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28 February 2022

UK Government to establish a register of beneficial ownership of UK land and property owned by overseas entities

The UK has arguably been at the forefront of moves to combat illicit finance, being in 2016 one of the first in the world to introduce a public register of beneficial ownership of companies registered in the UK (the Persons of Significant Control Register maintained by Companies House). The Register is not however an all-encompassing solution to the problem that it seeks to address, both because there are significant issues in relation to its implementation and operation, and because a huge swathe of assets are excluded from its ambit – UK property that is owned by offshore entities not registered in the UK, and whose home jurisdictions mostly do not make public information as to their beneficial ownership.

As far back as 2018, a draft bill on the Registration of Overseas Entities, which would have required the registration in the UK of overseas entities owning land or properties in the jurisdiction, was drafted and underwent pre-legislative scrutiny by a Joint Committee of MPs and Lords Members. Despite that committee reporting back in 2019, there was no further action until on 19 January 2022 it was presented to Parliament as a Private Members’ Bill. It is at present undergoing its second reading in the House of Commons.

The Eleventh Report of Session 2021-22 on Economic Crime, published by the House of Commons Treasury Committee on 2 February 2022 noted with disapproval the government’s failure to respond to calls to bring forward an Economic Crime Bill to deal, inter alia, with reforms to Companies House aimed at addressing the various shortcomings identified and to establish a public register of beneficial ownership of property.

Russia’s invasion of the Ukraine has now forced the issue up the government’s agenda, with Boris Johnson announcing at the weekend that the Economic Crime (Transparency and Enforcement) Bill is expected to be tabled in parliament tomorrow. Like the existing draft Registration of Overseas Entities bill, it will require overseas entities owning UK land and property to register and to make publicly available information as to their beneficial owner. The government has already indicated that it goes further however in that it will apply retrospectively to property purchased up to 20 years ago in England or Wales, or 14 years ago in Scotland and failure to register could lead to a restriction on being able to sell the property and a term of imprisonment of up to five years.

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