Money Laundering and Terrorist Financing (Amendment) (No. 3) (High-Risk Countries) Regulations 2021 — House of Lords, 2021-11-25
Topic: Law and Crime
Theodore Agnew (Conservative, Centre-right): I thank noble Lords for their contributions and I will try to answer the queries raised I turn first to the noble Lord, Lord Purvis, and the register of overseas entities’ beneficial ownership. The Government remain absolutely committed to these reforms. When implemented, this register will be an important new tool in our wider efforts to tackle economic crime and will be complemented by the broader powers we are now proposing for Companies House. Once implemented, the register will be one of the first of its kind in the world. That is good news for the UK, maintaining our global leadership role on corporate transparency and enhancing our already strong reputation as an honest and trusted place to do business. The Bill will reflect the pre-legislative committee’s recommendations to ensure that the legislation is as effective as possible in tackling the use of UK property for the purposes of money laundering. I cannot give the noble Lord a precise date, but I am the counter-fraud Minister and I am pressing hard to get that commitment, because I share his concern on this important additional weapon in our arsenal I turn to the number of important points raised by the noble Lord, Lord Tunnicliffe, and will try to address as many of them as possible. In terms of the views of FATF, the UK has achieved the best ratings of any country assessed so far in this round of its evaluations, outperforming other states who are at the forefront of tackling money laundering and terrorist financing. I must stress that we are not complacent, and I take the noble Lord’s challenges and criticisms very seriously. The Government will continue to enhance our response to illicit finance as new risks and methodologies emerge The UK continues to be guided by FATF standards in our domestic response to money laundering and terrorism financing. Our strategy for combating these crimes is set out in the Economic Crime Plan. This plan contains 52 actions, and its comprehensive agenda will ensure that the UK maintains its global leadership. Key actions include the reform of the suspicious activity reporting regime and improving the supervision of anti-money laundering compliance in the regulated sector. We have made progress in delivering on the Economic Crime Plan, with 24 of the actions complete and a further 10 implemented and being undertaken as an ongoing activity In terms of the weakness in the RBA to supervision, the FCA is changing its risk-based approach to anti-money laundering supervision by implementing new data-driven analytical tools and a targeted modular supervision model. This means it will be better placed to balance the two perennially competing aspects of any regulatory oversight regime—depth and breadth—to make the supervisory approach more bespoke, flexible and targeted. The FCA expects firms to implement their obligations effectively and has taken meaningful and impactful enforcement action against firms who failed to implement effective systems. As committed to in the Economic Crime Plan, the Treasury is undertaking a review of the UK’s anti-money laundering regulatory and supervisory regimes. The review will consider the structure of the UK’s supervision regime and the role and powers of the Office for Professional Body Anti-Money Laundering Supervision. We will publish a report setting out the findings of the review and intended next steps in June 2022 I turn to Companies House reform. The Government have issued their response to the corporate transparency and register reform consultation of last September and set out their plans to reform Companies House and strengthen the UK’s ability to combat economic crime. The reforms are significant and will deliver alongside other broader reforms to clamp down on the misuse of corporate entities. They will deliver more reliable information on the companies register via verification of the identity of people who manage, control or set up companies. There will be greater powers for Companies House to query and challenge the information submitted to it, and the removal of technological and legal barriers to allow enhanced cross-checks on corporate data with other public and private sector bodies The noble Lord specifically asked about Russia and Afghanistan. The high-risk third countries list is only one of the tools that the Government have to signal to the private sector which jurisdictions are currently at risk. We also have the national risk assessment of money laundering and terrorist financing, which advises firms where they should take extra caution in building business relationships, given cross-border money laundering risks. The money laundering regulations require firms to consider geographical risks so, regardless of listing, firms have to be nuanced and risk-assess their business relationships taking into account credible sources In the FATF assessment of Russia, the judiciary’s lack of independence and corruption were both highlighted. For example, FATF noted that levels of corruption are high in Russia. This is why we are at the forefront of global actions spanning operational policy and diplomatic communities to target the money launderers and the enablers who underpin corrupt elites and serious organised crime. To go back to the point made by the noble Lord, Lord Purvis, there is a horrible interconnection with what is happening with the migrant boats. If they get 50 people on to one of those boats at £2,000 each, that is £100,000 and it probably costs them £1,000 to buy the boat, so the noble Lord is completely right. That is why we are not in any way complacent about this Some of our response will be visible through law enforcement policy and international engagement. Other options will be less visible but no less impactful. Our response continuously evolves with the threat. In relation to Afghanistan, our engagement with the private sector tells us that there is already a very high level of scrutiny of money laundering, terrorist financing and sanction evasion risks. The presence of sanctions entities in Afghanistan and its potential money laundering and terrorist financing risks have been well-publicised, with alerts from UK supervisory bodies and other credible sources available for the regulated sector to draw on to assess the risks The noble Lord asked how we intend to lead the fight from the front. We are trying to lead by example and our freely accessible public register of company beneficial ownership is one of the most open and extensively accessed company registers in the world. The UK has been at the forefront in delivering greater corporate transparency. We have led international reform efforts. This year, we used our G7 presidency to agree landmark commitments to implement and strengthen beneficial ownership registries, securing commitments from countries such as the US, Canada and Japan which had not previously been made.