The Register of Overseas Entities

The government has published a policy paper to introduce a ‘Register of Overseas Entities’ in order to crack down on foreign criminals using UK property to launder money.

The new register will require anonymous foreign owners of UK property to reveal their real identities to ensure criminals cannot hide behind secretive chains of shell companies, setting a global standard for transparency in the process.

The Economic Crime (Transparency and Enforcement) Bill forms part of the government’s strategy to combat economic crime, while ensuring legitimate businesses can continue to invest in the UK.  A useful summary of the separate measures in this legislation can be found here.  The two elements of particular interest are

• a beneficial ownership register for overseas entities holding UK real estate; and
• the white paper setting out plans to reform Companies House.

Beneficial Owners Register

Where an overseas entity owns UK property they must now include the details of the ‘beneficial owner’ on the new ‘Register of Overseas Entities’.  There are heavy fines for those overseas entities who refuse to reveal their beneficial owner: managing officers can face criminal sanctions including fines of up to £500 per day or a prison sentence of up to five years.  Companies House will begin work to implement the register as quickly as possible, working closely with the UK’s 3 land registries.

Reforms to Companies House

Going forward, the aim is that anyone setting up, running, owning or controlling a company in the UK will need to verify their identity with Companies House.  In addition, Companies House will be given the power to challenge information that appears dubious and will be empowered to inform security agencies of potential wrongdoing.

The aim of these measures is to prevent company agents from overseas from being able to create companies in the UK on behalf of foreign criminals or secretive oligarchs.  It should also improve the quality of information provided to Companies House so that the thousands of small companies who rely on it to make business decisions can trust who they are transacting with.

Other improvements will see filing processes for small businesses streamlined and digitalised and company directors being better able to protect personal information published by Companies House which might put them at risk of fraud or other harm.

It is clear then that the government is determined to improve the transparency of ownership of UK companies.  Going forward it seems likely that the sale (and purchase) of UK property could become impossible without the relevant details being included on the new Beneficial Owners Register.

The government fact sheet can be found here and a useful official publication on the background to the measures can be found here. Please contact Steven for more information on these proposed regulations, especially if you are concerned they may affect you or your business.