Economic Crime: Law Enforcement — House of Commons, 2022-07-07
Topic: Law and Crime
Kevin Paul Hollinrake (Conservative, Centre-right): The hon. Gentleman is right. The regulations are there but the penalties are not sufficient. The people within Danske Bank knew that they were doing wrong when they moved €200 billion out of Russia and into other parts of the world, but there was no incentive to do anything about it because they made a huge amount of money as it flew through their systems. A local manager, a mid-tier manager or even a senior executive would think, "Well, we’re making money and nobody’s going to find out, and if we are found out there will be a fine down the line and I will have gone by then anyway." So where is the incentive to clamp down if they are going to make lots of money out of it? After all, everybody has budgets and targets to hit, and bonuses on the back of them. That is the problem: the penalties and enforcement need to be different Another key reason why money is washed through the UK is that we have the overseas territories, tax havens that work on the same basis of common law—Jersey, the Cayman Islands and the British Virgin Islands. Money launderers do not want to pay tax on their money, so they put it through a jurisdiction with low or zero taxation. That is why the UK plays a major role in facilitating this, and also why it must play a major role in clamping down on it We do not do clamping down very well here, however. Our enforcement agencies have success in some regards, but they are nowhere near as successful as other jurisdictions, for example the USA, which is far more focused on this. The US has similar bribery laws to the UK, introduced in 2011. In 2020 the US fined organisations in the US £1.85 billion for bribery offences, which is more than the UK has fined in 10 years. The situation for money laundering sanctions is very similar: in 2019 the UK fined our banks £260 million in the entire year for money laundering offences, while the US fined £7.5 billion, including £2.5 billion of criminal sanctions. Almost every one of our agencies is underfunded and under-resourced in tackling this problem What do we need to do? My colleague the right hon. Member for Barking will talk about some of the measures, but I will focus on the key things that I think we need. We must ringfence a budget for tackling economic crime right across the piece in the UK, to see exactly how much we are spending on tackling organised crime. We need fewer agencies, too; the effort must be more consolidated so the lines of reporting are less fragmented and more direct Action Fraud must not just be a rebadged enterprise. It needs to be meaningful, and people need to have confidence that the offences reported to it will be dealt with. I was recently nearly scammed through WhatsApp when I thought my son had contacted me, but it was another person. I wondered whether to report it to Action Fraud, but I thought, "What’s the point? It’s not going to do anything about it." That is why people do not report such incidents. Clearly, therefore, there are many more offences than the number reported The No. 1 thing we need to do is something the Government have talked about. We already have a failure to prevent offence. There is corporate criminal liability in the UK if people fail to prevent bribery in their organisation—that offence was introduced some years ago, I think in 2011—and also an offence of failure to prevent tax evasion. People cannot just stop that happening; they have to put the rules in place to stop it happening. The key thing is what they can do to stop this. They therefore put systems in their organisation to alert them to certain things happening, and they train staff that they cannot get involved in bribery or facilitate tax evasion. We need to extend that to failure to prevent economic crime The Government have been talking about this for some time, and the Law Commission has reported on it. It said we should introduce such an offence but probably for fraud alone, not for money laundering or things like false accounting. I think that is a big mistake. It is also very mealy-mouthed on including personal liability for directors; it says it could be added if they have the mental something—what is the word?