Lord Wilson of Sedgefield (Lab)

My Lords, I thank the noble Baronesses for their questions. They were many in number so we will scour Hansard and, if there are any that I do not answer, we will of course respond with letters. I turn first to the points made by the noble Baroness, Lady Bennett; I hope to cover them all, though not necessarily in the order in which she made them. She mentioned enhanced due diligence as far as high-risk jurisdictions, especially the likes of Russia and China, are concerned. The money laundering regulations contain specific provisions requiring enhanced due diligence in relation to geographic risk, which are unchanged by this SI. Firms must still assess and manage geographic risk as part of their overall risk-based approach and apply EDD wherever high risk is identified, in line with the requirements set out in the regulations. Firms will be expected to consult government guidance, such as the National Risk Assessment of Money Laundering and Terrorist Financing 2025, which provides a more UK-focused, nuanced and sector-specific view of the risks. Jurisdictions that present a risk in the UK but are not currently listed by the Financial Action Task Force, such as Russia, China and the UAE, are referred to in the national risk assessment for the UK. On the changes to the due diligence requirements, some countries on the FATF’s increased monitoring list are recognised as presenting more of a regional risk than an international one, perhaps due to the lack of specialised and international-facing financial sector or strict currency controls. The Financial Action Task Force recommends enhanced due diligence to be mandatory only for countries on the separate “call for action” list, which will continue to be the case following this change. The noble Baroness asked a question on asset recovery. The 2026-29 ECP will set out the Government’s next whole-system approach to tackling economic crime. It will consolidate key strategies, including the fraud and anti-corruption strategies and the forthcoming anti-money laundering and asset recovery strategy, into a single coherent framework for delivery. The plan will focus on strengthening cross-system prioritisation and deliver grip and the long-term funding and capabilities needed to respond to evolving economic crime threats. On reforms to the trust registration service, the Government are making targeted changes to particular categories of trusts to ensure that requirements to register remain proportionate to the risk. Recognising that registration must be proportionate to risk, certain types of trusts are excluded from the requirement to register on the grounds that they either pose an inherently low risk of money laundering or are already regulated elsewhere. On the database for trust registration, trusts are frequently established for legitimate and highly personal reasons, such as to hold assets for children or vulnerable adults. The Government believe that placing the information held on the trust register into the public domain would infringe the privacy rights of individual beneficial owners, the vast majority of whom are not involved in any money laundering activities. The information held on the register is available on request to law enforcement agencies and other relevant parties to assist with anti-money laundering investigations. The Government believe that this approach strikes the right balance between the conflicting demands of transparency and privacy. The noble Baroness, Lady Bennett, made a point about stamp duty reserve tax. In taking a risk-based approach, the Government consider that the role of stamp duty reserve tax in enabling and detecting money laundering or terrorist financing is not proportionate to the administration placed on trusts by this requirement. The current regulatory framework focuses on those entities with significant links to the UK. The Government consider that a liability to stamp duty reserve tax is not, in isolation, indicative of a significant link to the UK. Entities with significant links to the UK are more likely to be those with significant property assets or liabilities for income, capital gains and inheritance tax. The collection of stamp duty reserve tax is already administered by the Government, and the sale of shares already sits within a broader regulatory environment. I welcome the approval of the general thrust of the SI from the noble Baroness, Lady Neville-Rolfe. She raised several issues that I hope I can answer. The money laundering regulations form a core part of the UK’s defence against economic crime. They aim to ensure that attempts to launder money through banks and other regulatory businesses are prevented or detected and flagged to law enforcement. The SI is part of a wider suite of government action on money laundering and economic crime in general. This includes the publication of the National Risk Assessment of Money Laundering and Terrorist Financing 2025 in July 2025, the delivery of two economic crime plans—2019-22 and 2023-26—with a further economic crime plan in the pipeline, the new anti-corruption strategy in December 2025, the new fraud strategy in March 2026 and anti-money laundering supervision reform. At Budget 2025, the economic crime levy, which is paid by businesses regulated under the money laundering regulations, was raised to generate an additional £110 million for initiatives to tackle economic crime. In my opening speech, I mentioned some of the benefits from what we have achieved and are going on to achieve. The Government have committed to recruit 475 new roles by September 2026 to help clamp down on money laundering; £284.5 million of criminal assets were recovered in the year to March 2025; and there have been nearly 8,500 prosecutions and 3,892 convictions for money laundering as a principal and non-principal offence. This is a big increase, of nearly 20%, from before. On refusal to open bank accounts, the FCA requires banks to treat customers and prospective customers fairly, to take proportionate and non-discriminatory account opening decisions and to apply the consumer duty across the full onboarding journey. Where someone is dissatisfied with how a decision has been handled, they can complain to the firm and escalate the matter to the Financial Ombudsman Service, which can assess whether the firm has acted fairly. In addition, where an individual is denied access to a standard current account, the UK’s nine largest personal current account providers are legally required to offer basic bank accounts. I turn to derisking and bank account closure. Economic crime, including money laundering, poses a rapidly growing and increasingly complex threat to the UK’s national security and prosperity. It fuels the serious organised crime that damages the fabric of society. In the face of this threat, the Government believe that due diligence checks, applied proportionately, are an essential tool to protect firms and their customers from fraud and other financial crime, as well as assisting law enforcement in investigating criminal activity. On the SRA and sanctions, the original consultation received hundreds of responses. The legal sector, as the noble Baroness pointed out, expressed some concerns, but changes made following the technical consultation are expected to address most of those. Financial services and most other sectors have welcomed the shift away from tick-box compliance, particularly the reforms to increase flexibility around enhanced due diligence. Civil society and anti-corruption organisations supported the measures to close loopholes and improve system co-ordination, while expressing measured concern about EDD changes. A recent blog by Spotlight on Corruption stated that most of the measures in the SI were “unambiguously positive”. On debanking, banking services fulfil a vital role for millions of people. The Government have legislated to ensure customer protection in cases where their bank account is terminated by the provider. Payment service providers are required to give customers at least 90 days’ notice before closing their account under new rules which came into force in April 2026. Providers will also need to provide a clear explanation to customers in writing so that they are able to challenge decisions, such as through the Financial Ombudsman Service. I turn to the difficulties facing SMEs in accessing a bank account. Access to banking services is obviously vital and the Government have introduced new rules to require banks to give customers 90 days’ notice. These new rules will ensure more transparent and predictable access to banking, and the Government will continue to monitor wider access to bank account provision. On the difficulties facing charities in accessing a bank account, charities and community groups make a valuable contribution to society. UK Finance, banks and charity representative groups have worked together to provide the voluntary organisation banking guide, aimed at supporting charities and community groups to access banking services. We will continue to monitor wider access to bank account provision while recognising that it is largely a commercial matter. The noble Baroness mentioned defence companies and their access to bank accounts. Access to finance is a significant issue for defence firms, particularly SMEs. No company should ever be denied access to financial services solely on the basis of its work in the defence sector. The banking sector should never take a blanket approach to any one sector. The Government are actively engaging with banks to ensure that they understand the importance of the defence sector. The FCA has worked to understand why banks might close or reject accounts. Where it has found areas where firms need to improve customer outcomes, the Government expect firms to consider its findings.