Recommendations & Conclusions
17 items
1
Conclusion
Second report - The cost of complacency…
Accepted
The Committee underlines the imperative of implementing beneficial ownership rules and robust reform of Companies House, including new powers for the company registrar to verify information to ensure accuracy as well as discretionary powers to remove corporate entities from the register for wrongdoing and ensure robust identity verification requirements. It …
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The Committee underlines the imperative of implementing beneficial ownership rules and robust reform of Companies House, including new powers for the company registrar to verify information to ensure accuracy as well as discretionary powers to remove corporate entities from the register for wrongdoing and ensure robust identity verification requirements. It is important that beneficial ownership registers are as transparent as possible.
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Government response AI summary
The government agrees and is reforming Companies House through the upcoming Economic Crime and Corporate Transparency Bill to broaden the Registrar's powers, introduce new objectives, improve data accuracy, and enhance investigation and enforcement capabilities.
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Foreign, Commonwealth & Development Office
2
Recommendation
Second report - The cost of complacency…
Accepted
We recommend that the FCDO ensures there must be timely and effective implementation of the Companies House register of overseas entities that own UK property.
Government response AI summary
The government agrees and created a new Register of Overseas Entities through the Economic Crime (Transparency and Enforcement) Act, requiring overseas companies owning or buying property in the UK to provide information about their true owners to Companies House. The Register went live on 1 …
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Foreign, Commonwealth & Development Office
3
Conclusion
Second report - The cost of complacency…
Acknowledged
Recent changes to the Economic Crime (Transparency and Enforcement) Act 2022 seek to make it easier to apply for UWOs, but a law is only as effective as its enforcement.
Government response AI summary
The Government notes the conclusion and states UWOs are one of several tools to investigate and recover proceeds of crime. Reports on the use of UWO powers will be publicly available, and the Home Office will draft and lay an annual report in Parliament covering …
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Foreign, Commonwealth & Development Office
4
Conclusion
Second report - The cost of complacency…
Accepted
The Government’s unwillingness to bring forward legislation to stem the flow of dirty money is likely to have contributed to the belief in Russia that the UK is a safe haven for corrupt wealth. It is shameful that it has taken a war to galvanize the Government into action. The …
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The Government’s unwillingness to bring forward legislation to stem the flow of dirty money is likely to have contributed to the belief in Russia that the UK is a safe haven for corrupt wealth. It is shameful that it has taken a war to galvanize the Government into action. The measures in the Economic Crime (Transparency and Enforcement) Act 2022, while welcome, do not go far or fast enough and do little to address the fundamental mismatch between the resources of law enforcement agencies and their targets. Although Ministers have spoken eloquently in the House about the need to clamp down on kleptocrats, rhetoric has not been matched by constructive action. Meanwhile, corrupt money has continued to flow into the UK.
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Government response AI summary
The Government notes this conclusion and states that it is already taking action, including setting up the Combatting Kleptocracy Cell in the National Crime Agency (NCA) and sanctioning over 1,100 Russian individuals linked to the Kremlin regime.
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Foreign, Commonwealth & Development Office
5
Recommendation
Second report - The cost of complacency…
Accepted in Part
The Government cannot afford to rely on rhetoric if it is to deliver on its commitment to tackle illicit finance. Without the necessary means and resources, enforcement agencies are toothless. If the UK is to protect its reputation as a global financial centre, it is essential that legitimate businesses can …
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The Government cannot afford to rely on rhetoric if it is to deliver on its commitment to tackle illicit finance. Without the necessary means and resources, enforcement agencies are toothless. If the UK is to protect its reputation as a global financial centre, it is essential that legitimate businesses can have trust in the integrity of our institutions. The threat illicit finance poses to our national security demands a response that is seen to be serious. To that end, we repeat the call for a substantial increase in funding and expert resourcing for the National Crime Agency, Serious Fraud Office and other responsible agencies.
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Government response AI summary
The government cites the Economic Crime Levy and Spending Review 21 settlement, representing £400 million over three years, including £100 million per year through the Economic Crime Levy. The allocation round will take place this financial year and will include funding for the Suspicious Activity …
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Foreign, Commonwealth & Development Office
6
Recommendation
Second report - The cost of complacency…
Deferred
The Government should publish its long-awaited review of the Tier 1 Investor visa scheme without delay. It should also explain: whether it intends to review Investor visas issued since 2015; what action it will take in relation to those who were granted a visa without due diligence, particularly those who …
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The Government should publish its long-awaited review of the Tier 1 Investor visa scheme without delay. It should also explain: whether it intends to review Investor visas issued since 2015; what action it will take in relation to those who were granted a visa without due diligence, particularly those who now hold permanent residency or British citizenship; and what action it has taken against those it has deemed to be a national security risk.
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Government response AI summary
The government notes the recommendation and states that the review of the Tier 1 Investor visa scheme is being finalised and it is their aim to publish it in the near future.
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Foreign, Commonwealth & Development Office
7
Recommendation
Second report - The cost of complacency…
Accepted
Greater public access to information about beneficial ownership would improve private sector compliance with sanctions, pre-empt sanctions evasion and improve transparency about designated individuals. If the Government and Overseas Territories had achieved this by December 2020, as originally expected, these public The cost of complacency: illicit finance and the war …
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Greater public access to information about beneficial ownership would improve private sector compliance with sanctions, pre-empt sanctions evasion and improve transparency about designated individuals. If the Government and Overseas Territories had achieved this by December 2020, as originally expected, these public The cost of complacency: illicit finance and the war in kraine 25 registers would have been in place before sanctions on Russia were imposed in response to the invasion of Ukraine. We recognise and appreciate the progress made by many Overseas Territories and Crown Dependency jurisdictions. We recommend that the FCDO ensures that public registers of beneficial ownership in the Overseas Territories and Crown Dependencies are faithfully implemented by early 2023 with full and free access to company data, not limited to single entries. In its response to this report, we ask the Government to explain what is causing the delay and what steps it is taking to speed the process. In the meantime, we recommend that the Government leverages its access to information through the Exchange of Notes procedure to proactively request information about non-transparent companies and assets, which it could then make available to banks and partner countries to support sanctions against Russia or publish publicly, where appropriate to do so.
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Government response AI summary
The government states that Overseas Territories and Crown Dependencies are separate, self-governing jurisdictions with their own governments responsible for domestic affairs, including fiscal matters and financial services policy. They point to the freezing of Russian assets and the Exchange of Notes procedure to proactively request …
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Foreign, Commonwealth & Development Office
8
Conclusion
Second report - The cost of complacency…
Accepted
We welcome the consultation on SLAPPs, to which we have submitted a memorandum. We will return in our further report to ways in which the FCDO can work in concert with other departments to curb professional enablers who wittingly or otherwise help kleptocrats to establish a financial foothold in the …
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We welcome the consultation on SLAPPs, to which we have submitted a memorandum. We will return in our further report to ways in which the FCDO can work in concert with other departments to curb professional enablers who wittingly or otherwise help kleptocrats to establish a financial foothold in the UK and to stifle investigation of their affairs.
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Government response AI summary
The government welcomes the committee’s support and outlines plans for a legislative definition for SLAPPs and early dismissal process, supported by a formal costs protection scheme.
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Foreign, Commonwealth & Development Office
9
Recommendation
Second report - The cost of complacency…
Acknowledged
Journalists, however, are not the only truth-tellers who need protection. They often rely on whistle-blowers inside companies and organisations. These whistle-blowers need protection. The FCDO should therefore push for a Whistleblowing Bill to offer protection to those who speak out against, or uncover, economic crimes and other wrongdoing.
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Journalists, however, are not the only truth-tellers who need protection. They often rely on whistle-blowers inside companies and organisations. These whistle-blowers need protection. The FCDO should therefore push for a Whistleblowing Bill to offer protection to those who speak out against, or uncover, economic crimes and other wrongdoing.
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Government response AI summary
The government agrees that an effective whistleblowing framework is important and has committed to a review of the whistleblowing framework, and is considering the scope and timing of this review.
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Foreign, Commonwealth & Development Office
10
Recommendation
Second report - The cost of complacency…
Deferred
The vectors of illicit finance are often companies. Therefore, the FCDO should work across Government to encourage reform of outdated and ineffective corporate criminal liability laws which mean that it is difficult to hold large companies to account for economic crimes. We will return to this point in our final …
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The vectors of illicit finance are often companies. Therefore, the FCDO should work across Government to encourage reform of outdated and ineffective corporate criminal liability laws which mean that it is difficult to hold large companies to account for economic crimes. We will return to this point in our final report. (Paragraph 23) K Sanctions regime: Russia and kraine
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Government response AI summary
The Government notes this recommendation and is carefully assessing the options presented by the Law Commission's review of how corporates could be better held to account for committing serious crimes, and continues to work collaboratively with them and other key stakeholders to review and take …
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Foreign, Commonwealth & Development Office
11
Recommendation
Second report - The cost of complacency…
Accepted
We are concerned the Government’s recent rhetoric about action on “dirty” Russian money implies that the current raft of sanctions is a part solution to the UK’s problem of kleptocratic wealth. We welcome the issuance of sanctions, which have frozen the assets of a growing number of oligarchs for supporting, …
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We are concerned the Government’s recent rhetoric about action on “dirty” Russian money implies that the current raft of sanctions is a part solution to the UK’s problem of kleptocratic wealth. We welcome the issuance of sanctions, which have frozen the assets of a growing number of oligarchs for supporting, or receiving benefit from, the Russian Government. But this should not become a form of “criminal justice light” where assets are held indefinitely without subsequent prosecution, nor should it become a form of expropriation without due process. We recommend that the relevant law enforcement agencies now take advantage of the time these asset freezes provide to consider if there is a criminal case for asset seizure.
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Government response AI summary
The government notes the recommendation and states that law enforcement agencies are currently able to freeze and seize foreign assets with links to criminality or unlawful conduct by using powers granted under the Proceeds of Crime Act 2002.
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Foreign, Commonwealth & Development Office
12
Recommendation
Second report - The cost of complacency…
Accepted
The primary reason for early ineffective action on sanctions was inadequate preparation and foresight by the leadership of the FCDO and consequent understaffing within the sanctions unit. The skillset of staff within the sanctions unit and the coordination between departments to understand the commercial environment are critical. We welcome the …
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The primary reason for early ineffective action on sanctions was inadequate preparation and foresight by the leadership of the FCDO and consequent understaffing within the sanctions unit. The skillset of staff within the sanctions unit and the coordination between departments to understand the commercial environment are critical. We welcome the Government’s expansion of the sanctions unit. But policy effectiveness requires practical backing, sufficient resources and 26 The cost of complacency: illicit finance and the war in kraine the right capabilities, including the capacity to gather necessary intelligence to support designations. The Government should provide the sanctions unit with the necessary additional resources for the duration of the crisis. We recommend that the Government develops a professional sanctions cadre, to develop sanctions design and targeting as a recognised professional specialism. The UK is a global financial centre with access to this information; we should make better use of it.
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Government response AI summary
The FCDO has established a permanent Sanctions Directorate and a cadre of sanctions experts to build enduring expertise. This includes training for staff across the FCDO and wider government.
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Foreign, Commonwealth & Development Office
13
Recommendation
Second report - The cost of complacency…
Accepted
The Government has an obligation to help guide institutions through the sudden gear change in policy, not least because it has introduced strict liability for breaches. We endorse the Treasury Committee’s call for clear guidance for the private sector. (Paragraph 32) A strategy for illicit finance
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The Government has an obligation to help guide institutions through the sudden gear change in policy, not least because it has introduced strict liability for breaches. We endorse the Treasury Committee’s call for clear guidance for the private sector. (Paragraph 32) A strategy for illicit finance
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Government response AI summary
The Office of Financial Sanctions Implementation (OFSI) undertakes regular engagement with a variety of different industry sectors and provides a variety of sanctions guidance available online to support stakeholders, and keeps this regularly under review.
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Foreign, Commonwealth & Development Office
14
Recommendation
Second report - The cost of complacency…
Accepted
Given the impressive coordination with the EU and US on sanctioning individuals and entities in relation to the war in Ukraine, we urge the Government to build on this initiative and to develop a comprehensive transatlantic partnership to curb kleptocracy. This transatlantic partnership has the potential to adjust the global …
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Given the impressive coordination with the EU and US on sanctioning individuals and entities in relation to the war in Ukraine, we urge the Government to build on this initiative and to develop a comprehensive transatlantic partnership to curb kleptocracy. This transatlantic partnership has the potential to adjust the global financial order in a way that bears down on corruption and bolsters democratic values.
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Government response AI summary
The government agrees that transatlantic collaboration is vital and emphasizes working with partners bilaterally and multilaterally to tackle illicit finance. They cite existing partnerships with the US and UAE, participation in the G7 and G20, and involvement in the US-led Summit for Democracy’s Financial Transparency …
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Foreign, Commonwealth & Development Office
15
Recommendation
Second report - The cost of complacency…
Acknowledged
The FCDO has vast experience, through the merger with DFID, of running illicit finance programmes internationally and gathering critical intelligence to assess security risks. The FCDO should be present at the table in international fora on illicit finance, such as the Financial Action Task Force. Appointing a Minister for Economic …
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The FCDO has vast experience, through the merger with DFID, of running illicit finance programmes internationally and gathering critical intelligence to assess security risks. The FCDO should be present at the table in international fora on illicit finance, such as the Financial Action Task Force. Appointing a Minister for Economic Security with cross-Whitehall responsibility for the multiple strands of work on countering corruption would go some way to demonstrating the Government’s commitment to ending kleptocracy in the UK. It would provide meaningful accountability to Parliament for delivery of a comprehensive strategy. The Government should study lessons from US legislation such as the ENABLERS Bill currently before Congress, and the Countering America’s Adversaries Through Sanctions Act (CAATSA) for protections which could be aligned with UK legislation. (Paragraph 38) Conclusion
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Government response AI summary
The government acknowledges the importance of addressing economic crime and security, stating that there is effective governance of these efforts and that they will continue to review and strengthen governance arrangements. They state that HM Treasury leads the UK delegation to the FATF, drawing on …
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Foreign, Commonwealth & Development Office
16
Conclusion
Second report - The cost of complacency…
Acknowledged
We will continue to monitor the Government’s progress on the next Economic Crime Plan, the Economic Crime Bill 2 and Companies House reform. We will look at how effectively the UK continues to maintain pressure on Russia through sanctions and, more critically, how the Government enforces its sanctions so that …
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We will continue to monitor the Government’s progress on the next Economic Crime Plan, the Economic Crime Bill 2 and Companies House reform. We will look at how effectively the UK continues to maintain pressure on Russia through sanctions and, more critically, how the Government enforces its sanctions so that they have the intended impact of crippling the Russian war machine and deterring those who would aid Putin’s regime.
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Government response AI summary
The government notes that the Committee will continue to monitor progress on the Economic Crime Plan, Economic Crime Bill 2, and Companies House reform, as well as the effectiveness of sanctions against Russia.
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Foreign, Commonwealth & Development Office
17
Conclusion
Second report - The cost of complacency…
Acknowledged
It is deeply regrettable that it has needed a war for the Government to make progress on long-promised plans to tackle the flows of illicit finance through London and beyond. While sanctions remain in place, freezing the corrupt wealth of President Putin’s supporters, now is the time to take action: …
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It is deeply regrettable that it has needed a war for the Government to make progress on long-promised plans to tackle the flows of illicit finance through London and beyond. While sanctions remain in place, freezing the corrupt wealth of President Putin’s supporters, now is the time to take action: to strengthen legislation against enablers; to adequately resource the National Crime Agency and other bodies The cost of complacency: illicit finance and the war in kraine 27 responsible for bringing criminal cases to trial; and to coordinate strategically with our allies and others, particularly the US, so that those with dirty money no longer have a place to hide it. (Paragraph 40) 28 The cost of complacency: illicit finance and the war in kraine
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Government response AI summary
The Government notes these conclusions and states that it has taken robust action over the last decade and will not tolerate the Kremlin’s business model of stealing in Russia to then spend and save in the West, including the UK.
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Foreign, Commonwealth & Development Office