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The Register of Overseas Entities
- AuthorDenise Serifoglu
Section 3 of the Economic Crime (Transparency and Enforcement) Act 2022, which requires the Registrar of Companies to keep a register of Overseas Entities in accordance with the provisions of the Act, came into force on the 1 August 2022.
Linked to the commencement of the Register of Overseas Entities are changes to the Land Registration Act 2022 and the Land Registry procedures. These provisions came into force on the 5 September 2022. This requires Overseas Entities that own or will own land in the UK to register with Companies House (unless they are exempt from doing so), to provide information about their beneficial owners or managing officers and to update the required information annually. The registration process results in the entity acquiring an Overseas Entity ID.
The main impact on real estate ownership and transactions is that as from 5 September 2022, Overseas Entities are not permitted to become registered as proprietors of qualifying estates and from making certain types of disposals of registered titles without an Overseas Entity ID (or proof of exemption).
This new legislation was a move from the UK Government to crack down on “corrupt elites” from Overseas using UK property to launder illegal wealth. However, since the passing of the deadline, it would seem that the legislation is not quite “fit for purpose”. Companies owned through trusts as opposed to other set ups are exempt from having their beneficial owner information made public on the register, therefore, the identity of those who control the companies remains unclear.
The BBC and Transparency International have matched thousands of filings from the new register with Land Registry records and this analysis suggested that some 18,000 offshore companies which between them hold more than 50,000 properties in England and Wales either ignored the law altogether or filed the information in such a way that it remains impossible for the public to find out who the individuals are who ultimately own and benefit from them.
Companies House is now assessing and preparing cases for enforcement action so as to pursue further legal avenues against the companies that are seemingly flouting the law. It would seem more needs to be done with this legislation to ensure that anonymous foreign companies seeking to buy UK land or property are clearly identified to stop foreign criminals from using the UK property market to launder money by hiding behind secretive chains of shell companies.
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