The Economic Crime and Transparency and Enforcement Bill would require anonymous foreign owners of UK property to reveal their real identities, therefore preventing criminals hiding behind shell companies.
Those who do not declare a “beneficial owner” will face restrictions on selling their property and rule breakers could face up to five years in prison.
The Register of Overseas Entities will apply retrospectively to property bought by overseas owners up to 20 years ago in England and Wales and from December 2014 in Scotland. The register will be held by Companies House with support from the UK’s Land Registries.
The legislation will also mean more people can be handed an Unexplained Wealth Order (UWO), which came into force in 2018 and helps authorities identify and seize property that is suspected to have come from criminal activity proceeds.
Other reforms include expanding the scope of UWOs to include those who hold property in trust and the definition of an asset holder will be broadened so individuals cannot hide behind shell companies and foundations.
It will also increase the amount of time law enforcement has to review material provided following a UWO, changing cost rules to stop law enforcement agencies from incurring substantial legal costs if a case is “ultimately unsuccessful”.
The legislation also introduces a strict civil liability test for monetary penalties, making it easier to impose “significant fines” by Office for Financial Sanctions Implementation (OFSI).
The OFSI can also publicly name companies that breach financial sanctions but are not fined.
Business Secretary Kwasi Kwarteng said: “The new register will shine a light on who owns what in the UK so we can flush out the oligarchs, criminals and kleptocrats who think they can use UK property to hide their illicitly obtained wealth.”
Prime Minister Boris Johnson said: “There is no place for dirty money in the UK. We are going faster and harder to tear back the façade that those supporting Putin’s campaign of destruction have been hiding behind for so long.
“Those backing Putin have been put on notice: there will be nowhere to hide your ill-gotten gains.”
Companies House reform
The government has also released a white paper outlining its plans to upgrade Companies House, which includes identity verification, powers to challenge information and limiting those who can create companies.
Those who set up, run, own or control a company have to verify their identity and Companies House can challenge dubious information and inform security agencies of wrongdoing.
Overseas company agents cannot create companies in the UK on behalf of foreign criminals or secretive oligarchs.
The white paper also has plans to improve information quality, streamline and digitalise the filing process for small businesses and better ability to protect personal information.
The bill also includes new powers to seize crypto assets, strengthened anti-money laundering powers and reforms to limit use of limited partnerships as a vehicle to facilitate international money laundering.
