The FCA – Transformation to Assertive Supervision
A new bill will be put forward to parliament tomorrow with the aim of increasing transparency of ownership of property in the UK. The introduction of this new Economic Crime (Transparency and Enforcement) Bill has been expedited following the sanctions announced last week, however the drive for change began over five years ago and that it is finally coming to fruition will be welcomed by many.
The new bill will create a publically available register identifying the beneficial owners of overseas entities that hold land in the UK. At present there is huge distinction between the treatment of UK entities which purchase property and their overseas counterparts; since 2016 UK registered companies have been required to provide information to Companies House about their ultimate owners and controllers by way of a ‘Persons with Significant Control’ (PSC) register but entities registered overseas are not so obliged.
The lack of transparency of overseas ownership of UK property is cited as a major draw for criminals and money launderers because it offers them the opportunity to invest significant sums of money without raising the alarm of law enforcement agencies. According to an article in The Times in November 2021, the number of properties in England and Wales owned by individuals based overseas has trebled since 2010. The Director of Policy at Transparency International UK also told the Treasury Committee in July 2021 that their ‘research has identified about £5 billion worth of suspicious wealth that is stashed away in UK real estate. There are currently more than 95,000 properties in England and Wales owned by overseas companies. Of those, 85,000 are owned by companies registered in countries where the names of company owners are not published.’
Since 2016 the Government has maintained its intention to establish a register of overseas entities, including drafting a bill in 2018, but had stopped short of introducing the proposed legislation to parliament. The new bill will require the ultimate owners of non UK registered entities which have purchased property in England and Wales in the last 20 years and since December 2014 in Scotland to identify themselves or face restrictions on the onward sale of the property or even criminal sanction.
With sufficient resourcing, this register will assist law enforcement agencies to better identify and trace the proceeds of crime which are hidden behind property in the UK. The reach of these agencies will also be strengthened by the other proposed powers in the new bill which deal with Unexplained Wealth Orders (UWOs). UWOs are an investigatory tool which may be used by law enforcement agencies and which require an individual to prove that a particular asset was obtained through legitimate means or else face civil recovery or even criminal proceedings. To date they have been sparsely used and with mixed success and the Government will hope the new bill can bolster their use by clarifying who falls within its scope, allowing the agencies further time to consider an individual’s response to a UWO and by capping the cost of unsuccessful applications to the High Court.
The announcement of the introduction of the new bill is accompanied by the publication of a White Paper detailing plans to reform Companies House and these plans will form part of a further Economic Crime Bill in the coming months.
Gemma joined the Kingsley Napley Criminal Litigation team in 2020 from Corker Binning where she had been a partner and consultant. She has extensive experience in advising clients in criminal and regulatory matters.
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