The invasion of Ukraine has prompted the UK government to speedily publish the draft legislation for the Economic Crime (Transparency and Enforcement) Bill 2022 which requires foreign entities that acquire UK property (freehold interests or leases granted for more than 7 years) to register with Companies House and declare details of their beneficial ownership. Implementation will proceed at record pace following royal assent and ultimately the register could be open for public inspection (albeit with restricted access to date of birth and residential addresses of beneficial owners).
The objective of the Bill is to crack down on foreign criminals using UK property to launder proceeds of corruption.
Any non-UK entity that already owns (and indeed acquired at any time in the previous 20 years) or going forward buys UK land will be required by the new rules to disclose to Companies House details of its beneficial owners/individuals with significant control (broadly those owning more than 25% of the shares/voting rights or otherwise exercising significant control) in exchange for the issue of an ID number necessary to complete title registration. Information provided will need to be verified and updated annually. Sanctions for non-compliance of course will include restrictions on an ability to create charges over or dispose of the land as well as daily fines of £500 and/or criminal sanctions including prison sentences of up to 5 years. At present those who already own land will have a grace period of 18 months to register.
The effects of the new legislation will be felt not only by the Russian oligarchs and kleptocrats it is aimed at but also by those families who have historically favoured holding UK land through offshore entities as a means of asset protection or to safeguard privacy for other reasons. The new rules when read alongside the expanded scope of the UK Trust Register are a significant step towards global transparency.
Originally Published 08 March 2022
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