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Lords asks government to think again on Economic Crime and Corporate Transparency Bill

12 September 2023

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The Economic Crime and Corporate Transparency Bill returned to the Lords for consideration of Commons amendments in ‘ping pong’, on Monday 11 September.

The Economic Crime and Corporate Transparency Bill seeks to:

  • prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies to abuse the UK’s open economy
  • strengthen the UK’s broader response to economic crime
  • support enterprise by enabling Companies House to deliver a better service.

Consideration of amendments

The bill was considered by the House of Lords between 30 January and 4 July 2023, before returning to the House of Commons.

Members have now considered Commons reasons for disagreeing to Lords amendments (changes) to the bill.

Lords divisions

There were also two divisions (votes) on proposed changes to the bill.

Failure to prevent fraud

During Lords consideration of the bill, members agreed to insert a new clause which makes a 'body' - a company or organisation - legally liable if a member of their personnel commits fraud.

MPs in the Commons agreed with this clause, but added the disclaimer that this should apply to large organisations only. 

Lords members have now considered a further amendment, which expands the remit to both large and 'non-mirco' organisations and gives a financial explanation to define a non-micro body.

Members voted 211 in favour and 185 against, so the change was made.

Civil recovery costs

During Lords consideration of the bill, Lords members agreed a new clause which compels courts not to give orders that the cost of trial proceedings are met by a liable person or body unless certain criteria are met.

MPs in the Commons rejected this clause, on grounds it may violate the 'loser pays' principle, and instead proposed an alternative which empowers the government to consider and report whether this rule would be beneficial.

The Lords has now considered a new version of the original amendment, which instead makes recommendation for courts not to give such orders, rather than compelling them not to.

Members voted 218 in favour and 186 against, so the change was made and the revised clause inserted into the bill.

Catch up

Explore further information

Read background on the bill in the House of Lords Library Economic Crime and Corporate Transparency Bill briefing.

Next steps

The bill now returns once again to the House of Commons for further consideration of Lords amendments.

What's happened so far?

Third reading: Tuesday 4 July

Third reading is the chance for members to ‘tidy up' a bill, making small changes to ensure it is effective.

Proposed changes

A number of government amendments to the bill were put forward ahead of third reading on subjects including:

  • rules on providing information on those with significant company control, including exemptions
  • registering beneficial owners of overseas entities.

Members also discussed the passage of the bill at the conclusion of its Lords stages.

Catch up

Report stage day two: Tuesday 27 June

Report stage is a further opportunity to closely scrutinise elements of the bill and make changes.

Members speaking on the final day of report stage put forward amendments (PDF) (changes) to the bill to be discussed. 

Lords Divisions

There were  three divisions (votes) on proposed changes to the bill.

'Regimes' and corporate exemption

The first vote was on amendment 110, which inserts a new clause that would remove the exemption for organisations that are not 'large organisations' from the failure to prevent financial sanctions which relate to a specific country or terrorist group, or 'regime'.

Members voted 179 in favour and 176 against, so the change was made. 

Failure to prevent fraud and money laundering

The second vote was on amendment 125A, which inserts a new clause that makes failure to report fraud or money laundering an offence.

Members voted 176 in favour and 160 against, so the change was made.

Extending the cap for civil recovery cases

The final vote was on amendment 129, which inserts a new clause that extends the cost cap for civil recovery cases beyond Unexplained Wealth Orders.

Members voted 164 in favour and 150 against, so the change was made.

Catch up

Report stage day one: Tuesday 20 June

Members speaking on the first day of report stage have put forward amendments (PDF) (changes) to the bill to be discussed. 

Lords Divisions

There were  three divisions (votes) on proposed changes to the bill.

Nominee shareholders

The first vote was on amendment 16, which inserts a new clause to require nominee shareholders to declare under whose control their shares are held.

Members voted 218 in favour and 175 against, so the change was made. 

Updating the register of overseas entities

The second vote was on amendment 72, which inserts a new clause to require registered overseas entities to register any changes to their details within 14 days.

Members voted 172 in favour and 153 against, so the change was made.

Material available for public inspection

The final vote was on amendment 73a (PDF), which would remove protected trusts information from the list of materials not to be made available to the public. 

Members voted 171 in favour and 151 against, so the change was made.

Catch up

Committee stage day seven: Thursday 11 May

Committee stage is the first chance for line by line examination of the bill. 

Members speaking on the seventh and final day of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

The amendments covered a range of subjects, including: 

  • compensation for victims of economic crime
  • the information collected by Freeport Governance Bodies on the register of beneficial ownership of businesses operating within the Freeport tax site.

Catch up

Committee stage day six: Tuesday 9 May

Members speaking on day six of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

The amendments covered a range of subjects, including: 

  • establishing an Office for Whistleblowers
  • property and wealth obtained through economic crime against vulnerable adults
  • review of the Tier 1 (Investor) Visa Scheme.

Catch up

Committee stage day five: Thursday 27 April

Members speaking on day five of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

The amendments covered a range of subjects, including: 

  • creating a new offence of failing to prevent fraud
  • duty to disclose all funds and economic resources.

Catch up

Committee stage day four: Tuesday 25 April

Members speaking on day four of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

The amendments covered a range of subjects, including: 

  • anti-money laundering function of HMRC
  • supressing investigations into economic crimes
  • confiscating crypto assets.

Catch up

Committee stage day three: Thursday 20 April

Members speaking on day three of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

The amendments covered a range of subjects, including: 

  • international implications of the bill
  • enabling Companies House to publish the names of parties to trusts which own Overseas entities in the Register of Overseas Entities.

Catch up

Committee stage day two: Tuesday 18 April

Members speaking on day two of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

The amendments covered a range of subjects, including: 

  • indentity documents
  • public inspection of information on the register
  • funding for tackling economic crime.

Catch up

Committee stage day one: Monday 27 March

Members speaking on day one of committee stage put forward amendments (PDF) (changes) to the bill to be discussed. 

These amendments covered a range of subjects, including: 

  • powers for ministers to disqualify an individual from becoming a director of a company 
  • clarifying the definition of 'appropriate address' for a company's registration
  • information required in a company's register of members.

Catch up 

Second reading: Wednesday 8 March

During second reading, members discussed the main issues in the bill and drew attention to specific areas where they think amendments (changes) will be needed.

Topics covered in the debate included:

  • the cost of economic crime to the UK
  • transparency and reporting requirements for companies
  • power of law enforcement to seize cryptoassets. 

Members speaking 

Lord Johnson of Lainston (Conservative), Minister of State in the Department for Business and Trade, opened the debate and responded on behalf of the government.

Members speaking in the debate included:

  • Baroness Altmann (Conservative), former govenor of the London School of Economics
  • Baroness Blake of Leeds (Labour), shadow spokesperson for business, energy, and industrial strategy and international trade 
  • Lord Cromwell (Crossbench), member of the Lords Industry and Regulators Committee
  • Lord Davies if Brixton (Labour), member of the Lords Economic Affairs Committee
  • Lord Faulks (Non-affiliated), former Minister of State for Justice in the Lords
  • Lord Fox (Liberal Democrat), Liberal Democrat spokesperson for business, energy and industrial strategy
  • Lord Garnier (Conservative), member of the Centre for Financial Crime and Security Studies (CFCS), The Royal United Services Institute for Defence (RUSI).

Watch and read the debate

Find out more about the issues discussed: catch up on Parliament TV or read the Lords Hansard transcript.

Image: Adobe Stock