money

See below my article for Politics Home on today’s newly published UK Anti-Corruption plan. Click here to read the original article.

Today’s much delayed UK Anti-Corruption Plan, which was due to be published in June, is welcomed but leaves a number of serious questions unanswered about our approach.

On resourcing, the Plan confirms that the Met’s Proceeds of Crime Unit and the City of London’s Overseas Anti-Corruption Unit will transfer to the National Crime Agency in April, yet fails to explain how the new team will be resourced and how many investigators will agree to the move. As police officers are not covered by TUPE and the contractual terms are less attractive at the National Crime Agency, some may refuse to move. We are in danger of breaking up a Unit that has achieved great success since being formed ten years ago and losing the detailed understanding of the specific nature of financial crime that those investigators have built up. Without the right people in place the action plan risks being undermined.

Alongside headcount numbers, we also need to give investigators the tools to be able to convict corrupt officials. At present, the police are given just 38 days to investigate a suspicious activity report which is likely to involve a complex, cross-jurisdictional deal involving multiple international parties, often where the country in which the fraud took place refuses to cooperate. How can this possibly be enough time? Despite the idea being raised repeatedly with Ministers and officials, the Plan ignores proposals for an ‘unexplained wealth order’, as already applies in Guernsey, to give investigators the ability to ‘stop the clock’ when working on challenging cases. This should be brought forward in the Serious Crime Bill before the Commons for its second reading in the New Year.

The plan promises a review of the suspicious activity reporting regime, but misses the point that what matters most is what happens once an alert has been received. Out of over 316,000 suspicious activity reports last year, just 110 were referred on to the Proceeds of Crime Unit. Yet this team has the potential to recover significantly more funds if seized assets were redeployed into funding further investigations.

Today’s publication is also silent on the beneficial ownership of multi-million pound UK properties. With an estimated 45% of London properties sold for more than £2m owned by offshore companies, this Plan was a perfect opportunity to force those buying up expensive property in this country as a vehicle to launder their corrupt money, to reveal themselves.

At the Urgent Question I tabled today in the House, the new Anti-Corruption Champion seemed to think that the Small Business, Enterprise & Employment Bill addresses this which is simply not the case. The government should require that the ultimate beneficial owners of all UK properties that have been sold for £2m+, and the purchasers in any future sales of UK properties worth £2m+, should be recorded and on a public register with the Land Registry.

For the Plan to work we also need international co-operation and must apply further pressure to ensure that the British Overseas Territories and Crown Dependencies publish their own registers of beneficial ownership which the Prime Minister has taken the lead on. Despite all the Overseas Territories with financial services centres committing to conducting consultations last year on creating a register, progress has been very slow and the Government’s plan kicks their action plans into the long grass of late 2016. Worst still, the new plan appears silent on the use of Limited Liability Partnerships as shell companies based in the UK as a vehicle to avoid financial transparency.

Although the plan is a step in the right direction, with the change to the evidential test making it easier to obtain restraint orders particularly welcome, there are significant holes which threaten to undermine the tough rhetoric of Ministers and the personal interest shown by the Prime Minister.

The real test behind the plan will come early in the new year when the Serious Crime Bill comes for its second reading. The Government should look to legislate to close existing loopholes – like unexplained wealth orders – so that the UK is better equipped to fight the £23 billion a year the Home Secretary estimates is laundered in the UK each year.

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