In light of Russia’s invasion of Ukraine, on the 1st March 2022, the United Kingdom (UK) government has introduced new legislation. Through this new legislation, the UK National Crime Agency will now be able to prevent foreign owners from laundering their money in UK property in the hopes of preventing corrupt oligarchs from hiding behind the façade of property ownership. Anyone who is expected to be laundering money through property could now be liable to receiving an Unexplained Wealth Order (UWO).
The new bill intends to remove key barriers to the use of UWOs, by increasing the time available to law enforcement to review any material provided and by reducing any substantial legal costs incurred by law enforcement agencies that bring a reasonable case that is ultimately unsuccessful.
The drafted Economic Crime (Transparency and Enforcement) Bill intends to establish a register of overseas entities and their beneficial owners. The new reforms mean that further conditions will be set on overseas entities that own land requiring them to provide more detailed registration under certain circumstances. The new register will consist of a list of:
- Currently registered overseas entities
- Documents delivered to the registrar under the Bill
- Any other regulations made under it or, otherwise, in connection with the register
- As well as any other information required to be included in the register
Ensuring that all property owned in the UK is through reliable means.
Furthermore, under the proposed legislation, any individuals who hold UK property in a trust will be brought within the scope of the new obligations and the definition of an asset “holder”. This new proposed legislation essentially expands to ensure that any and all individuals who own property within the UK will not be able to hide behind opaque shell companies and foundations.
The new register will apply to any property bought by overseas owners from up to 20 years ago in England and Wales and from December 2014 for property in Scotland. Ultimately the new envisaged register will require anonymous foreign owners of UK property to reveal their real identities, for the purpose of ensuring that criminals cannot hide behind secretive chains of shell companies. The legislation is seen as setting a new global standard for transparency, highlighting the previous complications that came with anonymous ownership. Any Global Entities that do not declare their beneficial owners will now face restrictions which can include the selling of their property, and furthermore, those who are seen to be breaking or disregarding the new rules may face up to 5 years in prison.
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