Recommendations & Conclusions
9 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
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
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
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