25 Jul 2018
Frontmen who fail to declare the beneficial owners of foreign-owned UK properties face up to five years in jail under the British government’s draft laws aimed at tackling money laundering and corporate secrecy in the property sector.
The planned legislation also includes unlimited fines and makes it easier for law enforcement agencies to seize criminal funds.
According to recent research by Transparency International, over £4.2 billion worth of London properties are bought with suspicious wealth.
The UK hopes the new public register will expose the ultimate owners of overseas shell companies, giving authorities the information they need to come down on criminals who launder dirty money through the UK’s property market.
Under the draft rules, foreign companies owning UK properties will also be required to reveal their ultimate owners in what the government said is the world’s first public register of overseas entities’ beneficial ownership.
Firms will also be required to provide annual updates to Companies House to ensure the information on the register is up-to-date.
“The penalties include a ban on any foreign entity selling or leasing property without first publicly declaring its beneficial owner; an individual found to have committed this offence could face up to 5 years in jail and an unlimited fine,” said the Department for Business, Energy and Industrial Strategy.
“Individuals who fail to register overseas entities when instructed face up two years in jail and an unlimited fine; individuals who knowingly try and deceive the register by providing false information face up 2 years in jail and an unlimited fine.”
The new register, which is set to go live by 2021, follows the government’s roll-out its ‘people with significant control’ or beneficial ownership register of UK firms, which is publicly accessible.
“The requirements for frontmen in complying with the overseas entities register are similar to those under the People with Significant Control regime, as set out in the draft legislation,” the Department of Business explained.
The new overseas property register also follows the introduction of the Criminal Finances Act 2017, part of the government’s Anti-Corruption Strategy, which provides new powers such as unexplained wealth orders to law enforcement agencies to help them seize the proceeds of crime.
More than £2 billion of criminal assets have been recovered under the Proceeds of Crime Act, while the government has recovered more than £3 billion extra since 2010 through recovery under additional powers, the Department of Business said.
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