My Lords, my noble friends Lord Brennan and Lord McFall have tabled amendments on the issue of anti-money-laundering at previous stages of the Bill. It is with
some regret that we feel we have to return to the issue as it has not been dealt with to our satisfaction or sufficiently seriously.
We accept that the coalition has acknowledged that it shares the view that this issue is of the utmost importance, and that it intends that the Bill should deal with it. However, in all its responses so far, I believe that it has failed to show that it has understood the crux of the matter and, in turn, has not amended the Bill appropriately. It is for this reason that my noble friend Lord Brennan and I have submitted this further amendment at Third Reading.
It is apt that, in preparing for the debate, I came across a press release of a court case held in London earlier today involving the imprisonment of a former Goldman Sachs banker who was sentenced to four and a half years for laundering £8 million on behalf of James Ibori, the former governor of Nigeria’s oil-producing state of Delta. Mr Ibori has himself been in prison since April of last year, having received a 13-year sentence after pleading guilty to various counts of fraud and money-laundering. He is the most senior Nigerian politician to have been held to account for the corruption that has blighted that large and very important African country. At the April 2012 court case, it was stated by the prosecutor, no less, that Ibori and his associates had used multiple accounts at Barclays, HSBC, Citibank and Abbey National—now part of Santander—to launder funds. Millions of pounds in total passed through these accounts, some of which were used to purchase expensive London property. The point is that there has been no investigation into those four organisations following that case, which leads me to ask your Lordships what disincentives there are for banks not to continue with their somewhat lax approach to some very large sums of money that are proffered to them. That is why it is important that we deal with this issue by inserting a provision in the Bill today, or at least when it returns to another place.
On Report, the noble Lord, Lord Newby, promised that the coalition Government would provide a commentary on the early amendments that my noble friends Lord Brennan and Lord McFall and I submitted, in order to explain both why they thought them unnecessary and how exactly the new personal responsibility mechanisms in the Bill would include anti-money-laundering compliance obligations. The noble Lord, Lord Deighton, wrote to my noble friend Lord Eatwell on 29 November, but I regret to inform noble Lords that his letter did not provide a satisfactory response.
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The letter from the noble Lord, Lord Deighton, claimed that the amendments on Report would be counterproductive by requiring all junior staff involved in compliance to be covered by the senior persons regime, when in fact the opposite is the case. My noble friends and I sought the advice of independent counsel on this issue, which was reflected in a clearly worded amendment designed to ensure that the senior management of a bank can be held accountable for breaches of any bank’s anti-money-laundering obligations.
I urge the coalition to heed this advice and bring forward a new amendment in another place which reflects the debate in this House. I believe that failure to do so would mean that the buck for anti-money-laundering compliance could stop with the relatively junior post of money-laundering reporting officers. This is exactly the system that has been in place for many years and has clearly been found wanting. This is why we continue to raise the issue at this late stage of the Bill.
The Bill is in danger of implementing a groundbreaking and highly effective recommendation of the Parliamentary Commission on Banking Standards in a manner that could be singularly ineffective by merely maintaining the status quo. This should be avoided at all costs.
I should also say a little about the Government’s explanation of how the new personal responsibility mechanisms in the Bill will include anti-money-laundering compliance. Unfortunately, the letter from the noble Lord, Lord Deighton, also falls short in reassuring my noble friends and me in this respect. Instead, the argument appears to be that the note that the FCA provided on Report about anti-money-laundering, and the Treasury’s recent anti-money-laundering report outlining the approach and work of UK regulators, demonstrate that the FCA is fully committed to dealing with anti-money-laundering compliance issues.
However, this misses the point. Whether the FCA is or is not fully committed—and I am perfectly willing to give the benefit of the doubt on that—the fact remains that its attempts and that of its predecessor the FSA to enforce anti-money-laundering laws have been largely unsuccessful. In advancing that argument, I refer noble Lords to the FSA’s 2011 report, which found that in a review of banks, 75%—I repeat, 75%—of those banks were not meeting their anti-money-laundering obligations. That report also highlighted that banks were making the same mistakes as they did a decade earlier when the regulator reviewed the banks that had taken £900 million from the corrupt Nigerian dictator Sani Abacha.
The letter from the noble Lord, Lord Deighton, stated that the Treasury would raise my concerns with the FCA about the note. I welcome that. In this respect, I would also welcome reassurance that this will take the form of a statement from the Chancellor of the Exchequer two weeks after the Bill receives Royal Assent—or preferably earlier—clearly setting out that the FCA is bound both to require banks to identify a senior person as having responsibility for anti-money-laundering compliance and to include it in both the new banking standards rules and the remuneration code.
Such a statement is vital to be binding on the FCA to include anti-money-laundering compliance as one of the obligations. I beg to move.