly a third since 2011. RBS reports that, between 2010 and 2015, its customers’ online and mobile transactions increased by 400%. The British Bankers Association reports more than 7,000 banking app logins a minute in 2015, which was a 50% rise on the previous year. Many of us in this place, too, have reduced our use of high street bank branches as it has become easier to do more online.

Such changes are leading to tough decisions for the banking industry. Some banks are investing in branch networks, some are consolidating their networks and some are establishing themselves as digital only. It is not for Government to intervene in those commercial decisions, although it is right for us to support access to the banking services that people need. Bank branches remain important to many customers. The Government want to ensure that the industry responds to changes in the way in which we bank while ensuring that it caters for customers who still need access to a branch.

My hon. Friend mentioned post offices. The post office network of more than 11,500 branches enables customers to have access to their bank accounts, withdraw money, deposit cash and cheques, and check balances. She might be pleased to know that in January this year the Post Office announced that it had reached an agreement with all the banks to allow more banking customers to access a wider range of services at the post offices than ever before.

[Nadine Dorries]

I understand that point, which may be applicable to post office facilities housed in buildings that are appropriate for the extra business. In Ampthill, however, that is not the case. As I said, this lunchtime I was told by someone in Ampthill that the post office there struggles to find staff and is in small premises, which are very cramped—just try buying a stamp there at any busy time in the year. Although the Post Office has agreed to take over for those banks, we know that post office closures have been a problem throughout the UK for quite some time now. A local post office is neither predictable nor assured, and in Ampthill its facilities are certainly not appropriate.

[Simon Kirby]

My hon. Friend makes a reasonable point. In the wider context, it is important to say that 99% of personal and 75% of business customers will be able to carry out their day-to-day banking at post offices up and down the country as a result of the new agreement.

The post office in Ampthill is opposite the NatWest bank, in McColl’s store and next to the Woodhead Horns repair shop. Next to the bank and opposite the post office is Cambridge Wine Merchants, so I understand that Ampthill is a flourishing, attractive place for people to visit to shop. The banking facilities are an important part of that, but it is worth saying that post offices enjoy longer opening hours than banks, with many open on a Sunday. Furthermore, the changes in the new agreement will help with our frequent worry, as MPs, about our post offices closing down. The additional services and responsibilities will ensure that they are more likely to continue successfully.

The Post Office is also carrying out investment in and modernisation of 7,000 post offices throughout the country, to make the network more sustainable in the long term. In Ampthill, I hope that means that the cloud has a silver lining. It is worth adding that the Post Office is the largest retailer open on Sundays, it has a bigger network even than Tesco, and I am keen to see financial services on our high streets throughout the country. The access to banking protocol means that when a bank decides to close a branch it must think very carefully about the consequences of doing so. It must engage with its customers, it must consider their needs and it must identify ways for its customers to continue banking after the branch has closed. That analysis must be made public.

I am pleased to say that all the major high street banks have signed up to the protocol. The British Bankers Association appointed Professor Russel Griggs to carry out an independent “one year on” review of the protocol. He published that review last November and made several recommendations to improve how the protocol operates. The Government welcome that review, and we are pleased to see the industry commit to further improvements to protect people affected by closures. There is already evidence of improved industry behaviour in places such as Ampthill. RBS, the parent of NatWest, has committed to providing customers with six months’ notice of planned closures rather than the 12 weeks stipulated in the protocol, and it did so in Ampthill. That is good news for my hon. Friend’s residents, who will have more time to plan for change.

I should also say that customers could vote with their feet and switch their accounts to a bank with a branch nearer to them. My hon. Friend mentioned Flitwick, which is 3 miles away, where Barclays is clearly doing a good job. Perhaps people will consider that option. I can confirm that I have heard that NatWest has committed to retaining an ATM in Ampthill when the branch closes. That is good news and another example of positive industry behaviour.

[Nadine Dorries]

I thank the Minister for his forbearance. I have had a similar promise in writing from NatWest, but when it is asked to give that promise at public meetings, it gives no such assurance to the local community. It is good that he said that on the record. I, too, have said it, but NatWest is not doing that in local meetings.

[Simon Kirby]

I am not really in a position to tell NatWest how to run its business, but here we are in a public forum that is being recorded and is available for all to see. Having heard that an ATM is promised, I would be disappointed if one were not delivered. I can be quite clear about that. I should say that I am sure that that promise is a result of my hon. Friend’s work and campaigning with local residents, who clearly see this as an important issue.

I will continue to keep a close eye on this matter. My hon. Friend will be aware that hundreds of towns, villages and even cities up and down the country are seeing changes in financial services. I try to take an interest in them all, but as she succeeded in securing this debate, I will take an even closer look and keep an eye on her area in particular.

I understand my hon. Friend’s concerns and the concerns of many other Members, who do a good job of standing up for their local communities. I encourage the industry to think creatively about how banks continue to serve their customers and how the impact of branch closures can be minimised. Banks and building societies need to balance customer interests, market competition and other commercial factors when considering their strategies. Although the Government do not intervene in such commercial decisions, we will continue to push to ensure that everyone can access the banking services that they need. I thank my hon. Friend for raising these important issues. This has been a good debate, and I look forward to visiting her part of the world in the near future to use the cashpoint, the wonderful wine merchants and the horn repairers.

Question put and agreed to.