My Lords, my name is attached to Amendment 167, and I will also bring my Amendments 168 and 169 into play, not least because, unless I have misunderstood the situation, my noble friend Lord Eatwell will certainly wish to speak about one of my amendments in this group, if not all three of them.
I fully support Amendment 167 and will touch on some of the arguments in support of it when referring to Amendments 168 and 169. Amendment 169 would provide a duty on the Secretary of State to hold a consultation on the establishment of a publicly accessible register of the beneficial ownership of UK property by companies registered outside the United Kingdom within six months of the commencement of Section 1 of this legislation. It would also require the Secretary of State to bring forward legislative proposals to set up such a register within 12 months of the commencement of the section.
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We had a discussion last week in Committee about the state of the London property market in particular. What became evident from the Panama papers was that just under 3,000 less-than-transparent companies set up by Mossack Fonseca held 6,000 Land Registry titles in this country, with combined historical costs of £7 billion, and that more than 40,000 properties—10% in the London borough of Westminster—are owned by offshore companies with unknown beneficiaries. Not only has that had an impact on housing costs, to the detriment of those on lower and middle incomes, including first-time buyers, both within and beyond London, but it has also given rise to strong suspicions about property being used for money laundering and for keeping finance hidden. If offshore companies holding property titles in this country were required to declare their beneficiaries, it would be in line with the requirement on UK companies to disclose ownership. Having a public register as provided for in this amendment in relation to UK property would help to lift offshore secrecy and eradicate money laundering in the United Kingdom.
In Committee in the Commons, the Government said that they planned to create a beneficial ownership register of overseas companies that owned or wished to purchase property in the United Kingdom. They said that they were developing the detail of how the register would work before issuing a call for evidence “in the coming months”. They said that their intention was,
“to bring forward legislation to provide a statutory basis for the register in due course and as soon as possible”.—[Official Report, Commons, Criminal Finances Bill Committee, 22/11/16; col. 182.]
During discussion on this issue in the Commons, the Government said that the register would apply throughout the United Kingdom but that Scotland and Northern Ireland had different land registration requirements from those of England and Wales, which made the drafting more complex. Can the Minister confirm that this register will be publicly available and accessible? I do not doubt the point about the complex nature of the drafting; nevertheless, for the Government to say simply—if they are not prepared to accept this amendment—that they will bring forward legislation,
“in due course and as soon as possible”,
is being, to put it mildly, just a trifle vague.
As the call for evidence will be on how the register would work, and therefore the Government appear to have accepted that it should be created, surely they can be a little more precise about how long it will be before legislation is brought forward, and indeed when the call for evidence will he made. Will the legislation appear in time for it to be properly debated, passed by both Houses and implemented before, say, the end of this Parliament, bearing in mind the concerns that have been raised about the potential lack of legislative time for anything other than matters related to the triggering of Article 50? That would hardly be an ambitious timescale, but it would at least provide an assurance that the register of beneficial ownership of UK property would not just be talked about but would actually happen.
My Amendment 169 provides a duty on the Secretary of State to provide all reasonable assistance to the Crown dependencies to create public registers of beneficial ownership of companies before the end of 2018. It also provides for the Secretary of State to lay a report before Parliament on progress.
As I think has already been said, in 2014 the then Prime Minister made it clear that beneficial ownership and public access to a central register were key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion. He said also that it would,
“give businesses and individuals a clearer picture of who ultimately owns and controls the companies they are dealing with and make it easier for banks, lawyers and others to conduct due diligence on their customers. It will shed light on those who have provided false information, helping to tackle crime where it occurs and deterring people from providing this false information in the first place”.
He said it would help,
“reduce the cost of investigations for tax and law enforcement authorities … particularly in developing countries, by making information more easily available to them at the very start of an investigation”.
He said he hoped that the overseas territories would,
“consult on a public registry and look closely at what we are doing in the UK”.
Perhaps the Minister will say what the responses were to that 2014 letter from the then Prime Minister to the overseas territories on consultation on a public registry.
In a letter of 6 March this year sent to Members of this House, the Government confirmed that they had significantly changed—and in my view weakened—their
previous stance to which I have just referred. This letter says that the Government’s stance is as follows:
“It remains our ambition that public registers become a global standard. If and when they do, we would expect the Overseas Territories and Crown Dependencies to follow suit”.
In other words, we will no longer take a lead where we can in seeking to ensure that public registers become a global standard, since it is now only an “ambition” and not, presumably,
“vital to meeting the urgent challenges of illicit finance and tax evasion”.
So we will not be making it clear to the overseas territories and Crown dependencies that they should take a lead, since we would expect them only to “follow suit” if and when public registers become a global standard.
In essence, our amendment in respect of the Crown dependencies, where there are central registers and exchanges between tax and law enforcement authorities but where there is no movement towards public registers, provides for the Secretary of State to provide a progress report on the creation of public registers to Parliament before the end of 2018. It requires the Government to report by the end of next year on the progress being made, in the light of the recent letter, towards the Government’s declared “ambition” of public registers becoming a global standard in relation to the Crown dependencies.
When the Minister comes to respond to my amendment, perhaps through her the Government will clarify, as the noble Baroness, Lady Stern, requested, what the letter of 6 March means. Since the Government will require the overseas territories and Crown dependencies to “follow suit” once public registers become a global standard, will the Minister confirm that this means that until public registers of beneficial ownership of companies have been adopted globally—as we have done in this country—there will be no pressure from this Government on the overseas territories and Crown dependencies to follow suit and do likewise?
Will the Minister confirm that what the letter also means is that if overseas territories do not move to a public register, the Government would not expect the Crown dependencies to go down that road, and that if the Crown dependencies did not go down the road of public registers, the Government would not expect the overseas territories to do so either, as public registers would not be a global standard with the omission of the overseas territories or Crown dependencies? Perhaps the Minister could clarify that point one way or the other.
If the wording in the letter does not mean what I have just suggested, what does it mean? What are the criteria against which the Government will determine whether public registers have become a global standard and that, therefore, the overseas territories and Crown dependencies would then be expected to follow suit? Does this mean that we will no longer be encouraging or expecting the overseas territories and Crown dependencies to take a lead with public registers, as opposed to following suit?
At the moment it very much appears that the Government under the previous Prime Minister giving the impression that they would act on public registers
and then subsequently adopting rather different and much more limited policy goals and objectives on public registers of beneficial ownership beyond the UK without any real explanation of why the tenor of the Government’s commitment has changed.
I await the Government’s response to my questions and to the amendments in this group.