We have Amendment 73 in this group, which is on not dissimilar lines to the amendment moved by the noble Baroness, Lady Hamwee. Amendment 73 would require the Secretary of State to,
“lay before each House of Parliament an annual statement on the money laundering supervision regime and any plans the Government has to amend it”.
On Second Reading, we raised questions about the effectiveness or otherwise of our anti-money laundering system in the light of the billions of pounds in corrupt money that comes into this country each year. Reference has already been made to that point in our earlier debate on the London property market. According to the National Crime Agency, the figure could be as high as £90 billion. The Government’s impact assessment says that this country is unusually exposed to the risks of international money laundering, which is made even more serious by the reality that money laundering is also a key enabler of serious and organised crime, including terrorist financing. The social and economic costs of this are estimated in the Government’s impact assessment at some £24 billion per year. However, despite this far from satisfactory state of affairs, there are, as I understand it, some 27 supervisory bodies in the relevant sectors, which must surely lead to a fragmented approach in the identification and mitigation of risks, and in the approach to enforcement.
6.30 pm
There are also concerns about whether some of the 27 or so supervisory bodies have conflicts of interest, because 15 or so are also lobby groups for the sectors they supervise. The Bill does not seem to address the issue of the effectiveness or otherwise of our anti-money laundering system—hence the amendment.
At Second Reading the Government said that they had consulted on reforms to the anti-money laundering supervisory regime and had considered the responses.
They went on to say that the Treasury intended to publish the outcome of the review in the coming weeks in order to ensure the most effective possible supervision of the regulated sector. I do not know whether the Government were referring at Second Reading to the Treasury document on the response to the consultation on the anti-money laundering supervisory regime dated this month, or whether they were referring to a future Treasury document, since the March 2017 document includes a call for further information, with a return date for comments of 26 April 2017.
The fact that a consultation has taken place suggests that the Government have some doubts about the current arrangements. However, as with the suspicious activity reports, the Government’s answer at Second Reading was again that they had undertaken a review and were considering their position in the light of the responses. So I have to ask again: why, in all the discussions on the Bill that took place before it was even brought to Parliament, let alone in the discussions in Parliament, was the issue of the effectiveness or otherwise of the present anti-money laundering regime not resolved and determined, when it is surely a crucial aspect of the issues that the Bill seeks to address?
Saying that a key issue such as this is still being considered by the Government suggests that Parliament will not have the same level of scrutiny and debate, or the same ability to amend any changes to the current system, that it would have if those changes were incorporated in the Bill. The closing date for comments of 26 April indicates that the Government are set against Parliament considering any changes as part of the consideration of the Bill. However, the Government’s UK National Risk Assessment of Money Laundering and Terrorist Financing, published in October 2015—so not recently—found that the effectiveness of the supervisory regime in this country was inconsistent and that there was room for improvement across the board, with the number of professional body supervisors in some sectors risking inconsistencies of approach. One would have thought that, by now, bearing in mind that the risk assessment was published in October 2015, the Government might have got round to making some decisions that could have been included in the Bill and debated properly by Parliament. However, unfortunately that will not be the case.
I am sure that a number of noble Lords will have received a communication from the Solicitors Regulation Authority—I think that the noble Baroness, Lady Hamwee, referred to this document—which states that anti-money laundering supervisors should be fully independent of interference or control by any representative body because of the obvious conflict of interest.
There is clearly a feeling that the current anti-money laundering supervisory regime needs changing, albeit that the Government do not intend to involve Parliament in the process and decision-making through the Bill—hence the amendment requiring the annual statement to Parliament from the Secretary of State.
I hope that the Government will accept the amendment—or, if not, will put down one of their own with a similar objective. Parliament needs to be
involved and, unfortunately, by accident or design, this will not be achieved through the legislation we are discussing today—and concerns have already been expressed today about the difficulty of finding time for legislation in the next two years. I hope that the Government will give a positive response and that we may receive some assurances on this—albeit that, with the closing date for comments of 26 April, I am probably being unrealistic in expressing the hope that the Government may come back on this matter by Report or Third Reading.