Speech on April 27th in the House of Lords at Committee Stage of the Economic Crime Bill.
In moving my amendment 85 I will explain the amendment’s genesis and why I want to see the sanctions regime strengthened.
Although the amendment stands alone in the marshalled list, it is not unconnected to many of the important issues raised in the Committee on amendments considered on Tuesday, including anti money laundering measures and Strategic Lawsuits Against Public Participation -SLAPPs.
On Tuesday Lord Ponsonby was right when he said that the House must ensure that the Bill has “proper teeth.”
This amendment which also bears the names of the noble Lord, Lord Coaker, the noble Lord Lord Fox and my noble friend, Lord Steven of Birmingham – and enjoys support from across the House – is designed to give the sanctions regime “proper teeth” and deal with dirty money.
I suppose I have skin in the game as someone who is sanctioned by authoritarian regimes – a distinction I share with Rt. Hon Sir Iain Duncan Smith MP.It was he who suggested that I meet with Dame Margaret Hodge MP, former Chair of the House of Commons Public Accounts Committee and who served on the Standing Committee which considered this Bill in another place.
She and Margaret Mollat from Dame Margaret’s office have been tireless in their efforts to build a nonpartisan alliance championing greater accountability and countering malign forces which manipulate and enjoy our British freedoms while collaborating in the denial of those same freedoms to millions of people elsewhere.
I have also subsequently met with Helen Taylor Senior Legal Researcher Spotlight on Corruption with her colleagues; with MariaNizzero, a research fellow at the Royal United Services Institute’s Centre for Financial Crime and Security Studies. I draw attention to her important paper “How to seize a billion: Exploring Mechanisms to Recover the Proceeds of Kleptocracy” published in the New Law Journal
I have also met with Bill Browder, author of “Red Notice” and with Evgenia Kura Murza, the wife of Vladimir Kara–Murza, a British citizen and champion of democracy in Russia, who was last week sentence to 25 years in prison on charges of treason.
In a book published last year I detailed our State failures to hold to account those responsible for international crimes – notably genocide – and the way in which we persist with business as usual with the actors who perpetrate those crimes.
Yesterday I was extremely grateful to the noble lord, Lord Sharpe of Epsom, for providing the opportunity to discuss amendment 85 with him and to be able to explore some of the issues which inevitably arise – everything from proportionality and capacity for enforcement to EU requirements on mandatory disclosure. He was accompanied by the very able Corrie Monaghan from the Bill Team.
I was glad to learn from her about the continuing work across departments to address the issues raised in this amendment and the willingness to consider what more might be done. She and the Minister also referred to amendment 91A which takes useful steps to strengthen enforcement mechanisms sand to address civil and monetary gaps. Although the Minister explained that this is not introducing any entirely new provisions he said it plugs some gaps and brings clarity.
Amendment 85 seeks to go further than that, to require disclosure and enable asset recovery under the Proceeds of Crime Act where there has been deliberate concealment rather than disclosure.
This Committee is well aware that Russia’s illegal and tragic invasion of Ukraine on Feb24th last year exposed the uncomfortable reality that our country has been welcoming Russian money, and at times, facilitating the concealments of illicit funds – earning us the infamous nickname of ‘Londongrad’. `
I recognise and applaud the Government’s introduction of two welcome pieces of legislation aimed at combatting economic crime and enforcing transparency.
Its swift legislative action in the form of the Economic Crime (Transparency and Enforcement) Act and this Economic Crime and Corporate Transparency Bill were a good beginning but we have the opportunity to go further.
The amendment allows the seizure of assets when deliberate attempts have been made to escape the enforcement of sanctions.
I should add that in addition to these important legislative efforts, the government has imposed sanctions on nearly 1500 individuals, including 120 oligarchs with a net worth of over £140 billion. But put that in perspective. The Office of Sanctions Implementation (OFSI) reports that in total, assets worth just £18bn associated with Russia’s regime, have been frozen since the beginning of the war.
In the meantime, the oligarchs have found increasingly sophisticated ways to weaken our sanctions response: moving assets just before sanctions hit, exploiting loopholes to put assets out of reach, and concealing assets to hinder the enforcement of sanctions.
For example, Oligarchs such as Abramovich were able to bypass the sanctions by handing over their wealth and companies to family members, just a few weeks before the sanctions hit.
In fact, just before the war began, Abramovich restructured at least $4 billion of his personal wealth and transferred it to his children, who are now the owners of trusts, luxury yachts, private jets, and mansions. All out of reach of UK sanctions.
Had Amendment 85 been in place, these funds, which by contrast amount to more than the UK’s present commitment in military aid to Ukraine, would not have escaped freezing orders and could have potentially been seized.
Similarly, Mikhail Fridman’s personal assistant, Nigina Zairova, took control of several entities previously owned by that sanctioned oligarch, including a £65 million mansion in Highgate. She was belatedly sanctioned, but the costs of constantly being one step behind are clear.
Recent investigations by Transparency International UK found that luxury homes worth £700 million previously linked to sanctioned oligarchs were not flagged as restricted on the UK property register. Perhaps the Minister can tell us what is being done about that.
And this isn’t just about the war in Ukraine. The Minister and I share a common love of Hong Kong. I am a Patron of Hong Kong Watch and at an event last night I pointed out that at least 5 Hong Kong officials and 6 legislators that are complicit in the ongoing human rights crackdown currently own property in the UK.
I strongly welcomed the Magnitsky sanctions established by the Government – named for Bill Browder’s lawyer Sergei Magnitsky, tortured to death in pre-trial detention in 2009- but the failure to use targeted sanctions against those responsible for the destruction of Hong Kong’s freedom underlines the case for parliamentary accountability and oversight of the sanctions regime.
Indeed, we even provide a red carpet for officials like Christopher Hui who met 3 U.K. Ministers last week while his regime has denied access to Hong Kong BNOers to more than £2.2 billion of pension savings. A letter signed by 110 parliamentarians from both Houses has urged the Government to undertake an audit of UK assets of Hong Kong and Chinese officials linked to human rights violations. No response has been received and no action taken. I hope the Minister with his customary diligence can help with that.
Clearly assets are slipping through the cracks of our sanctions regime, but we do not currently have any legislative tools to seize assets that remain concealed.
Amendment 85 proposes a minor but significant change to our current legislation that would put us on the front foot in pursuing sanctioned assets.
The amendment has teeth and would help us seize concealed assets by expanding the scope of sanctions evasion. Sanctions evasion is already a criminal offence in the UK.
By extending the definition of what constitutes sanctions evasion, we can increase the pressure on those who seek to conceal their assets, here in the UK.
Specifically, the amendment would require all designated individuals to declare any assets they control in the UK to the Office of Sanctions Implementation (OFSI).
They would also be required to provide a list of assets held in the six months prior to designation. Failure to disclose these assets within a specified timeframe would be criminalised as a form of sanctions evasion.
As a result, undisclosed assets would be made susceptible to seizure using existing procedures under the Proceeds of Crime Act (POCA). These procedures already have safeguards in place for courts to ensure that a person is not deprived of their private property in a manner that is disproportionate to the public interest served by seizing the proceeds of crime. The Minister was right to flag a concern about that and I would be very open to giving that issue further definition.
Addressing another point raised with me by the Minister, this amendment would also provide greater transparency about what assets are caught by sanctions, as it places the onus on the sanctioned individual to report their assets to the authorities. This would allow OFSI to ensure better compliance with the sanctions regime and give law enforcement agencies valuable intelligence to tackle evasion.
It is clear that our law enforcement agencies are currently struggling to take effective action against oligarch assets because they lack time and resources to trace the assets. With this amendment, we would put the odds more in their favour, as the oligarchs would have to disclose their assets upfront.
This would help meet the urgent need of targeting sanctioned Russian assets, but the amendment also has within its sights the longer-term need to strengthen all our sanctions regimes and enhance the fight against corruption.
Let me draw to a close by referring to best practice elsewhere.
Our allies have already taken steps to move from “freeze” to “seize”.
Last year, the EU introduced a similar duty to disclose sanctioned assets,and sanctions evasion has been standardised as a criminal offence across all member states. The EU Commission has committed to working with international partners to seize more than €19bn of Russian oligarchs’ funds for the reconstruction of Ukraine.
Meanwhile, our Government is asking the taxpayer to foot the bill.
This is not to say that our efforts in support of Ukraine are not highly commendable.
It is something to be proud of that the UK has come only second to the USA in its contributions.
In 2022, the UK committed £2.3bn in military aid, as well as £220 million in humanitarian assistance.
This amendment would open a potential path to hold to account some of those who have been responsible for enormous human misery and suffering and the great economic damage that has been inflicted on so many.
None of the £18 billion sanctioned has been seized. None of the £140billion of the assets has been frozen.
It’s time it was.
I urge the Minister to continue the discussions about what more can be done and to give serious consideration between now and Report Stage to including this amendment in the Bill.
I beg to move.
