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Mr. John McFall (Dumbarton): I welcome the initiatives that my right hon. Friend has so quickly taken in the past few days. Has he any proposals to strengthen the oversight powers of the FSA so that it can find and publicly name individuals who are involved in money laundering? May I seek reassurance that there will remain the closest contact with the Channel Islands, the Isle of Man and the British dependent territories to ensure consistency of approach so that they do not act in any way differently from the United Kingdom?
Mr. Brown: I am grateful to my hon. Friend, who chairs the Treasury Select Committee. I welcome him to his new post.
The FSA assumes all its powers in a month's time. In my view, it will have powers to deal with the matters that he has raised. If it needs additional powers to do so, we can consider that.
My hon. Friend referred to dependent territories and overseas dependencies. It has been a source of concern for many years that there are gaps in the law in those countries that prevent us from dealing with money laundering and, in this case, the financing of terrorism. I am pleased that, particularly over the past few weeks, there has been far greater contact with those countries, which are now willing to introduce laws similar to ours. Many of them have money-laundering laws, but they will now introduce laws that will enable them to do as we are doing and try to cut off the supply of funds for terrorism. I therefore believe that we will be able to take further action in that area.
As for naming countries, which was the second point made by my hon. Friend, the financial action taskforce will name countries that do not meet the regulations. In reply to the point made by the Liberal spokesman, the hon. Member for Truro and St. Austell (Matthew Taylor), it will consider what action to take when it meets on 29 October.
Mr. Andrew MacKay (Bracknell): Will the Chancellor confirm that the legislation will apply to Northern Ireland? Does he accept that a series of measures, which were meant to deal with the funding and financing of paramilitaries, both republican and so-called loyalist in the Province, have singularly failed? What assurances can he give the House that on this occasion it will be different?
Mr. Brown: In many ways, the legislation that has been applied to Northern Ireland is now being applied to the whole mainland to deal with the finance of terrorism. The right hon. Gentleman raised issues which I know are of concern, particularly in the United States of America,
which has said that it is introducing new laws to tackle the finance of terrorism. However, it is for its authorities to administer them. As for the United Kingdom, we continue to do everything in our power to cut off the supply of funds to terrorist organisations, whoever they are.
Mrs. Alice Mahon (Halifax): I am sure that the whole House welcomes the measures outlined by my right hon. Friend. Is he aware that at a recent meeting of the NATO Parliamentary Assembly the deputy director of Interpol's agency on organised crime told delegates about the bin Laden connection in the financing of the KLA, before and during the war in Kosovo, and before the war in Bosnia, via the Balkans route and the trafficking of arms, women and drugs. Can we have a full inquiry into the activities of the KLA, now renamed the Kosovo Protection Corps, where it gets its finances from and the organised crime in which it is currently engaged?
Mr. Brown: I am grateful to my hon. Friend, who asked about a particular organisation. I can assure her that we shall get the authorities to look at it. On her more general point about bin Laden's funding and the funds that the al-Qaeda organisation amasses from a number of activities, we shall continue to examine in detail how those funds are acquired and try to cut them off at source.
Mr. John Redwood (Wokingham): When the Chancellor said that our recent interest rate cut was co-ordinated with other countries, did he mean the Treasury requested the Bank of England to take that action or that the Bank of England decided independently to go beyond its normal remit and timing for those changes? I am not against the change; I would just like to know the process by which it took place.
Mr. Brown: I am grateful to the right hon. Gentleman for raising the matter of interest rates so that I can put him right. The individual authorities—the Bank of England, the Federal Reserve bank and the European Central Bank—make their own decisions about interest rates. I know that many Opposition Members resisted our decision to make the Bank of England independent, but it is independent and makes its own decisions.
I was referring to what I thought and feel able comment on; everybody here should be able to do that. Following the decisive action by the relevant authorities, there was a boost to the world economy at a most difficult time. There have now been nine interest rate cuts in the USA, three by the European Central Bank and six by the Bank of England in the last few months. All those institutions have made statements in the past few weeks that they will not hesitate to take further action if necessary. I am therefore grateful to the right hon. Gentleman for allowing me to put the record straight.
Mr. Harry Barnes (North-East Derbyshire): The measures announced mean that it will be easier to tackle underground banking, money laundering conducted nationally and, with the G7, that practised in overseas financial institutions. Will the provisions be extended so that problems can be tackled in countries like Nigeria, where the Abacha regime salted away masses of money under the dictatorship? Surely the fact that there is nothing internationally to stop the Tobin tax has been finally
established. A tax on currency speculation is of great importance in tackling terrorism because it will get at the problem of global poverty.
Mr. Brown: My hon. Friend wants to draw me into a very wide debate. May I answer him on the first point about Nigeria? I believe that under the measures that are being embedded in law and have been over the past few years, to which we are adding today, banks have an obligation to report suspicious transactions and we have the power to freeze the money involved. That makes it possible to say that what happened in the past should not happen in the same way again. We are determined to root out the sort of practice that caused us problems in the past. As for the Nigerian case, it is a matter of judicial review, so my hon. Friend would not expect me to comment further on that.
With regard to the Tobin tax, two issues are involved. The first is the volatility of the international financial markets, and the second is the need for finance for development. On the volatility of the financial markets, it has not been shown that the Tobin tax would make the difference in a liberalised set of capital markets. Interestingly enough, Professor Tobin himself now takes that view. On the financing of development, however, a powerful case has been made for all of us to do more, not just in terms of emergency aid in Afghanistan and Pakistan. My right hon. Friend the Secretary of State for International Development has made additional money available—and further money will be necessary—to feed people there during these difficult times, but more is needed for the general financing of development, so that education, health and anti-poverty programmes move ahead. We stand four square behind all those who want to see a better international approach to securing finance for development.
Michael Fabricant (Lichfield): Further to the question asked by the hon. Member for Dumbarton (Mr. McFall), the Chairman of the Select Committee on the Treasury, the Chancellor will be aware that many billions of dollars move through the banks of dependent territories. In recent months the Cayman Islands, Gibraltar and Bermuda have been highlighted. Could the Chancellor amplify his earlier answer and say specifically what measures are being taken to encourage the dependent territories to introduce new laws rapidly, and what time scale he envisages for the introduction of such laws to dry up money laundering in those countries? Legislation there is every bit as important as it is here in the United Kingdom.
Mr. Brown: The hon. Gentleman is right. Those are big financial centres: the Cayman Islands is the fifth largest financial centre in the world, Bermuda is a world leader in insurance, ranking alongside New York and London for the insurance trades, and more than 300,000 international business corporations are registered in the British Virgin Islands, so what happens in those offshore centres is important. That is why their accepting anti-money laundering legislation and control systems based on the UK model is important. They have done so, and they are not named in the financial action taskforce list of countries where further action must be taken, because they have introduced anti-money laundering legislation. However, they will have to do more. That is why we have been in discussion with them about their
adopting the same regulations and laws as we are adopting, or similar regulations and laws, to deal with the sources of terrorist finance. We remain determined to move ahead on all fronts. That means that we can only be as strong as the weakest link, and action must be taken in the dependent territories.I believe that the hon. Gentleman will be reassured by the fact that those countries and dependent territories have issued statements to the effect that they are prepared to go in the same direction as we are going to increase the anti-terrorism powers available to them. We also had a debate with them on extending the exchange of information, and I believe that we are making progress on that as well.
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