Hansard

First, I reiterate this Government’s, Scotland’s and, I assume, this Parliament’s unqualified support for Ukrainian sovereignty, independence and territorial integrity, and our unequivocal support for the package of international economic sanctions against the Russian invasion. I am sure that the whole Parliament will be united in supporting the actions that we are taking to address this flagrant violation of international law by Putin’s regime.

The people of Ukraine should know that Scotland stands with them in the face of this unprovoked and unjustifiable aggression against their nation, and they can be assured that we will take all possible steps to sever ties to Putin’s regime and those individuals who support it.

That is why I am seeking the agreement of Parliament to the legislative consent motion on the Economic Crime (Transparency and Enforcement) Bill, which was introduced into the United Kingdom Parliament on 1 March. The bill has passed its Commons stages and is with the House of Lords. The bill introduces a register of overseas entities—ROE—and strengthens measures around unexplained wealth orders and the enforcement of sanctions. That will help the UK to counter illicit financial activity from Russia and elsewhere more effectively. The Scottish Government shares and supports those objectives and the provisions in the bill.

I intend to talk briefly on the measures in the legislative consent memorandum separately. Part 1 of the bill creates a register of overseas entities to provide transparency of beneficial ownership across the UK to tackle money laundering. The register will apply to all overseas entities that own land in Scotland and throughout the UK, which will have to provide information about their beneficial owners to Companies House. The register is designed to prevent criminals from hiding behind anonymous companies and from laundering money in UK property, and it will provide more information for law enforcement to help track down those using UK property as a money-laundering vehicle.

Property law, its interface with company law and the interface with the legal systems of jurisdictions around the world are a very complex matter. Broadly, the split between devolved and reserved powers lies not in the powers in this UK Government bill but between the entities to which it applies. I will use an example to illustrate that: a registered overseas company would fall within reserved powers, but an overseas charity would fall within devolved powers. That means that the ROE provisions legislate, to that limited extent, for devolved competence.

We have liaised with the UK Government over the proposals for a number of years, and I especially welcome the engagement over the past week. UK Government ministers wrote to me yesterday to confirm that they will be tabling an amendment, to be considered during the Lords committee stage, introducing a statutory mechanism to consult the Scottish ministers on regulations made under the sunset clause in the bill.

Transparency of ownership has long been a key objective of our land reform policy, and the Land Reform (Scotland) Act 2016 included provisions to establish a register of persons with a controlled interest in land—RCI. The establishment of the register was delayed slightly by the pandemic, but it is on track to be launched on 1 April. Although the policy objective of the RCI is to shed light on who is responsible for decisions about property, whereas the ROE seeks to tackle money laundering by shedding light on who benefits from that property, there is clearly some overlap and, in due course, we will review any duplication. Together, the RCI and the ROE will provide a better understanding of who owns, controls and benefits from Scotland’s land—questions that we have been seeking to answer for a very long time.

Part 2 of the bill seeks to strengthen the system of civil recovery of property that has been obtained through unlawful conduct by improving the effectiveness of the unexplained wealth order investigative procedures, assisting enforcement authorities in taking action against kleptocrats and criminals who are laundering funds in the UK.

The reforms will help to allow UWOs to be sought against property that is held in trust and other complex ownership structures. In Scotland, the civil recovery unit, acting on behalf of the Scottish ministers, can apply to the Court of Session for a UWO. The unexplained wealth order is just one investigatory tool under the Proceeds of Crime Act 2002, but it is a powerful one. It is a court order that requires persons who are suspected of being involved in or connected with serious criminality, or who are politically exposed persons, to explain how they obtained certain property where the value exceeds their known, lawfully obtained income.

The bill includes provisions that will assist enforcement authorities to investigate the origin of property and thereby recover assets that were obtained through unlawful conduct. The bill increases the scope of the existing powers in the 2002 act, expanding the list of persons against whom UWOs can be sought and enabling them to be served on a person who is a “responsible officer” and is expected to have some control of the asset.

For situations where the property holder was not responsible for financing the acquisition but it may have been obtained through unlawful conduct, the bill contains an alternative test to the income requirement that must currently be met for UWOs. That will help to ensure that property that is held via complex ownership structures will fall within the scope of the UWO regime.

The bill provides a power for the Scottish ministers or the Lord Advocate to seek an extension to the length of an interim freezing order, which prevents a person from dealing with any property that is subject to it. The bill will increase the time to a total of 186 days for the civil recovery unit or the Lord Advocate to review material that is provided to them.

The bill will also reform the court expenses rules so that expenses are payable by the Scottish ministers or the Lord Advocate in court actions relating to an UWO only if they have acted improperly.

The LCM sets out the relevant provisions that require consideration by Parliament in so far as they fall within this Parliament’s legislative competence or confer functions on the Scottish ministers so as to alter their executive competence in relation to devolved matters.

It is worth noting that the bill also seeks to strengthen sanctions measures, which fall outwith the LCM, in the light of Russia’s aggression towards Ukraine.