Draft Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022

Wayne David Excerpts

Tuesday 19th July 2022 General Committees

[Wayne David (Caerphilly) (Lab)]

I have just three questions for the Minister to tease out some more facts about what is being suggested. As she said, this is an important area, and there is real concern that a large amount of money is still coming into London, in particular from Russia. London has the unenviable reputation as one of the money-laundering capitals of the world—if not the money-laundering capital—so this matter is of some importance.

My first question is about the territorial extent of this piece of legislation. The explanatory memorandum says that the purpose of the instrument is to

“require certain documents to be delivered to the Registrar of Companies of England and Wales”.

However, paragraph 11.1 states:

“Overseas entities who already own property after certain dates in Scotland or England and Wales”.

Why is Scotland referred to in that paragraph, but not elsewhere? Does the measure actually apply to England and Wales—in which case is there an agreement with the Scottish Government for a separate and complementary piece of legislation—or is there agreement for the legislation to apply in Scotland as it will apply to England and Wales?

My second question is about the use of the word “deter” in paragraph 7.4 of the explanatory memorandum. We all believe in the principle of deterrence, but as we all know, deterrence sometimes does not work. Rather than simply deter this illegal practice and disrupt crime, should we not be aiming to stop it? Would that not be a far firmer, more categorical and legally sound term to use in the secondary legislation?

My third and final question is a technical one. In her introduction, the Minister mentioned that there are affirmative and negative resolution procedures with regard to legislation in the Commons and the Lords, so why is the procedure for this measure separate from that for similar statutory instruments that are being approved?

[Jane Hunt]

I am grateful to Committee members for their contributions. The Government are committed to ensuring the register of overseas entities strikes the right balance between improving transparency and minimising burdens on legitimate commercial activity. The measures contained in the instrument will play a key part in the effectiveness of the register from its launch, which is expected on 1 August.

That begins to answer some of the questions from the hon. Member for Sefton Central, who talked about protections and ensuring that the system is not abused, with 163 of 436 applications being made on the existing register. There will be a process in place with clear guidelines, which will be coming out shortly and be ready for 1 August. That will help to provide support, and ensure that protections are in place and robustly followed. The hon. Member for Caerphilly—I think it is Caerphilly, but I might be wrong.

[Wayne David]

Absolutely. Just think of the cheese and you will be all right.

[Jane Hunt]

The hon. Member for Caerphilly talked about England and Wales, and referred to Scotland being separate. The reason for that is that Land Registry information was gathered at different times. We will start with England and Wales being retrospective to January 1999, but with Scotland only as far back as December 2014, because that is when the processes were in place. That covers what the hon. Member was talking about.

These regulations are essential for the register of overseas entities to operate effectively from the outset. Mandating digital delivery for certain documents ensures that the registrar is able to receive and process information in a timely manner. An effective protection regime will protect those at real risk of serious harm, because of their link with an overseas entity, from the public disclosure of their details. That information must still be provided, and it will be available to law enforcement.

The measures on trustees allow for a consistent approach to dealing with corporate and individual trustees. Corporate trustees will be brought within scope, making it harder for corporate structures to be altered to avoid reporting requirements. The register of overseas entities provides a novel approach, setting a new global standard for transparency, and levels the playing field with property owned by UK companies, which must already disclose their beneficial owners to Companies House.

The register is a crucial part of the Government’s fight against illicit finance. The forthcoming economic crime and corporate transparency Bill is being finalised at pace, and it is expected to be introduced to Parliament shortly after the summer recess. The Bill will feature substantial changes to UK company and partnership law, and will be complementary to the Economic Crime (Transparency and Enforcement) Act 2022. I hope the Committee will approve the instrument.

Question put and agreed to.