The Economic Crime (Transparency and Enforcement) Bill 2022 will be debated by the Commons on Monday, with the aim that it passes in a day.
The Bill has the intention of creating a register of foreign entities owning property in the UK. The Bill does, in my opinion, fail for three reasons.
First, the penalties are too small to worry an oligarch.
Second, the Bill does not require that the overseas controlled entities that it refers to have to file their accounts on public record in the UK, which seems to make no sense at all. The registration is simply that the entity owns property, but accounts tell us a lot more than that, so my suggestion is that all such entities be required to file accounts as if they are large companies incorporated in the UK, requiring that meaningful data might be supplied. The obsession with beneficial ownership seems meaningless to me if we do not understand what is done with the entities in question - and accounts are the only way we have of knowing that.
And third, there is no mechanism to require the UK agents of these overseas entities to be held accountable for their actions when what we know is that the reason that money laundering takes place in the UK is that there are professional enablers who let it happen.
As a result I suggest this amendment to the Bill:
- Requirement to register professional advisers
a.Any person who acts as an adviser to an overseas entity shall be required to record that fact as part of the entry within the register for that overseas entity;
b. For the purposes of this act advisers to an oversees entity shall include those who supply services to it as:
-
- Accountants;
- Bankers;
- Estate agents;
- Financial advisers;
- Lawyers
These terms are as defined by section 39 of this Act;
c. The information to be supplied by an adviser to an overseas entity shall be obliged to advise:
-
- Its registered name;
- Its registered number;
- Its registered address;
- Its trading address;
- The name of the individual within the advisory organisation with primary responsibility for the supply of services to the overseas entity;
- A narrative description of the type of services provided;
- An annual update on the value of services supplied to the overseas entity;
d. Penalties shall be applied in accordance with the provisions of section 38 of this Act in the event of non-compliance with these requirements by any adviser to an overseas entity;
e. An adviser to an overseas entity who is aware that another such adviser has not registered their relationship with that overseas entity then they shall commit an offence subject to the penalties described in Section 38 of this Act if they do not register that omission with regard to that entity.
f. The Secretary of State may, at their discretion, waive the requirement to file this information in the case of overseas entities controlled by persons from states that they shall identify by way of regulation.
I am not suggesting that the drafting cannot be improved. It's the sentiment that matters. The aim is to make UK professionals responsible for what they are doing. If the London laundromat is to be beaten this has to happen.
I am hoping such an amendment such as this might be proposed to this Bill on Monday, and be adopted by the government.
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I think we can already surmise that this will not be an ‘Economic Crimes’ bill but rather a Bill aimed specifically at Russian Economic Crimes, which itself gives the Government serious problems; because this and previous British governments have, with reckless irresponsibility presided over and facilitated the full, extravagent development of the Londongrad Laundromat. The current Government has already badly failed the British people in its prime duty to protect the security of the people and the national interest – or we wouldn’t be facing this Economic Crimes Bill; that is incontrovertible.
A real ‘Economic Crimes’ Bill would be comprehensive, and be directed against all Economic Crimes, including home-grown Economic Crimes. Total transparency of ownership of all corporate entities, and full financial transparency are the ‘sine qua non’ of transparency and the effectiveness of Economic Crimes legislation. Anything less will soon enough become a mere escape ladder for those with the wealth to buy the best legal and accountancy advice, which will find loopholes. The British financial economy has grown into a monstrous, unworkable legal edifice, that only functions through the elaborate construction of a massive sub-structure, built entirely out of loopholes. It has become a way of life. Reform? We can write that script now. Perhaps we could all view on TV the iconic dramatisation we can now predict will come from the consequent first lurid, high-profile scandal; and we could air it on a box-set before the Bill has even been enacted. It would save us all a great deal of wasted time, money and effort.
A real Economic Crimes Bill would focus on all Economic Crimes from all sources; focusing on Tax havens, on SLPs, on NDAs, on Companies House, on the adequacy of implementation of the law; on the hopelessly inadequate resources of HMRC and SFO, on the corporate Audit regime, the adequacy of the accountancy profession as a regulator, and really deep problems; such as whether we have ended with Britain as the world’s financial sewer, because the law here has reached the point where, as a matter of plain fact, it facilitates the power of money and the protection of super-rich criminals (from where-ever, including here in Britain), more effectively than it does the lawful. And all that is just the starting point.
It will not happen. This is a Conservative Government, and the fundamental motto of Conservatism has always been the same: pecunia non olet.
Who would put forward such an amendment – could it be the Chief Secretary to the Treasury? – for the government , Simon Clarke or Labour’s shadow – Pat McFadden? Might be worth sending your amendments to them.
This one is for the BEIS teams …
Establishing a Chartered Institute of Enablers might be a very British solution. Or have other bodies already got that covered?
I see the Coop Party are encouraging supporters to email their MPs in relation to the 18 month compliance window: https://party.coop/register-amendment?mc_cid=71c69baea5&mc_eid=5d0afc263b.
Is it worth reaching out to them with your proposed amendments Richard?
Robbie
I have spoken to members of that party….
David Allen Green
https://davidallengreen.com/
Talks about the importance of ‘constitutionalism’ as more important than a constitution.
Surely what we need isn’t only legislation but culture change so that ‘professionals’ dont touch that sort of thing in the first place.
As a ‘for example’ while tax rates were much higher, I understand that in the 60’s and 70’s the big city firms stayed away from tax avoidance schemes.