Criminal Finances Act 2017 and Economic Crime and Corporate Transparency Act 2023 (Consequential Amendments) Regulations 2024

I would be grateful for an explanation from the Minister of some of the detailed provisions in the SI. The term “substantial value” is used as a qualifier four times in Regulation 2(4); it is obviously an important qualification. What is the test for

“is likely to be of substantial value”,

and is it the same test—or tests—in all four appearances of the phrase in this instrument? Who decides what the threshold is in each case?

I have a couple more questions about interpretation. Regulation 2(4)(b) inserts new subsection (7G)(a), which refers to

“any other question as to its derivation”.

Does “derivation” here mean provenance, or has it some alternative meaning? The same question applies to the use of “derivation” in Regulation 2(6). Is not the phrase “any other question” in itself extremely wide in scope? What questions, if any, are excluded by this phrasing?

I was pleased to see the attempt at an impact assessment incorporated in the EM. I wondered, however, what weight to give to the assessment of benefits. The range offered is very large, even if the lower bound quoted in the EM, of £107.60, is a misprint of £107.6 million. The difficulty in assessing the usefulness and reliability of these estimates is exacerbated by the qualifying sentences in paragraph 9.2 of the EM, which say:

“The data and assumptions surrounding cryptoassets are limited due to the technology being relatively new and rapidly changing. It is also sensitive, and many figures and police data are not suitable for the public domain”.

This seems rather opaque. Can the Minister say whether enforcement authorities are significantly disadvantaged when it comes to dealing with likely crypto asset issues? Can he be a little less mysterious about that final sentence in paragraph 9.2 of the EM—in particular, is it reasonable to rely on unspecified and apparently secret data whose reliability we cannot estimate or properly qualify? After saying all that, I should repeat that we support this SI.

I have committed to see through the previous Government’s fraud strategy. We are now refreshing it to look at a number of key areas, including data sharing, international co-operation and the technical abilities of both telecommunications companies and tech companies. We will revise the fraud strategy at some point during the first half of this Parliament to ensure that we address some of the issues and take it forward still further.

The noble Lord, Lord Sharkey, mentioned “substantial value”. Again, if he will let me, I will reflect with officials on how we can interpret that, but it is important to note the asset seizures that have taken place this year; this also goes back to the point that the noble Lord, Lord Murray, mentioned. Between April and October, 23 crypto asset seizures, with a value of £2.5 million, and 64 confiscation cases, involving identification of crypto assets totalling £6 million, have taken place. I regard those as substantial value in the terms of the instrument. I am pleased to have the noble Lord’s support for this instrument. If he will let me reflect with officials on whether we can define that further then I will certainly write to him, but I hope that will not be a bar to passing the instrument.

The noble Lord raised a number of other important but technical points on some of the issues in the economic statement. Again, if he will let me reflect on those I will make sure that he gets a full answer, but I hope they will not prevent him supporting this instrument.

I am grateful for the support for the instrument from the noble Lord, Lord Murray. I have tried to answer the points he raised relating to the seizures that have taken place. It is not for me to determine the number of prison sentences that might accrue as a result of that and of the changes we are making, but he needs to know, as I am sure he understands, that the Government, in passing this instrument and taking the action that we are on fraud, want to send a very strong signal to those who trade in or hold their criminal assets in crypto assets that we will come looking for them. If he wishes to know the impact of that, I can tell him that, under his Government between 2018 and 2024, £1.6 billion was recovered from criminals using asset recovery powers under POCA, and £140.7 million was paid in victim compensation from confiscation orders. With this statutory instrument, we want to ensure that we do not have that narrow misidentification that allows a problem to exist when we can take action under legislation that had mutual support from all parties in this House and in the Commons in the previous Parliament.

I hope that, with those points, I can assure both Front Benches that this is an important instrument that tightens a loophole and redresses the powers that were missing in the previous legislation. It is done for a purpose, which is to ensure that those who use and benefit from crypto assets have the ability to have those crypto assets identified and, if necessary, taken as assets.