Contribution
My Lords, I will make some comments on the amendments that have been discussed and then speak to the amendments in my name. I have some sympathy with the issues raised by the noble and learned Lord, Lord Hope, and I very much hope that the Minister can clear up this issue of professional privilege and client confidentiality, because it seems to me that it is not in any way interpretable from the legislation or the Explanatory Notes, and it is key.
I also see that the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham, have tabled Amendment 69A to require a report on the transfer process, which seems very sensible. The noble and learned Lord, Lord Hope, has an amendment calling for a review of anti-money laundering and counter- terrorism financing supervision within three years. All those make some sense to me.
I will look particularly at Amendment 64A from the noble Lord, Lord Holmes of Richmond, because it hits part of the problem on the head. It seeks to require more effective intelligence sharing between supervisory authorities. It is that failure of intelligence sharing that many people consider to be the fundamental underlying cause of many of the problems we have today. It is not very clear that the proposals the Government are bringing forward are the easiest way to remedy that. I will say more on that later.
For my amendments in this group, I thank the Chartered Institute of Taxation and the Association of Taxation Technicians for both clarifying issues and proposing legal language. Despite all the steps we have taken over recent years, London remains the global centre of choice for laundering dirty money, whether from crime, sanctions busting or political corruption. Estimates suggest that 40% of all laundered money globally goes through the City of London or the Crown dependencies—up to £325 billion a year. The primacy of the London money laundromat is not an accolade we wish to retain.
Part of the problem has been the fragmentation of oversight by 25 separate public and professional bodies, supervising not just financial institutions but the many enablers, ranging from accountants to solicitors, property agents and service companies. In 2018, the Government set up within the FCA what they hoped would be the answer: the Office for Professional Body Anti-Money Laundering Supervision, which the noble Lord, Lord Mackinlay, described as the OPBAS—I thought it was an acronym, not an initialism. It was put in place to oversee the 22 professional body supervisors, not the public ones. We need to acknowledge that it has had some real successes, but it has not been as effective as we had hoped. That goes back to the issue raised by the noble Lord, Lord Holmes, who is no longer in his place: the primary reason for this, in most people’s opinion, seems to be relatively poor communication and co-operation between OPBAS and the law enforcement agencies. Frankly, I cannot find anything in this Bill that begins to deal with that.
One approach to remedying this situation would have been to have given OPBAS proper resources and more teeth. Instead, the Government have decided that the FCA should take on directly all supervisory responsibility for anti-money laundering and counter- terrorism financing. Many in the professional bodies are very correctly worried that the FCA lacks the expertise and capacity to carry out the role it is being given, which is much more complex than just enforcement.
Many of the firms that the FCA will supervise on these AML issues are small to tiny. The FCA has no significant history of supervising small and tiny firms, and no understanding of the different operations and pressures of these entities or their specialist activities. The firms—this has been one of the strengths of the professional bodies—need compliance support, education, expert helplines, hand-holding and guidance from a supervisor that knows their business model.
My Amendments 65 to 69 should be seen as part of a whole. They are collectively intended to try to tackle that problem, and to clarify and ensure a workable transition process. Amendment 65 addresses education guidance and compliance support. Amendment 66 requires a proper transition timetable. Amendment 67 requires the FCA to have the necessary expertise and experience in tax, accounting, legal services, trust and company service provision—it does not have that at the moment. Amendment 68 requires transparency on supervisory costs and the fees that the FCA will levy. Amendment 69 requires a report in six months on how effective the new anti-money laundering system is.
Frankly, all of that should have been in the Bill, and none of it should be controversial. Once again, we have a situation where the Government seek to pass primary legislation that gives Ministers and regulators a blank sheet of paper to fill in as they wish with secondary legislation. At this point, as far as I can understand— I looked but could not find it—we do not even have a promise to publish the regulations for consultation.