MPs last night backed a new law to crack down on ‘dirty money’ that sloshes into UK mansions, jets and yachts.
The Economic Crime Bill was rushed through the Commons in a bid to achieve Royal Assent after the weekend.
The government claims it will finally allow “hundreds” of Russian oligarchs to be sanctioned in line with the EU and UK - as soon as next Tuesday.
It will also bring in a long-awaited ‘register of beneficial ownership’ to better show the chains of who really owns vast assets through shadowy firms.
Home Secretary Priti Patel insisted the Bill would set a "new global standard for transparency".
But critics warn loopholes will give Vladimir Putin's cronies a "head start" and “get-out-of-London-free” card - with time to hide their "dirty money”.
Cross-party rebels were racing tonight to toughen up the Economic Crime Bill in the Lords with a flurry of amendments tomorrow.
One furious MP told the Mirror: “There’s the danger that by rushing it through, you botch something that would have been a good tool.”
Another pointed out it doesn’t actually do much on sanctions, it’s all about transparency - and MPs are trying to “dress it up as something it’s not”.
So what are the six biggest hitches in the law? We go through them here.
Six-month grace period for declaring assets
The Bill will introduce a “public register of beneficial owners of overseas entities owning land in the UK, which will be held by Companies House”.
This is after years of complaints that dirty money is plunged into London property through shadowy offshore property.
There are still several concerns about this - more on this below.
But a principle one was the time period for declaring your assets. It was going to be 18 months and Tory ministers cut it to six months.
But the government refused to accept Labour ’s plans for a 28-day grace period to declare assets in the UK.
Labour’s Seema Malhotra warned: “Six months still provides ample time for criminals to sell properties and find other assets in which to invest.”
Ministers did promise to name oligarchs who sell up during the transition. Business minister Paul Scully: “They will have to register ownership, so we will get their ownership details either when they sell or at the end of the transition period.”
Could assets still just be declared via an offshore company
Tory MP Anthony Mangnall questioned whether the register of beneficial ownership, as drawn up, will let oligarchs “get away with it”.
He wanted ministers to address the issue of nominees - lawyers often in a Panama or Virgin Islands company who are supposedly the owner.
He said: “Do the enforcement mechanism and the reference to named individuals enable us to stop them doing that?”
Ex-Tory leader Iain Duncan Smith replied: “They should, because the individual has to declare the whole chain. “Not knowing” would be no excuse.”
Former Housing Secretary Robert Jenrick added: “If I wanted to conceal the ownership of a property, I would simply set up a shell company in the British Virgin Islands… We must resolve that.”
Assets won’t be seized immediately
Boris Johnson told his MPs to reject plans to immediately freeze assets, such as land, flats, mansions, yachts and aircraft, when an oligarch’s name is announced - and before they are actually sanctioned.
Cross-party MPs led by Tory David Davis put forward the amendment but it was defeated 300-234.
It wold have immediately banned anyone formally named by the UK government from selling any assets or moving them out of the UK.
It would have covered land, houses, businesses, art, jeweller, yachts, jets, gold and bank deposits.
Mr Davis said: “What will we see during the months it takes to get people to the legal point at which they are sanctioned?
“We will see Russians scrambling to sell off their houses, dispose of their businesses and offload their football clubs.”
People who help the ‘economic wellbeing of the UK’ could be exempt
Lib Dem MP Layla Moran said she was concerned one exemption could “drive a coach and horses” through the crackdown.
She pointed out there is an exemption to declaring ownership of property if a Tory minister decides it is “in the interests of the economic wellbeing of the UK.”
There is also an exemption if it is “in the interests of national security” or “for the purposes or preventing or detecting serious crime.”
But an amendment to overturn this was not selected so could not be voted on in the Commons.
They could transfer to a minority stake or a family member
UK officials admit they are limited in what they can freeze or seize when sanctioning oligarchs.
This is because under current sanctions law, ownership counts as owning more than half of something, and family members are not subject to sanctions.
While the Bill is mainly about transparency rather than actual sanctions, it will be slightly better on this front. When deciding how property should be declared, “beneficial ownership” will be defined as owning 25% or more of an asset.
But SNP MP Alison Thewliss had urged ministers to lower the threshold for beneficial ownership from 25% to 10%.
She said: “Evidence already points to the threshold being gamed and to people appointing family members and those they can easily control, and the Government need to be aware of that and do more to prevent it.”
Enforcement
Critics say the law will be useless without proper enforcement, and it doesn’t currently exist.
Government-ally MPs also voted down bids to be more transparent about the funding of enforcement, and to bring a new law reforming Companies House.
Labour MP Margaret Hodge, former chair of the Public Accounts Committee, said agencies charged with punishing breaches are “no longer fit for purpose” after a decade of austerity.
She said: “Money laundering prosecutions have dropped by 35% over the past five years, just as money laundering has increased and intensified in the UK economy. Fraud is now the most common crime committed in the UK, with more than 5 million offences, but hardly any are prosecuted.”
Ms Hodge told the Mirror: “This is not an Economic Crime Bill. It’s simply a transparency issue around properties. They’re trying to dress it up as something it’s not.”
