Baroness Bennett of Manor Castle (GP)

My Lords, I thank the Minister for introducing this statutory instrument, which, as he said, implements the UK’s commitment to the agreement between the UK and the Swiss Confederation on mutual recognition in financial services. I note that the explanation of the SI says that it will, as the Minister said, allow the Financial Conduct Authority and the Prudential Regulation Authority to essentially oversee and ensure that nothing is going wrong and have oversight of Swiss operations here. That is perhaps not as reassuring as one might hope. I note a report in the Times yesterday that the Financial Conduct Authority had privately shared concerns about the 79th Group with the City of London Police eight months before the group collapsed, owing thousands of people more than £200 million. It is, to quote the Times, “suspected of being one of the largest Ponzi schemes in British history”. I note for the record that the company denies any wrongdoing. None the less, the Financial Conduct Authority appears to have had concerns but did not share those with consumers, who are clearly now very much paying the price. It is worth reflecting that it is a little bit surprising that, as the Minister said, this reflects an agreement that was struck in December 2023 by the previous Government. They said that this was a “ground-breaking pact on financial services cooperation” and that it would enable “frictionless, cross-border provision of financial services between the UK and Switzerland”. It is interesting that a Government who have been elected on a promise of change now appear to be delivering exactly the agenda with the same kind of terminology as that of the previous Government who they replaced. It is important to put on the record and focus on the reality of Swiss banking, which is deeply corrupt and non-transparent. If we take, for example, the Tax Justice Network’s financial secrecy index, Switzerland ranks second, and that is not a good result—it is second worst. The UK ranks at number 20, which is relatively good comparatively. Yet we now appear to be seamlessly linking up these two systems, linking our system into a more secret system, with considerable risks. Switzerland also ranks fifth on the Tax Justice Network’s corporate tax haven index, so it is complicit in multinational companies’ tax abuse in particular. The Tax Justice Network estimates the cost to other countries of the Swiss operations to be $21 billion a year. Perhaps this is a specific question to the Minister. As regards the worldwide rise of automatic exchange of information notes in the past decade or so, in which Governments are supposed to exchange relevant financial information with their peers to help them enforce criminal and tax laws, Switzerland has carved out exceptions to these so-called AEOI notes. So, Article 47 of the Federal Act on Banks and Article 127 of the direct federal tax Act, which still provide for secrecy, have not changed. That is going to be accessing our system and under Swiss law we will not be able to see what is happening. There has been talk of using trusts to replace some of the secrecy instead, but of course trusts are one of the issues that are a major problem. I note in particular the work of Maria-Gabriella Sarmiento—I do not know whether the Minister has seen this, but I certainly encourage him to look at it—who completed a PhD at the University of Zaragoza about the estimated losses of between $20 and $40 billion for corruption practices, of which Switzerland is a significant destination for that money. Over 20 years, “assets from at least 33 jurisdictions have been traced to Swiss banks … primarily proceeds of grand corruption, money laundering and other crimes”, with their estimated values ranging between $112 billion and $514 billion. The reality is, of course, that the UK and Switzerland are quite similar: they have expansive banking sectors, sophisticated wealth management services and market high-value assets. They are prime destinations for the corrupt to stash their money. To take one practical example from Transparency International, Carlos de São Vicente, a former CEO of a partially state-owned insurance company in Angola, embezzled more than $1.2 billion through Bermuda-registered companies; he then transferred substantial sums to Switzerland. That is one case where someone has been found out, but it is a sample of what a great many people we know are doing without being found out and without me being able to name the details. I note also that, in 2023, Swiss regulators inspected their institutions and found that 50% had largely unsatisfactory anti-money laundering systems. I do not know whether the Minister can tell me whether there have been significant improvements in that area of money laundering since then. It is very sad that this important statutory instrument is getting so little attention and focus and that it is happening in this Room, because it is crucial. We have to situate this in the context of the grave concerns—it is not just me who is expressing them—about the state of financial stability in our current system, for all kinds of reasons that I will not go into here. This is about linking up two systems that have great problems with corruption and a lack of transparency—two of the biggest systems in the world—and I cite a former Conservative Minister saying that 40% of the world’s dirty money goes through the City of London and the British Crown dependencies. I do not have a comparable figure for Switzerland, but I have no doubt that it is significant. We are linking up these two sets of money flows, which has to be a concern.