Economic Crime Bill – gov.scot

Increased powers to fight corruption.

Finance and Economy Secretary Kate Forbes has welcomed a new UK bill that will boost powers to crack down on Russia’s illicit financial activities.

The Scottish Government supports the Economic Crimes (Transparency and Enforcement) Bill introduced by the UK Government and has tabled a Legislative Consent Memorandum which is expected to be considered by the Scottish Parliament next week.

The bill, which will pass second reading on March 7 in the House of Commons, requires the approval of the Scottish Parliament as it covers devolved issues relating to the Unexplained Wealth Ordinances and the Foreign Entity Register.

Ms Forbes said:

“The Scottish Government fully supports any measures that target the wealth and assets of the Russian regime and its supporters, but it is important that the Scottish Parliament is given the opportunity to scrutinize its provisions.

“An open letter has been sent to the Scottish business community urging them to take economic action by cutting ties with Russia following the invasion of Ukraine.

“Greater transparency is essential to identify links to Putin’s regime. However, it is essential that adequate resources are allocated to the enforcement of the measures contained in this Bill and we urge the UK Government to ensure this is provided.

In addition to economic sanctions, the bill contains four specific proposals regarding strengthening the Unexplained Wealth Orders (UWO) in the Proceeds of Crime Act, including:

  • ensure assets held through complex ownership structures can be investigated
  • allowing a UWO to be served on a person reasonably expected to have some control over the asset
  • give investigators more time – from 60 days to 186 days – to consider a civil recovery action
  • limit the liability of ministers to pay legal fees following a UWO request

context

While Russia is involved in UK financial markets, its main economic ties lie in the ownership of UK real estate, including homes as well as art and luxury goods. A study by Transparency International UK found that £1.5bn of real estate in the UK had been bought by Russians accused of corruption or with links to the Kremlin. Most of this property is held by shell companies that hide it from the UK government, the police and the public.

The Scottish Government has a long-standing commitment to improving land transparency in Scotland, which is why a register of controlled interests in Scottish land will be launched in April.

An unexplained wealth order is a court order requiring people connected with serious crime or who are politically exposed persons to explain how they obtained certain property whose value appears to exceed their legally obtained known income.

A Politically Exposed Person (PEP) is a person entrusted with important functions by an international organization or by a state other than the UK or another EEA state. A PEP has power and access that can be abused for personal gain and is therefore considered high risk under UK and international anti-money laundering rules.

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