As published on bloomberg.com, Friday 12 November, 2021.
U.K. Conservative members of Parliament urged Prime Minister Boris Johnson to come good on a long-held government promise and pass a law cracking down on the use of U.K. property for money laundering.
Some 17 rank-and-file Tories wrote to the premier earlier this week asking him to prioritize legislation to tackle economic crime in the current House of Commons session, including the creation of a registry of overseas entities that own property in the U.K.
“Economic crime and illicit finance in the U.K. funds organized crime, terrorists and other malicious actors, undermines good governance and faith in our economy, and tarnishes our global reputation,” according to the letter. Efforts to get signatures were spearheaded by Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking.
The U.K.’s National Crime Agency has estimated that money laundering costs the U.K. some 100 billion pounds ($134 billion) a year, and as part of efforts to stamp it out, successive Tory governments have pledged to create a register that identifies the ultimate owners of U.K. property in cases where the land is registered to an overseas company or entity. While draft legislation was published in 2018, it’s yet to be turned to law.
“The legislation is robust, has already attracted cross-party support, and just needs to be prioritized for Parliamentary time,” the MPs wrote. “It will build on the international leadership the U.K. has shown on beneficial ownership transparency,” they said, adding that it will also cut risk and due diligence costs for investors.
The call comes against a backdrop in which MPs themselves are under the microscope over their own behavior after a botched attempt last week by Johnson to overhaul parliamentary standards in order to spare his friend Owen Paterson from punishment after being found guilty of breaching rules on paid advocacy. There has been a steady stream of stories about MPs and their potential conflicts of interest that is eroding Johnson’s own popularity.
Hollinrake’s group and the APPG for Anti-Corruption & Responsible Tax, chaired by Labour MP Margaret Hodge, issued a statement on Friday saying that more than 40 cross-party MPs support the call to bring forward legislation.
“The recent Pandora Papers leak has once more placed Britain and our offshore tax havens right at the heart of the world’s dirty money crisis,” Hodge said in the statement. “The Government must grab this opportunity and urgently table legislation that will stop the abuse of U.K. property and companies for the purposes of economic crime. Transparency is vital as sunlight is the best disinfectant.”
Just last week, Business Minister Paul Scully gave a written statement to Parliament saying that the creation of the register “will strengthen our already impressive controls,” and that legislation would be introduced “as soon as parliamentary time allows.”
As well as publishing the draft legislation, the government is thinking of beefing up the role played by Companies House, which registers company information and makes it publicly available. Proposals include verification of the identity of people who manage or control companies and greater powers to query and challenge the information submitted to it.
“These are novel measures, and it is essential that the register strikes the right balance between improving transparency and minimising burdens on legitimate commercial activity,” Scully’s Department for Business, Energy and Industrial Strategy said in a statement. It said the government would “legislate in due course.”