The UK government has this week introduced the Economic Crime (Transparency and Enforcement) Bill

Peter Collins and Sophie Pilcher discuss the Economic Crime (Transparency and Enforcement) Bill introduced by the UK Government this week.

The Bill contains a number of measures designed to tackle ‘dirty money’ in the UK property market, such as the strengthening of powers around Unexplained Wealth Orders (UWOs). UWOs are an investigatory tool which may be used by law enforcement agencies requiring 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 hope is the 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.

It is, however, the proposals for a public register of the beneficial owners of overseas entities that own land in the UK which will be of significance to all legitimate overseas investors. It is estimated that approximately £170 billion of UK property is held overseas, meaning the Bill will impact a vast number of investors.

It will create a publicly 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 Bill aims to remedy this inequality. The proposed register would not just apply to future acquisitions of interests in UK land, but also to any overseas owner that owns land (a) in England and Wales which was acquired since 1 January 1999 and (b) in Scotland which was acquired since 2014. Failure to comply would result in restrictions on the ability to dispose of the relevant property and a breach of the rules could amount to a criminal offence, punishable by a stint in prison. The offence will be committed by every officer of the entity in default. The register will be held by Companies House, in respect of which a White Paper published on 28 February 2022 set out plans to upgrade, including enhanced checks on identification of those involved in setting up, running, owning or controlling a company in the UK.

It remains to be seen when the proposed UK register will come into force.  However, the Bill represents a significant step forward in the UK government’s plans to increase transparency around the ownership of UK property.

Peter Collins is a Partner and Sophie Pilcher is a Solicitor at Sharpe Pritchard LLP.

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