August 15, 2022
UK launches asset register to curb flow of £100bn ‘dirty money’

A new register will be launched on Monday to uncover the final owners of foreign companies controlling land in Britain – six years after it was first announced by former Prime Minister David Cameron.

The new register is designed to help tackle the estimated £100bn per year illegal financing, which the National Crime Agency believes is circulated annually through the UK.

The new register will require unknown foreign owners or buyers of UK property to reveal their identities to ensure criminals cannot hide behind secret chains of shell companies. It is designed to help the government uncover Russian oligarchs – or other kleptocrats – using UK land to hide their illegal wealth.

Downing Street brought forward legislation designed to crack down on the influx of “dirty money” into Britain in the wake of Russia’s invasion of Ukraine, with the passage of a new Economic Offenses Bill in March.

Starting Monday, any new purchases involving unidentified foreign buyers will now have to tell Company House – with verified information – before beneficial owners can make any application to UK land registries.

There will be a grace period of six months for already owned properties purchased in the last 23 years.

In England, any retrospective purchases of properties and land by unknown foreign entities from 1999 onwards must also be entered in the register by the end of January of the following year. For Scotland, all such deals must be recorded from 2014 onwards, whereas in Northern Ireland the register will not be retroactive.

Those who do not declare their beneficial owner will face a ban on selling their assets and up to five years in prison. There is also a fine of up to £2,500 per day – the equivalent of £912,500 per year – for failure to make accurate disclosures.

The trade minister, Lord Callanan, said the new register would “exclude corrupt elites” and “curtail criminals who are trying to hide their illegally acquired wealth”.

In principle, the register only applies to instances where an entity has ownership of more than 25 percent of its assets in line with international norms.

But Callanan said that where a person tried to evade investigation by dividing ownership of the property — for example with four children — they would still be held liable for full disclosure. “You can’t use it as a tool to achieve that. . . you are still the person with significant control of that business, so you can still be fined.”

Furthermore, the measures mean that any foreign entity selling assets with effect from February 28, 2022 will still have to make a statement to Companies House.

Company House chief executive Lewis Smith described the launch of the register as an “important milestone” in tackling economic crime.

James Gilbert-Green, an estate agent in London working on £20mn-plus deals, said the register would make life difficult for buyers who wanted to fly under the radar but were unlikely to stop the flow of foreign money into the capital .

“Will this help uncover the secret owners? Maybe in some very rare cases. But it’s actually very hard to buy in the UK, if you’re dodgy,” he said.

Banks, lawyers and estate agents have been more effective gatekeepers in recent years, he said. The introduction of anti-money laundering checks on sellers in 2014 and a new requirement for estate agents to run compliance checks on buyers in 2018 have effectively pulled down the drawbridge for dirty money, he said.

Rory Scarisbrick, a high-end property agent in London, said the new register is “a change for existing owners of special purpose vehicles rather than new buyers. You have to decide: do you want your name there or not?”

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