Criminal Finances Bill — House of Lords, 2017-04-25
Topic: Law and Crime
Edward Faulks (Conservative, Centre-right): My Lords, the Bill, which has been welcomed across the House, has been the Government’s response to the undoubted need to give law enforcement agencies the necessary capabilities and powers to recover the proceeds of crime, tackle money laundering and corruption and counter terrorist financing. No one could doubt that these are very real problems, and we must ensure that we respond adequately to the threats posed by corruption in its many guises. Throughout the passage of the Bill through your Lordships’ House, the Minister and the Bill team have been very helpful in providing information and explanations in respect of this quite complex legislation. The Government have also tabled some useful amendments as the Bill has progressed I am particularly enthusiastic about the potential use that could be made of unexplained wealth orders, which are featured in Chapter 1. There has been precedent for this, provided principally by Ireland and Australia. By and large those orders have been useful, and they have the potential to provide the basis for investigating criminal offences and recovering the proceeds of criminal activity. My concern has always been to ensure that the provisions are as effective as they can be. The opportunities for further legislation in the next few years are going to be very limited, for reasons that the House is only too well aware of. I hope UWOs will be used much more than was suggested. The revised impact assessment indicated that only about 20 UWOs a year might be obtained. The Minister assured me that that was only an estimate, and I hope it was a very conservative one Until last Friday we had not seen the promised code of practice relating to UWOs and other provisions in the Bill. Somewhat at the 11th hour, after I had tabled a number of amendments, it arrived. I am grateful to the Minister for providing it, and I will of course factor its contents into my remarks on the amendments in my name and that of my noble friend Lord Hodgson We had a number of debates about the safeguards in the Bill. I feel confident that the House is satisfied that they are perfectly adequate, particularly now that there is even a provision for compensation for a respondent whose assets have been wrongly frozen. In addition, there are of course restrictions on the freezing orders that would normally accompany a UWO, and any orders can be varied and discharged. My concern, however, remains how easy it will be for respondents to deal inadequately with a UWO and render ineffective the Bill’s provisions. It has to be accepted that UWO respondents who have invested the proceeds of tax evasion and/or bribery in specific property will be unlikely to want to be frank about their conduct if they can possibly avoid doing so. Why, then, can it not be appropriate for there to be a power to make an order to compel a respondent to give evidence on oath? It would be only a power, and in many circumstances I concede that a court might be satisfied with a statement, but if the statement is inadequate the very existence of the power, which could be exercised only by a High Court judge, would in my view be extremely salutary The Bill sets out the requirements that must be met before an unexplained wealth order is made, and allows a respondent a reasonable excuse for failing to comply with any order. I invite my noble friend to explain to the House why she still thinks it is inappropriate for this power to exist. Nothing in the code of practice gives any answer to that The remainder of the amendments with which I am concerned in this group—apart from that which relates to property, particularly in central London—are about provisions in respect of non-compliance. My no doubt simplistic view is that you either comply with an order or you do not. The references to purported compliance seem to leave open the possibility that a respondent could simply go through the motions of providing information and say that they have purported to comply with the order. I take the point that the Bill contains the proviso that a misleading or reckless statement can constitute an offence, but it is not so much the deliberately misleading statement that I am worried about; rather more I fear the short, uninformative, heavily lawyered response which will provide no useful information but may still technically be a purported compliance with the order I looked for assistance on this point on the recently provided code of practice. Paragraph 20 states that a respondent will be treated as having failed to comply with a UWO if, without reasonable excuse, he fails to comply with all the requirements imposed by the order. The paragraph continues by stating that it is important to note that where a response is provided to a particular requirement in the UWO but that response is considered unsatisfactory, this does not mean that the respondent has failed to comply with the order; this would amount to purported compliance. That was precisely the point that I was making in the original amendment. A footnote states that an example of this would be where an individual provides nothing more than the bare minimum of information necessary to address each requirement in the order and as a result the agency is not satisfied by his explanation as to the derivation of the property. The footnote goes on to state that, in those circumstances, the rebuttable presumption that the property is recoverable does not arise, but the enforcement agency may elect to take further civil recovery action against the property in the light of evidence or lack of evidence provided by the individual. I should be grateful if the Minister could set out why the Government think it so important, in a number of areas identified in the amendments, to have these provisions about purporting. Amendment 2 in this group and Amendment 24, which we will debate in the next group, concern a substantial problem: in central London, property—often extremely valuable property—is being bought by overseas companies and then left either empty and dark or occupied for only short periods. Parts of central London are entirely dark at night and, although London is the most obvious example, there is plenty of evidence of buying-up of property in other major cities and in some rural areas. Apart from the fact that it cannot be desirable that property is owned by those whose money has often come from illegal activities, there is the knock-on effect that it is having on the property market in general. Noble Lords are only too well aware of the intense difficulty faced by young people in buying property anywhere remotely near where they work, particularly in London, or indeed buying property at all. There are a number of reasons for this, but the situation is hardly helped when, according to the Land Registry figures, 100,000 properties are registered in the name of overseas companies. Unlike some countries, there is no restriction on foreign ownership of real property, and at the moment there is no sign of any decrease in the enthusiasm with which foreign investors are approaching the possibility of buying property here. Because of our respect for the rule of law and the independence of our judiciary, among other reasons, we are an attractive country in which to invest—particularly, I am afraid, to those who have ill-gotten gains for which they want to find a safe haven.