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Rishi Sunak Says ‘All Crimes’ Must Be Investigated – So Why is he Blocking Plans to Go After Fraudsters, Cronies and Kleptocrats?

Sunak’s Government is throwing out plans to get dirty money out of the UK

Photo: Justin Kase/Alamy

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This week Home Secretary Suella Braverman told officers to act on leads for phone or car theft, shoplifting and criminal damage – branding it “unacceptable” that some crimes have been treated as “less important”.

The slightly surreal new commitment to actually investigate crimes forms a key plank of a so-called “crime week” in the Conservatives’ PR grid. But what about far bigger crimes than phone thefts which are also not being investigated? 

The Government’s Economic Crime and Corporate Transparency Bill returns to the Commons next week when Parliament comes back from recess. 

In it are some laudable efforts to boost transparency and the ability to tackle economic crime, including more powers for the ineffective filing-system, Companies House, to check for potential corruption.  

But there are also some glaring omissions. During House of Lords debates in June and July, peers voted through key amendments, many of them tabled by backbench Conservatives. 

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Each amendment would represent a “huge step forward” in how we approach economic crime in Britain, the UK Anti-Corruption Coalition says.

Yet the Government has signalled that when the Bill returns to Commons for “ping-pong” (the back and forth between the two chambers) next Monday 4th September, it will reject nearly all the cross-party Lords’ proposals. Ministers are preparing for a showdown. 

Responding to the government’s plans to scrap the amendments, Labour’s Dame Margaret Hodge told Byline Times: “We’ve gone from ‘crime week’ to rolling out the red carpet to people traffickers, drug smugglers and Russian oligarchs in the blink of an eye.

“It just beggars belief that the Government is refusing to use the Economic Crime Bill to back up our enforcement agencies, crack down on dodgy lawyers and accountants and strip away the layers of financial secrecy these crooks are hiding behind. 

“Ministers still have an opportunity to support cross-party, practical amendments which would stem the flow of dirty money into Britain. I hope they seize it with both hands”.

Here are the key amendments being opposed by the Government, and what they’d mean in practice (with thanks to analysis by the UK Anti-Corruption Coalition). 

Kleptocrats Hiding Company Ownership

Amendment 23: Tabled by crossbencher Lord Vaux

Lord Vaux’s amendment would make it easier for enforcement agencies to identify the real owners of companies – who can currently hide behind placeholder “nominees” appointed by the wealthy.

If passed, it would require a person or firm holding shares as a nominee to be publicly identified, by naming the person (or people) on whose behalf the shares are held. And there’d be a new offence for those failing to declare themselves. 

The crossbench peer said “undisclosed nominee” arrangements are a “classic way” of hiding the real ownership of a company. “This amendment would mean dishonest actors will have to find people willing to lie on the record, rather than just keep quiet, completely altering their risk-reward calculations,” he added. 

Lord Vaux – and the hundreds of peers who passed the amendment in the Lords – believe it would be a “vital boost for transparency and national security” without placing undue burdens on businesses. 

In fact, without this amendment passing, a new loophole would be created, he argues – making it easier for wrongdoers to hide their ownership of UK property, by using a UK company instead of an overseas entity (for which there are higher transparency requirements). It would, he says, completely undermine the flagship Register of Overseas Entities, brought in last year. 

The Government is planning to block the amendment.

Closing Offshore Company Loopholes

Amendment 117: Tabled by Conservative peer Lord Agnew. 

This amendment aims to close a loophole that allows “bad actors” to continue hiding behind offshore companies.

To shine a light on who owns UK properties via offshore firms, the move aims to close a loophole in an earlier piece of legislation (the last Economic Crime Bill) that was expedited through parliament following Russia’s illegal war in Ukraine.

The Economic Crime Act 2022 introduced a new Register of Overseas Entities to list who owns property via offshore companies. 

But this has been “fatally undermined” by a loophole allowing bad actors to hide from scrutiny using overseas trusts, which weren’t included in that legislation, Lord Agnew argues. 

“By making it a requirement to publish information on trustees, we’d have a much better picture of who’s acquiring and holding UK property,” he says.

Previous research shows that £40bn of UK property is owned by offshore tax haven firms. 

The Government is planning to block the amendment.


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Failing to Prevent Fraud

Amendment 151: Tabled by Conservative peer Lord Garnier. 

Despite its national pledge to investigate every crime, the Government has proposed far-reaching exemptions for a new “failure to prevent” fraud offence, set out in the Economic Crime bill. 

The new offence would, in theory, make it much harder for professionals, like bankers and accountants, to turn a blind eye to clients’ wrongdoing, in the face of a new legal responsibility to carry out proper checks. 

But the Government plans to make small-and-medium-sized enterprises (SMEs) exempt from this new offence – despite SMEs accounting for almost all businesses in the UK, and being more likely than the biggest firms to be victims of – or vehicles for – fraud. 

Lord Garnier’s amendment sets out the principle that prosecutions for economic crime should be based on the “evidence of wrongdoing and on the public interest in a prosecution – not on the size of the suspect or company accused of wrongdoing,” backers argue. The UK Anti-Corruption Coalition says the rules should be the same for all firms, big or small.

Lord Garnier said the Government’s medium-sized business exemption is “not just bad law, it’s ridiculous.”

“We don’t prosecute only burglars [who are] over 6’6” and let off 99.5% of burglars because they are shorter than that. The criminal offence of failure to prevent fraud and money laundering should be the same for all companies and of burglary for all burglars…After all, small burglars can cause as much harm and misery as tall ones.”

The Government will try to block the SME exemption amendment, arguing that the “failure to prevent” fraud offence should only apply to “large organisation(s)”.

Promoting Money Laundering 

Amendment 159: Tabled by Conservative peer Lord Garnier. 

This one aims to extend the new “failure to prevent” fraud offence (see above) to include money laundering, a crime that is estimated to cost the UK around £100bn annually.

Lord Garnier said the Government has failed to provide a “rational…evidence-based argument” against the case for extending the ‘failure to prevent’ offence to money laundering. There are long-standing offences around failure to prevent bribery: why not money laundering? 

The Government seems to think it would be too big a burden. But Lord Garnier adds: “No properly run company of any size would want to promote or permit corruption or money laundering by anyone it deals with. Requiring all companies to have adequate procedures to prevent fraud and money laundering is not an imposition but common sense.”

The Government is planning to block the amendment.

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Reducing Costs for Crime Fighting

Amendment 161: Tabled by Conservative peer Lord Agnew.

This one would, backers argue, give law enforcement more confidence to go after “deep-pocketed oligarchs and criminals with expensive lawyers.”

It would limit the court costs that law enforcement agencies would be liable for when they’re pursuing economic crime cases. 

Super-rich individuals, like foreign oligarchs, have in the past relied on simply racking up unaffordable costs for regulators in order to evade prosecution. Cash strapped investigators and regulators simply give up as the legal bills balloon.

The “chilling effect” of potentially losing an entire year’s budget on one lost case can be fatal to the fight against economic crime, anti-corruption campaigners argue. 

As Lord Agnew says: “We already have protections from exorbitant court costs for our enforcement agencies when pursuing Unexplained Wealth Orders. This new amendment would simply extend this principle across different civil recovery cases.”

He and other peers believe investigation agencies should not have to “choose between budgetary oblivion and going after deep-pocketed oligarchs and criminals with expensive lawyers.”

The Government will move an “amendment in lieu” of the Lords’ own one, instead committing to “produce a report within 12 months on the benefits of this type of cost capping.”

Bold, eh.

Pivotal Importance

One anti-corruption campaigner told Byline Times the “biggest game-changer” of the pack of amendments would be a new offence for failing to prevent money laundering, as well as extending the new ‘failure to prevent fraud’ offence to include small and medium sized businesses.

It has strong backing from high profile legal parliamentarians, including former justice secretary Rob Buckland MP and Lord Garnier, the campaigner said. 

There is understood to be more agreement from business and industry on amendments which would strip away asset ownership secrecy provided by trusts – as it might mean they could spend less on due diligence. Sanctioned Russian oligarchs have been known to use secretive trusts to “restructure” wealth and conceal assets. 

Capping court costs for enforcement agencies is also a key priority – a recent case of the Serious Fraud Office dropping a 10 year case looking into Kazakh mining company ENRC “shows how hard it is for already underfunded agencies to go after bad actors when one misstep can lead to budgetary oblivion”, one anti-corruption source said. 

Senior Labour backbencher and long-time anti-corruption campaigner Margaret Hodge MP is deeply concerned about the Government’s failure to back the Lords’ proposals. 

“These practical changes would make it harder for Putin’s cronies to hide behind layers of financial secrecy. They would make it harder for people traffickers and drug smugglers to launder the proceeds of their crimes into our country. And they would make it easier for our outgunned and outspent enforcement agencies to go after these crooks and kleptocrats,” Hodge said. 

“Parliamentarians and experts of all stripes have come together to develop a strong, coherent and effective set of proposals. The Government still has a chance to think again. I would urge them to do so.”

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