Under new Anti-Money Laundering (AML) laws to crack down on dirty money, overseas organisations owning UK land or property must have publicly declared their true owners. So far, over 20,000 submissions have already been made to the Register of Overseas Entities, but the registration deadline has now passed. Those who have not yet done so are at risk of facing severe sanctions.
Cracking down on money-laundering
Companies owning property in the UK must now identify their beneficial owners and register them with Companies House, or else face punitive measures such as sale restrictions and hefty fines. This is part of the Foreign Entities Registration Bill, a world-leading initiative devised by the government to counter money laundering activities. All companies had to declare their beneficial owners on the Register of Overseas Entities by Tuesday 31 January 2022.
It is now a legal requirement for overseas entities to be registered with UK’s Companies House in order to prevent the flow of illicit funds stemming from the Russian-Ukraine conflict. For those who did not meet the recent deadline they face sanctions, fines or even prosecution.
Registering overseas entities with Companies House will make it harder for criminals to launder money. This was as illustrated by the case of Dr Ruja Ignatova (the infamous “Cryptoqueen” on FBI’s Most Wanted List), whose two intermediaries in Guernsey were identified following the new registration requirements.
Business Minister, Lord Callanan said:
“There is nowhere for the criminals and corrupt elites to hide. We will be using all the tools at our disposal, including fines and restrictions, to crack down on foreign companies who have not complied.”
The Register of Overseas Entities
Registering for overseas entities is crucial if a UK buyer wishes to buy an overseas property. HM Land Registry has put in place requirements whereby companies must be registered with the Register of Overseas Entities to meet compliance standards, otherwise they will be rejected from registering ownership of any land. This move helps to make transactions more transparent and reduce potential money laundering by criminals. It also serves as a safeguard against selling to non-compliant organisations.
Further investigatory powers
Companies House is now carrying out assessments and taking steps to enforce compliance. The implementation of additional new regulations will give Companies House the power to pinpoint financial penalties on overseas entities who do not register in a timely manner, as well as explore other legal actions if necessary.
So far, 19,510 out of a total of 32,440 registered overseas entities have revealed their beneficial owners. This data has also been an immense help for tax and revenue authorities to uncover assets that have been stowed away in offshore trusts with the intention of avoiding taxable fees.
The Economic Crime and Corporate Transparency Bill, recently approved by the House of Commons, will give Companies House and the Insolvency Service enhanced powers to combat money laundering and assist law enforcement. To this end, the bill includes a commitment of up to £20 million in funding for the recruitment of intelligence and analytics experts to help identify suspicious overseas entities registered with either agency.
Louise Smyth, Chief Executive Officer of Companies House said:
“The implementation of the Register of Overseas Entities has been another huge step forward in the transformation of Companies House and our role in helping combat economic crime.”
“We cannot be clearer in our message to these entities; if you ignored warnings and fail to register before the deadline, you will face consequences. This includes not only the prospect of restrictions on your land or property but also a possible fine, prison sentence, or both.”
For more information, please read our news article on Registering as an Overseas Company or get in touch with myself or our team of Entering the UK Market specialists.