Published: 09/03/2022
The government announced this month that it is introducing a “Register of Overseas Entities” to crack down on foreign criminals using UK property to launder money.This Register, which will be open to the public, will require a foreign entityowning UK property to declare the identity of the individuals who own and/or control it. Once registered, the overseas entity will be required to update this information annually.
The government intends that this Register will:
· help law enforcement agencies to track down those using UK property as a money-laundering vehicle;
· ensure criminals cannot hide behind secretive chains of shell companies;
·l evel the playing field with property owned by UK companies which already have to disclose their beneficial owners to Companies House;
· apply retrospectively to property bought since January 1999.
It will apply to:
· any company or similar legal entity (such as a foundation, trust or partnership) that is governed by the law of a country outside the UK (overseas entity);
·individuals who have significant influence or control over the entity, e.g. they hold 25% or more of the shares or voting rights (beneficial owners).
Non-compliance with these obligations will lead to criminal sanctions (including fines or a prison sentence) for the officers managing the overseas entity. Financial penalties and restrictions when trying to sell or lease the land will also be introduced.
In addition overseas entities will not be able to register title to or deal with land without proof of registration.
This idea is not new having been originally proposed in 2016 when the requirement for UK companies to register their beneficial owners was implemented. Progress of the draft Bill at the time stalled due to Brexit and Covid but recent events in Ukraine have now brought it to the fore. Implementation of the proposals will proceed once the new Economic Crime (Transparency and Enforcement) Bill 2022 currently progressing through Parliament is passed as law.
Those involved in management of overseas entities which will be affected by these provisions should think about engaging with the beneficial owners in order to start preparing the information which will have to be provided.