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 …
Government response. 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.
Foreign and Commonwealth 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. 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 …
Foreign and Commonwealth 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. 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 …
Foreign and Commonwealth 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 …
Government response. 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.
Foreign and Commonwealth 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 …
Government response. 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 …
Foreign and Commonwealth 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 …
Government response. 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.
Foreign and Commonwealth 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 …
Government response. 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 …
Foreign and Commonwealth 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 …
Government response. 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.
Foreign and Commonwealth 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.
Government response. 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.
Foreign and Commonwealth 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 …
Government response. 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 …
Foreign and Commonwealth 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, …
Government response. 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.
Foreign and Commonwealth 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 …
Government response. 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.
Foreign and Commonwealth 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
Government response. 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.
Foreign and Commonwealth 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 …
Government response. 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 …
Foreign and Commonwealth Office
15
Recommendation
Second report - The cost of complacency…
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 …
Government response. Addressing economic crime and security is a shared priority across government, and we agree on the importance of robust oversight and accountability to ensure coherence and impact. There is effective governance of these efforts, principally through the Economic Crime Delivery …
Foreign and Commonwealth 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 …
Government response. 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.
Foreign and Commonwealth 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: …
Government response. 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.
Foreign and Commonwealth Office