My Lords, I welcome these measures on behalf of these Benches and I thank the Minister for maintaining contact and giving advance notice.
These are both the culmination of weeks of lobbying from Parliament to have sight of further measures but also, as noted in this short debate—including by the Minister—the start of a process. They are of a differing character, as the noble and learned Lord, Lord Clarke, indicated. Perhaps these are now of a more strategic nature which will be medium and long term, and perhaps they will have a different characteristic from the sanctions regime that we have put in place, which is different from what the EU scheme envisaged.
The noble Lord, Lord Austin of Dudley, rightly raised a number of weeks ago with the noble Baroness, Lady Williams, in the Home Office, why, as my noble friend Lord Fox indicated, we had not been using existing legislation. It has been highlighted for a number of months that the weak point in the global efforts against money laundering and kleptocracy is in fact the UK. Therefore, questions such as that of the noble Lord, Lord McDonald, are quite right. There is a niggling fear that the UK is still behind the US and the EU in making sure that there is, as the Foreign Secretary said a number of weeks ago, no place to hide for kleptocrats. However, as we have seen, because the Government have now, due to persuasion from Parliament, brought forward the first of the economic crime Bills, there have been, regrettably, plenty of places to hide.
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However, we welcome these measures and support them. We have called for wider and further support, including specifically on the point that has been raised consistently and effectively by my noble friend about cryptocurrencies. She raised it with the Ukrainian ambassador when parliamentarians from both Houses met that representative of that extremely brave nation.
We welcome the Government’s additions overnight regarding sterling trade, but can the Minister outline whether we can expand them further to include UK trading houses that operate in denominations other than sterling? London is the centre of many key sectors—energy and specifically gold—where we are leading the world. I understand that beyond the sanctions regime there are landlords in London who are now exiting agreements, for example, with Gazprom Marketing & Trading Ltd. There are voluntary exits of tenancy agreements that are beyond the sanctions regime, but within the scope of very considerable reputational risk. As the SIs indicate, if fully enforced, this represents only 12% of UK exports to Russia. In many areas, the nearly 90% of private sector activity will have the biggest impact. A lot of decisions are being made because of reputational risk.
Regarding loopholes, it is still a concern that the UK has what they consider to be world-leading firms in what is euphemistically called risk management. Many have recruited, to put it politely, former colleagues of the noble Lord, Lord McDonald, and those from within slightly murkier areas of the British intelligence communities. However, there is a trade in second passports, at the moment. The UK can act very firmly with our Commonwealth friends to ensure that those who are potentially in scope of the sanctions cannot quickly secure second passports and utilise others. It is the sanctions regime for not only trade and finance but ministries of justice around the world, and for the Home Office and passport-issuing agencies. There is merit in saying that, if we are now asking questions about where the source of wealth is, there should be questions about why people are seeking second passports, especially in British Overseas Territories and within our Commonwealth family.
In speaking to me earlier, my noble friend Lord Fox referred to kleptocratic capital flight. We will give the economic crime Bill a fair wind and work with the Government in expediting its scrutiny, but we will want it to be tough. It will not have the effect that we want it to have if it cannot be implemented. The noble Lord, Lord Sharpe of Epsom, said in a letter to my noble friend Lady Northover in January that the sanctions unit in the Government has between 40 and 49 staff. That is insufficient for the task that is now ahead of us. Therefore, looking at the capacity and ensuring it is better co-ordinated will be essential.
Regarding other areas of avoidance and enablers, I agree with my noble friend Lady Northover that giving people a legal grace period is not insufficient. I hope that the Government will consider Liberal Democrat proposals to ensure that the new measures can be retrospective to the time of the Bill’s introduction, and that they give fair hearing to the proposal of a clause to ensure that there will be no risk of that legislation being avoided. I hope the Government will give that fair hearing and use other elements such as that indicated by President Biden in his state of the union address—legal mechanisms for seizure. My right honourable friend Ed Davey MP indicated to the Prime Minister over a week ago that we should be serving notice that assets would be seized.
Finally, if the noble and learned Lord, Lord Clarke, is right—and I think he will be—that this will be medium to long term, there will be both other countries negatively affected by this global sanctions regime, especially developing countries, and countries that will be the source of alternative supplies for those we are sanctioning, especially of minerals and technologies. We all know and have debated at length the passive position of India, China and the UAE in the United Nations. Countries that should be in our minds are both those that are alternative sources for Russia, which we are sanctioning, and, as I raised during Questions earlier, those that through no fault of their own face negative impacts from the higher prices of energy and wheat.
To prevent the slow and steady creep back to normality the Government could act by publishing risk registers of those who they believe will be in scope and disclosing
publicly those who are lobbying against these measures, or indeed, lobbying for them to be delayed. Full transparency will be the enemy of those seeking to avoid these measures, in many respects. I hope the Government will consider actions to prevent that kind of flight, which we all know is regrettably happening now.