Economic Crime Bill

7 Mar 2022 10:13 AM

Finance and Economy Secretary Kate Forbes has welcomed a new UK Bill which will strengthen powers to counter illicit financial activity from Russia.

The Scottish Government supports the Economic Crime (Transparency and Enforcement) Bill being brought in by the UK Government, and has lodged a Legislative Consent Memorandum which is expected to be considered by the Scottish Parliament this coming week.

The Bill, which has its second reading on March 7 in the House of Commons, requires the Scottish Parliament’s consent as it covers devolved matters in relation to Unexplained Wealth Orders and the Register of Overseas Entities. 

Ms Forbes said:

“The Scottish Government is fully supportive of any measures which target the wealth and assets of the Russian regime and its backers, but it is important that the Scottish Parliament has the opportunity to consider its provisions.

“An open letter has been sent to the Scottish business community, urging it to take economic action by severing links to Russia, following the invasion of Ukraine.

“Greater transparency is critical to identifying links with Putin’s regime. However it is vital that suitable resources are put into enforcement of the measures in this Bill and we urge the UK Government to ensure this is provided.”

In addition to economic sanctions, the Bill has four specific proposals in relation to strengthening Unexplained Wealth Orders (UWOs) in the Proceeds of Crime Act, including:

• ensuring property held via complex ownership structures can be investigated
• enabling a UWO to be served on a person reasonably expected to have some control over the asset
• giving investigators more time - from 60 days to 186 days - to consider a civil recovery action
• limiting Ministers’ liability to meet legal costs following an application for a UWO

Background

While Russia is involved in UK financial markets, its major economic links are through ownership of UK property, including homes as well as art and luxury products. Research by Transparency International UK has found £1.5 billion worth of UK property has been bought by Russians accused of corruption or with links to the Kremlin. Most of this property is held by shell companies obscuring them from the UK government, police and the public.

The Scottish Government has a longstanding commitment to improving transparency of land in Scotland, which is why a Register of Controlled Interests in Scottish Land will be launching this April.

An Unexplained Wealth Order is a court order requiring people connected with serious criminality or who are Politically Exposed Persons to explain how they obtained certain property where the value appears to exceed their known lawfully obtained income.

A Politically Exposed Person (PEP) is someone entrusted with prominent functions by an international organisation or by a State other than the UK or another EEA State. A PEP has power and access which can be abused for private gain and is therefore considered high risk under UK and international anti-money laundering rules.