Government eyes action to prevent asset-flight in ‘dirty money’ crackdown
A Tory frontbencher acknowledges concerns that corrupt people must not be allowed to sell-up and escape scrutiny
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Your support makes all the difference.Steps are urgently being looked at to prevent foreign criminals and kleptocrats dodging a key move to target “dirty money” in the UK, a minister has told Parliament.
The Government was responding to concerns raised at Westminster of asset-flight ahead of new rules coming into force to tackle the laundering of illicit cash.
Delayed anti-corruption measures are now being rushed through Parliament in response to Russia’s invasion of Ukraine, aimed at targeting oligarch allies of Vladimir Putin and ensuring sanctions hit home.
As part of the Economic Crime (Transparency and Enforcement) Bill, the Tory administration has already agreed to reduce the time given to comply with a new register of foreign-owned property from 18 months to six.
But critics in the House of Lords, while backing the action being taken, argue this is still too long and should be cut to 28 days.
Transparency of ownership is the most basic anti-corruption tool, and the Government have resisted it for far too long
The legislation would establish a new register of overseas entities requiring foreign owners of property in the UK to declare their true identity in a move intended to ensure criminals cannot hide behind secretive shell companies.
People who fail to comply will have restrictions placed on selling the property while those who are found to have broken the rules will face fines or up to five years in prison.
Other measures contained in the Bill include strengthening unexplained wealth orders and the sanctions regime.
Warning against delay on enforcing the property register, independent crossbencher Lord Macdonald of River Glaven, who was director of public prosecutions when former Russian spy Alexander Litvinenko was murdered, said: “Six months is too long. It would defeat the very purpose of the Bill. Transparency of ownership is the most basic anti-corruption tool, and the Government have resisted it for far too long.”
On the proposed six-month transition period, Liberal Democrat Baroness Kramer said: “It still gives any oligarch plenty of time and scope to alter their arrangements, including by liquidating and moving assets out of the United Kingdom into a safe haven.”
Labour frontbencher Baroness Chapman of Darlington said: “Properties will be sold and other assets disposed of in far less time, severely undermining the effectiveness of the new register.”
Tory former solicitor general and QC Lord Garnier said: “Nowadays, money flows around the world at the press of a computer button.”
Liberal Democrat Lord Fox said: “Money is already moving. The kleptocrats are cutting and running. To give them another six months’ head start essentially makes most of this pointless.”
Responding to peers’ concerns, business minister Lord Callanan said: “I think it is important to remember that the majority of properties held via overseas entities will be owned by entirely law-abiding businesses and people.
“We are talking about roughly 95,000 properties in England and Wales owned by some 32,000 overseas entities.
“It is a fact only a small, tiny fraction of these are likely to be held by criminal or corrupt interests.”
He added: “The transition period is an important protection for the rights of those legitimate owners of property.”
But the minister went on: “I am aware of the strength of feeling expressed that corrupt people must not be allowed to sell-up and escape the transparency that the register will bring.
“So the Government does see merit in requiring all those selling property to submit a declaration of their details at the point of transfer of land during the transition period.
“They would have to register ownership if selling and that way we would either get their ownership details immediately, or if they don’t sell we would get it at the end of the transition period, but in a way that still protects legitimate owners.
“We are urgently looking at this and giving this idea some serious consideration, but we do need to get the drafting right and legally watertight and so it is workable, effective and achieves what we want it to achieve.”
The Bill received an unopposed second reading and now goes forward for further scrutiny on Monday, when it is planned to take the legislation through all its remaining stages in order to get it on the statute book as quickly as possible.