Home Somerset rules Government mulls action to prevent asset flight in ‘dirty money’ crackdown

Government mulls action to prevent asset flight in ‘dirty money’ crackdown


Measures are urgently being considered to stop foreign criminals and kleptocrats dodging a key move to target ‘dirty money’ in the UK, a minister has told parliament.

The government was responding to concerns raised in Westminster about the flight of assets ahead of new rules to tackle illicit money laundering.

Delayed anti-corruption measures are now being rushed through parliament in response to Russia’s invasion of Ukraine, aimed at targeting Vladimir Putin’s oligarch allies and making sanctions hit at home.

As part of the Economic Crimes (Transparency and Enforcement) Bill, the Conservative administration has already agreed to cut the time allowed to comply with a new foreign-owned property registry from 18 months to six.

But critics in the House of Lords, while supporting the measures taken, argue that it is still too long and should be reduced to 28 days.

The legislation would establish a new Foreign Entity Register requiring foreign owners of property in the UK to declare their true identity in a bid to ensure criminals cannot hide behind secret shell companies.

People who don’t comply will face restrictions on selling the property, while those who break the rules will face fines or up to five years in prison.

Other measures contained in the bill include strengthening the unexplained wealth orders and the sanctions regime.

Warning of delays in enforcing the property register, Lord Macdonald of River Glaven, Independent MP, who was Director of Public Prosecutions when former Russian spy Alexander Litvinenko was murdered, said: “Six months , that’s too long. It would defeat the very purpose of the bill. Transparency of ownership is the most fundamental anti-corruption tool, and the government has resisted it for far too long.

On the proposed six-month transition period, Liberal Democrat Baroness Kramer said: “It still gives any oligarch plenty of time and scope to alter their arrangements, including liquidating and transferring assets out of the UK to a safe haven.”

Labor Baroness Chapman of Darlington said: ‘Properties will be sold and other assets disposed of in much less time, which will seriously undermine the effectiveness of the new register.’

Former Tory Solicitor General and QC Lord Garnier said: ‘Nowadays money flows around the world at the push of a button on a computer.

Liberal Democrat Lord Fox said: ‘The money is already flowing. Kleptocrats cut and run. Giving them another six months head start essentially makes it pointless.

Responding to concerns from his peers, Business Secretary Lord Callanan said: ‘I think it is important to remember that the majority of properties held through overseas entities will be owned by fully respectful companies and people. the law.

The Economic Crimes (Transparency and Enforcement) Bill received an unopposed second reading and is now moving forward for further consideration on Monday (Dominic Lipinski/PA)

“We are talking about around 95,000 properties in England and Wales owned by around 32,000 overseas entities.

“It is a fact that only a small, tiny fraction of these are likely to be owned by criminal or corrupt interests.”

He added: “The transition period is an important protection for the rights of these legitimate property owners.”

But the Minister continued: “I am aware of the strength of the sentiment expressed that corrupt people must not be allowed to sell and escape the transparency that the register will bring.

“The government therefore sees the value of requiring all those selling property to submit a declaration of their contact details at the time of transfer of land during the transition period.

“They would have to register the property if they sold and that way we would get their ownership details immediately, or if they didn’t sell we would get them at the end of the transition period, but in a way that protects always the rightful owners.

“We are urgently reviewing this and seriously considering this idea, but we need to get it properly written and legally watertight so that it is workable, effective and achieves what we want it to achieve.”

The bill received an unopposed second reading and is now moving forward for further consideration on Monday, when it is expected to push the legislation through all of its remaining stages in order to put it on the compendium of laws as soon as possible.