Require all tax advisers to join pro bodies, say MPs

An Economic Crime Manifesto published jointly by the All Party Parliamentary Group (APPG) on Anti-Corruption and Responsible Tax, and the APPG on Fair Business Banking recommends a range of measures to improve transparency, including:

• Reforms to Companies House such as new powers for the company registrar to verify information to ensure accuracy and discretionary powers to remove corporate entities from the register for wrongdoing
• Ensure that public registers of beneficial ownership in the Overseas Territories and Crown Dependencies are faithfully implemented by early 2023 with full and free access to company data
• The existing UK trust register housed in HMRC should be made more accessible
• An open register for the beneficial owners of UK land should be created in order to stop UK land and property being used to launder money.

Labour MP Dame Margaret Hodge, Chair of the APPG on Anti-Corruption and Responsible Tax, said: “It is tragic that it has taken the war in Ukraine to bring the dirty money crisis to a head. We must act in a determined and effective way.”

Conservative MP Kevin Hollinrake, Chair of the Fair Business Banking APPG, said: “People at the top of [financial] organisations need to think that if they don’t prevent this stuff [economic crime], or put the checks and balances in place, they could go to jail."

The two APPGs demand the Treasury and Home Office “properly resource and equip our law enforcement agencies for combating economic crime”. As well as additional spending they propose:

• A cross-governmental Economic Crime Fighting Fund to reinvest a proportion of the proceeds of regulatory and criminal fines, asset recovery, and deferred prosecution agreements into economic crime enforcement
• Reform the UK Financial Intelligence Unit (UKFIU) so that it can more effectively undertake strategic and operational analysis of SARs and other data
• Introduce new corporate “failure to prevent” offences for money laundering, fraud, sanctions evasion, and false accounting

 There is a particular focus in the manifesto on action against enablers of economic crime. This includes:

• An explicit duty on HMRC to effectively fulfil its enforcement role (alongside its duty as a revenue collector) to ensure that HMRC brings prosecutions against the promoters of aggressive tax avoidance schemes and the enablers of economic crimes
• A radical overhaul of anti-money laundering supervision that strengthens the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), with new powers to sanction supervisors and ensure consistency of implementation. “The system should be streamlined to deliver fewer supervisors with common standards and reduce risk of supervision by bodies that have conflicts of interest between their advocacy and regulatory roles.” OPBAS should ensure professional body supervisors issue “bigger, more public civil fines for wrongdoers.”
• Create a new, properly resourced Professional Enabler Unit at the NCA to investigate and prosecute wrongdoing.
• Reform the Suspicious Activity Reporting (SARs) regime with a new risk rating system to ensure quality over quantity and supervisors given powers to regulate the submission of low quality SARs.
• Regulation of Trust and Company Service Providers (TCSPs) should be strengthened by only allowing UK registered and based TCSPs to incorporate and manage UK legal entities; requiring more public information on companies and individuals that provide TCSP services to UK legal entities; and making it illegal for TCSPs to offer nominee services, such as nominee directorships.
• Require tax advisers to be signed up as members of a professional body. (They note that, currently, “a professional could be struck off as a member of a regulated trade body for tax fraud yet continue their activity”.)

The manifesto can be read in full here.