Submissions

Written Evidence

Submission to the Justice Committee Inquiry: Pre-legislative scrutiny of the Victims Bill, June 2022

Submission to the Foreign Affairs Committee Inquiry: Responding to illicit and emerging finance. June 2022.

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Recommendations:

Sanctions

Review the designation criteria underpinning the Global Anti-Corruption (GAC) sanctions regime to consider whether ‘abuse of function’ would provide greater flexibility for FCDO staff to impose designations.

Review how the sanctions regime can work in tandem with the criminal justice system more effectively to ensure assets are seized as well as frozen, including by reviewing the policy guidance note under the GAC sanctions regime in relation to when sanctions will be used where UK law enforcement has jurisdiction.

Develop a model within the Sanctions Unit where specialists work with local posts, and ensure smaller posts have both the resources and the guidance to work on designations.

Double the budget for the Office of Financial Sanctions Implementation (OFSI) and ensure it can increase staffing and skill levels.

Make data around sanctions enforcement more transparent, including a breakdown of assets frozen and fines handed out under each separate sanctions regime.

Synchronise reporting obligations so that both the OFSI and the NCA receive information about suspected sanctions breaches.

Introduce a proactive reporting requirement so that firms must make a positive declaration to the OFSI and the NCA on an annual or biannual basis that they have complied with their sanctions obligations and have no knowledge or reasonable suspicion of any breach.

Review whether the introduction of a conspiracy offence in relation to sanctions evasion would enable better criminal enforcement, and provide greater clarity about when criminal prosecution, rather than civil penalties, are considered in response to a sanctions breach.

Establish a high level independent advisory panel to advise the Foreign Secretary about the consistency and application of the sanctions regime.

Devote substantial investment to build up capacity in the sanctions units of the FCDO with a specific focus on developing long-term specialist expertise, particularly legal and forensic accounting skills.

Ensure there is more regular and robust oversight of the use of sanctions, particularly in light of new powers under the Economic Crime Act, whether through the creation of a specialist Sanctions sub-committee under the Foreign Affairs Committee (FAC), or the creation of a tripartite Sanctions Committee including the FAC, the Treasury Select Committee and the Home Affairs Committee.

Reform of the AML supervisory regime

Reform, consolidate, and standardise AML supervision and ensure that professional enablers in the legal and accountancy sectors are more effectively subject to criminal investigation and prosecution. This should be comprehensively addressed in the second Economic Crime Bill.

Create a specialist unit in the NCA to target professional enablers, looking at how firms across the regulated sector can more effectively be prosecuted for failure to disclose offences under Section 330 of the Proceeds of Crime Act, criminal breaches of the Money Laundering Regulations, and more serious money laundering offences under Proceeds of Crime Act.

Economic crime enforcement resourcing

Double key law enforcement annual budgets from £852 million to £1.7 billion to tackle economic crime.

Create a central economic crime fighting fund, based on the principle that money generated from law enforcement’s economic crime activity should be reinvested in law enforcement bodies on top of core budgets, on a sustainable, long-term basis (where it is not assigned for victim compensation).

Legislate to ensure costs protection in civil recovery proceedings where law enforcement bodies have acted reasonably and properly.

Allow law enforcement bodies to raise salaries within their budgets so that they can attract the best and the brightest.

Tier 1 (Investor) visas

Commit to publishing the full review into Tier 1 (Investor) visas as soon as possible and by early April 2022 at the latest.

Set out how it will deal with people with corrupt or criminal sources of wealth who have already received indefinite leave to remain through the golden visa route.

Publish any assessment it has made of the various loopholes that continued in the golden visa route since 2015 and the risks posed to national security.

Set out what steps it will take to build its institutional capacity to stop those with corrupt or criminal sources of wealth being granted residency or citizenship through any replacement or revised investor visa scheme.

Political donations

Give the Electoral Commission the powers and resources to ascertain whether the source of a donation poses a national security risk or whether they do not meet a ‘fit and proper’ test; and powers to give an order requiring a donation to be refused, returned, prohibiting the acceptance of donations from the donor, or other measures.

Require political parties to develop and publish proportionate, risk-based policies for identifying the true source of donations and for managing donation

Submission to the Corporate re-domiciliation Consultation organized by the Department for Business, Energy and Industrial Strategy, HM Revenue & Customs and HM Treasury

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Recommendations:

– The proposed regime should not be introduced until BEIS has completed the proposed reforms to Companies House giving the register powers to query, verify and remove inaccurate company data.

– Companies re-domiciling into the UK should be subjected to robust due diligence procedures and where companies are found to have submitted false or misleading information they should be subject to sanctions including, where necessary, the cancellation of the process itself.

 

    HM Treasury review into the UK's AML/CTF Regulatory and Supervisory Regime: November 2021

    Justice Committee’s Inquiry on Open Justice: Court Reporting in the Digital Age: November 2021

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    Recommendations:

    a. The government should be urged to accept, and give effect to, bold open justice commitments in its forthcoming National Action Plan through the Open Government Partnership.

    b. There needs to be an enhanced listing service that provides unrestricted public access to advance, sufficiently detailed court listings and information about reporting restrictions.

    c. Noting the Serious Fraud Office’s court calendar, other law enforcement agencies should consider publishing a calendar of upcoming hearings when they have been listed.

    d. Continued investment in and development of remote hearings during and after the pandemic, and technical solutions to support observers in remote hearings to access case documents.

    e. Closer ongoing coordination between the Ministry of Justice, HMCTS, the judiciary and legal supervisory bodies to ensure that they consistently apply the open justice principle.

    f. Greater ambition on a public database that includes skeleton arguments and other court documents, suitably redacted and filtered to allow for rehabilitation and privacy.

    g. There needs to be a model that delivers free and comprehensive access to all case law in a structured and machine-readable format. To that end, we support the government’s proposal for The National Archives to be responsible for storing and publishing case law.

    h. Careful work is needed to develop a system that retains and provides access to sentencing remarks, addressing the tension between rehabilitation and open justice.

    i. Consideration of the ways in which court transcripts can be made cheaper and more easily accessible for litigants and non-parties, and the piloting of digital transcription services.

    j. The Senior Data Governance Panel should be placed on a statutory footing with clear terms of reference and a public mandate, and a transparent recruitment process for civil society.

    PACAC inquiry into the Cabinet Office Freedom of Information Clearing House: September 2021

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    Recommendations:

    – The Cabinet Office should be much more transparent about the role and operations of the Clearing House – beyond the limited information that it has already published – with a view to informing public understanding and enabling an assessment of whether the Clearing House is necessary and whether its remit should be limited. To that end, the Cabinet Office should publish detailed statistics about the FOI requests sent to the Clearing House and the impact of Clearing House involvement on FOIA compliance.

    – The Cabinet Office should be fulfilling its role in ensuring compliance with the FOIA across government by proactively encouraging best practice and engaging with badly performing departments. At a minimum, the Cabinet Office should set a good example by complying with its own FOI-related obligations.

    Law Commission Consultation on Corporate Criminal Liability: August 2021

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    The principles that should govern how criminal liability is attributed to corporate bodies and other non-natural persons should include:

    A. Fairness and equality before the law – all corporate bodies should be held to account equally before the law regardless of size or corporate structure.
    B. Prevention – the law should encourage the introduction of robust compliance and monitoring regimes in order to prevent criminality.
    C. Deterrence – the ability of the state to stigmatise certain egregious behaviour through the criminal law is important to provide a genuine and credible
    deterrence and to provide recognition of the serious harm that corporate behaviour can cause society.
    D. Certainty and clarity – so that the rules are applied and interpreted consistently by prosecutors, courts and corporates themselves.
    E. Reality – current modes of decision-making and responsibility within modern corporate structures are reflected in the law.
    F. Extra-territoriality – to capture the global nature of much corporate activity and avoids a competitive disadvantage for UK-based companies.
    G. Equivalence – ensuring the UK does not fall behind international standards.

    Response to the Consultation on Restoring Trust in Audit and Corporate Governance: July 2021

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    Recommendations

    1. ARGA’s governance arrangements must ensure it is fully independent and include an open and transparent recruitment process to guard against industry capture and have in place strong revolving door and conflict of interest prohibitions.

    2. Auditors’ legal responsibilities and liabilities with regard to fraud detection should be clarified within the new ISA (UK) 240 standard document so that audit firms, auditor partners and the public have a better understanding of the required standards.

    3. An Independent Fraud Panel should be established within ARGA with sufficient powers and resources to conduct complex investigations into cases of serious audit failure. The Panel should have at its disposal a range of sanctions including levying of fines that take into consideration the seriousness of the misconduct as well as the size of the audit firm.

    4. ARGA should introduce changes to the UK Corporate Governance Code to include mandatory malus and clawback conditions in PIE directors’ remuneration agreements for causing, and/or failing to prevent conduct within companies that results in, negative material impact on firms’ financial performance or reputation.

    5. ARGA should deliver a full structural separation between audit firms’ audit and non-audit functions with prohibitions in place to restrict cross-subsidies or common ownership between firms. A structural separation would prohibit audit firms over a certain size from providing non-audit services in the UK, and would require firms to recruit non-audit related services externally from an independent non-audit practice.

    The Public Administration and Constitutional Affairs Committee: June 2021

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    Recommendations

    1) The government should consult on the introduction of an Integrity and Ethics Bill, by the spring of 2022
    2) The landscape for regulating standards is in desperate need of consolidation. Regulators need to be given more teeth, more independence, greater resourcing, a stronger statutory footing and greater sanctioning powers.
    3) The Ministerial Code should be put on a statutory footing in line with other codes of conduct. It should also be updated to reflect modern practices, including ensuring that mobile phone communications and other informal meetings are recorded. The Code should cover situations where ministersare lobbied during party political or donor events and in social contexts.
    4) The Business Appointment Rules should be strengthened and their enforcement properly resourced.
    5) Enhanced management of conflicts of interest. In line with recommendations from the Boardman review into Cabinet Office Communications Procurement during COVID and the National Audit Office (NAO) review of emergency PPE procurement
    6) Independent review into the role of crown representatives and more robust and transparent management of potential conflicts of interest.
    7) Tightened regulation of lobbying and increased transparency.In our view, the Greensill affair has highlighted widely recognised and significant weaknesses in the Lobbying Act

    Public Administration and Constitutional Affairs Committee: May 2021

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    Recommendations

    1) Financial sanctions available to the EC should be increased beyond the current £20,000 maximum and instead be benchmarked to a percentage of campaigns’ total spend.
    2) The EC’s sanctions regime for breaches of the Political Parties, Elections and Referendums Act 2000 should be extended to cover acts of non-compliance with the Representation of the People Act 1983 with the objective of closing the current enforcement gap.
    3) The EC should be given an explicit mandate to perform as a specialist prosecutor for electoral offences.
    4) Parties should undertake AML checks on beneficial owners and refuse donations from companies failing to provide evidence of genuine economic activity in the UK.
    5) The EC should be granted powers to compel social media companies to release data on political parties’ online advertising spend.

    Consultation on transforming public procurement: March 2021

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    Recommendations:

    1. The government should implement a robust national procurement strategy which draws on international best practice, including with the introduction of a False Claims Act, and legally enforceable codes of conduct for suppliers.

    2. The government should establish an independent procurement Ombudsman with powers to intervene where necessary to ensure contracting authorities and suppliers comply with the new framework.

    3. The government should commit to transparency by default throughout the procurement cycle, and ensure that public contractors are subject to the Freedom of Information Act.

    4. A fair dispute resolution should be established, and a new procurement Tribunal with specialised procurement judges to hear legal challenges, with the right of non-parties bringing procurement challenges on public interest grounds enshrined.

    5. The government should ensure that the exclusion regime is as effective as possible, by ensuring that convictions for fraud as well as failure to prevent bribery and tax evasion are grounds for mandatory exclusion from procurement subject to self-cleaning. The central debarment list and properly resourced centralised function for assessing exclusion decisions, ensuring they are applied on a cross-government basis, and for assessing whether a company has self-cleaned are essential to protect the integrity of public contracting.

    Future of Financial Services Inquiry: February 2021

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    Recommendations:

    1. Promoting competitiveness should remain as the responsibility of the government with parliament’s oversight while regulators’ mandate should retain its focus on ensuring the integrity of markets and consumer protection.

    2. Regulators’ mandate should be extended to include a commitment to protect and promote the public interest.

    3. An independent oversight body dedicated to monitoring the financial services regulators’ activities should be established to enhance democratic accountability.

    4. A specialist parliamentary select committee focused on financial services regulation should be established to provide an additional level of parliamentary scrutiny.

    5. Responsibility for handling and protecting whistleblowers should be transferred to the new independent oversight body.

    6. There should be much greater transparency and stakeholder participation in the development of policy by financial services regulators, including through the creation of citizen panels.

     

    Consultation on the Future Regulatory Framework for Financial Services: February 2021

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    Recommendations:

    1. Promoting competitiveness should remain as the responsibility of the government with parliament’s oversight while regulators’ mandate should retain its focus on ensuring the integrity of markets and consumer protection.

    2. Regulators’ mandate should be extended to include a commitment to protect and promote the public interest.

    3. An independent oversight body dedicated to monitoring the financial services regulators’ activities should be established to enhance democratic accountability.

    4. A specialist parliamentary select committee focused on financial services regulation should be established to provide an additional level of parliamentary scrutiny.

    5. Responsibility for handling and protecting whistleblowers should be transferred to the new independent oversight body.

    6. There should be much greater transparency and stakeholder participation in the development of policy by financial services regulators, including through the creation of citizen panels.

    Companies House consultation on ‘Corporate transparency and register reform: powers of the registrar’: January 2021

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    Recommendations:

    1. Risk-based approach to querying data must be based on a sufficiently wide scope of risk indicators and updated continually in light of emerging threats.

    2. Companies House must be given new resources to query records and intervene where necessary including expanding the number of forensic accountants to monitor increasingly complex fraud risks.

    3. Annotation and removal of documents would help the public to navigate risks and promote overalln compliance.

    Committee on Standards in Public Life Consultation, Standards 2: January 2021

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    Recommendations:

    1. We recommend that the Committee on Standards in Public Life conduct a review, building on this consultation, into which of the institutions regulating ethical standards should be consolidated into an independent, transparent, accountable statutory regulator, with the remit, powers and resources to properly regulate ethical standards and hold people with top executive functions and other public officials to account.

    2. Our preference would be for the Advisory Committee on Business Appointments and the Independent Adviser on Ministers’ Interests – and potentially other institutions, subject to the Committee on Standards in Public Life review – to be replaced with an independent Ethics Commission; and for this Commission to oversee and enforce enhanced, statutory codes of conduct for ministers and special advisers, and post-employment rules for senior civil servants.

    3. We recommend that both the Ministerial Code and the Code of Conduct for Special Advisers be enhanced to improve their effectiveness, enabling ministers and special advisers to be investigated and suitable sanctions imposed by an independent Ethics Commission, and that the revised statutory codes – covering conflicts of interest, lobbying, financial disclosures and post-employment rules – be overseen by an independent Ethics Commission.

    Treasury Committee Inquiry into Economic Crime: December 2020

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    Recommendations

    1. The immediate introduction of a failure to prevent economic crime offence to complement the current Law Commission review into the identification doctrine.

    2. An urgent amendment to the costs regime for public authorities bringing Unexplained Wealth Orders (UWOs) under the Criminal Finances Act 2017 (CFA);

    3. Amendments to the CFA to ensure UWOs can effectively be used where property is held by trusts or by those who are not the ultimate beneficial owner.

    4. Consideration be given to putting Property Freezing Orders (PFO) on an evidential par with Account Freezing Orders (AFO).

    5. Consideration of an individual failure to prevent economic crime offence for seniormanagers in the event that a company is found guilty of such an offence, or enters into a Deferred Prosecution Agreement (DPA).

    6. The introduction of a power for prosecutors to apply to courts for directordisqualification orders (DDOs) for directors where a company is convicted or enters into a DPA.

     

    LACK OF CONSISTENCY IN ANTI-MONEY LAUNDERING SUPERVISION

    Spotlight on Corruption has real concerns about the ongoing issues with the consistency of anti-money laundering (AML) supervision, including low rates of criminal and regulatory enforcement in relation to AML violations.

    Recommendations

    Spotlight on Corruption recommends that an independent expert review of the effectiveness of the UK’s supervision and criminal enforcement for AML is commissioned by the government in March 2021. This review should look at:

    – Whether the government has achieved its stated goal of enhancing AML supervision as outlined in the Economic Crime Plan.

    – How the UK performs against international best practice on AML supervision

    – Whether the current Professional Body Supervisor (PBS) model is working or needs to be replaced with a more effective and robust model of supervision

    – Whether the PBSs are effectively referring suspicions of money laundering to law enforcement and whether law enforcement is appropriately responding to suchsuspicions.

    – The factors behind the low rates of supervisory and criminal enforcement for money laundering in the UK.

    This review should be undertaken with stakeholder participation, and be published in a timely fashion and prior to the government undertaking the review of the Money Laundering Regulations (MLR) and Office of Professional Body Anti-Money Laundering Supervision (OPBAS) regulations which it has committed to do by June 2022.

     

    C.ECONOMIC CRIME ENFORCEMENT RESOURCING

    Spotlight on Corruption is concerned that the ongoing uncertainty and insufficiency ofresourcing for tackling money laundering and economic crime creates an inequality of arms between law enforcement bodies and those who commit economic crime.

    Recommendations

    Spotlight on Corruption recommends that a full analysis of law enforcement fundingneeds for economic crime be developed for the next multi-year spending review and that there is transparency about this analysis. Any analysis of funding needs must take intoaccount.

    – New resources needed for adequate enforcement of the sanctions regime.

    – New resources needed to respond to the fraud crisis created by COVID-19.

    – New resources that might be required as a result of the UK losing access to EU-wide security tools and databases at the end of the EU transition period.

    – The need to enhance recruitment and retention of relevant staff from financial investigators to top prosecutors, including pay levels needed to ensure this.

    – The huge disparity in what law enforcement bodies can pay for legal advice from counsel compared to what defendants pay for such advice.

    Public Bill Committee on the Financial Services Bill: November 2020

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    Spotlight on Corruption is calling for an amendment to the Financial Services Bill that would introduce a criminal offence for failing to prevent economic crime, with particular reference to fraud, money laundering and false accounting.

    Rationale

    1. We believe that there are several important reasons for the urgent introduction of a failure to prevent economic crime offence as outlined in this amendment. These reasons are:

    2. To promote strong corporate governance and deter wrongdoing in the financial sector after the UK leaves the EU (protection of market integrity);

    3. To create a level playing field for how large and small companies are held to account for economic crime, particularly in response to the burgeoning fraud crisis resulting from COVID-19 (fairness);

    4. To ensure that the UK does not fall behind international standards on prosecuting economic crime (equivalence); and

    5. To create a level playing field on how liability is attached to companies across different economic crimes within the UK (consistency).

    International Trade Committee Consultation on UK Export Finance: September 2020

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    Recommendations

    1. UKEF’s revised anti-corruption policies should be published along with an annual overview of its anti-corruption work.

    2. UKEF’s remit for combatting corruption should be revised in line with the Bribery Act and the publication of the UK’s Anti-Corruption Strategy to provide a specific mandate to prevent bribery.

    3. Strengthen its anti-corruption procedures by: ensuring there are appropriate sanctions where anti-bribery warranties are breached; referring suspicious activity promptly to law enforcement bodies; denying support where companies do not have anti-corruption procedures in place and where they do not cooperate with law enforcement investigations fully; and making greater use of its audit powers.

    4. Continue to promote best practice at the OECD for export credit agencies, including pushing for a robust review mechanism, and an intelligence sharing mechanism between ECAs on corrupt actors.

    Committee on Standards in Public Life Consultation on Electoral Regulation: August 2020

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    Recommendations

    1. The government should implement a robust national procurement strategy which draws on international best practice, including with the introduction of a False Claims Act, and legally enforceable codes of conduct for suppliers.

    2. The government should establish an independent procurement Ombudsman with powers to intervene where necessary to ensure contracting authorities and suppliers comply with the new framework.

    3. The government should commit to transparency by default throughout the procurement cycle, and ensure that public contractors are subject to the Freedom of Information Act.

    4. A fair dispute resolution should be established, and a new procurement Tribunal with specialised procurement judges to hear legal challenges, with the right of non-parties bringing procurement challenges on public interest grounds enshrined.

    5. The government should ensure that the exclusion regime is as effective as possible, by ensuring that convictions for fraud as well as failure to prevent bribery and tax evasion are grounds for mandatory exclusion from procurement subject to self-cleaning. The central debarment list and properly resourced centralised function for assessing exclusion decisions, ensuring they are applied on a cross-government basis, and for assessing whether a company has self-cleaned are essential to protect the integrity of public contracting.

    House of Lords Constitution Committee Inquiry into the Constitutional Implications of Covid-19: August 2020

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    Recommendations

    1. Serious consideration should be given to rolling out virtual technology for hearings that relate to pre-trial and procedural issues as the norm in both civiland criminal jurisdictions.

    2. The Lord Chief Justice and Lord Chancellor should review urgently how openjustice in criminal cases can be more effectively protected, including by giving consideration to making an order under Section 32 of the Crime and Courts Act to allow courts to provide remote access to the public, subject to safeguards.

    3. Serious consideration should be given to publication of transcripts ofjudgements handed down orally and sentencing remarks both during the Pandemic and long-term. The judiciary and HMCTS should be working towardscomprehensive publication of all such judgements in England and Wales.

    4. Listing data should make clear that members of the public as well as media are able to attend remote hearings.

    5. Evaluation should be undertaken and statistics kept on the number of casesthat have been heard in private during COVID-19, both under the CPR 39.2(3) and existing Civil Procedure Rules, to assess whether remote hearings have had an impact on application of privacy orders.

    6. The proposed Virtual Fraud Court should be implemented speedily to ensure that fraud and other economic crime cases can be managed effectively.

    7. Given the potential huge increase in economic crime as a result of COVID-19,urgent consideration should be given to creating a ‘ticket’ for judges to workon economic crime, ensuring judicial training and expert support in this area

    Oral Evidence

    Executive Director, Dr Susan Hawley, evidence to the Public Bill Committee on the Financial Services Bill: November 2020