The UK government introduced the Economic Crime (Transparency and Enforcement) Act 2022 on 15th March 2022, which includes several new measures to help prevent money laundering in the UK. The Act enables the government to move faster in imposing sanctions against corrupt individuals, with the Act coming into force following Russia’s invasion of the Ukraine.
The new measures of the Act include:
This register was launched on 1st August 2022 and requires the individuals behind foreign companies that own property or land in the UK to reveal their identities. Any entity that does not provide relevant information regarding its beneficial owners faces a fine of up to £2,500 per day and its officers face imprisonment for up to five years.
The ROE is operated by Companies House and applies to all property purchased from 1st January 1999 in England and Wales and from 8th December 2014 in Scotland.
The Act also includes several reforms to the existing Unexplained Wealth Orders, which have been introduced to make it easier for the government to pursue corrupt individuals laundering money in the UK, including extending the time period for reviewing material.
One of the key amendments to the existing UK sanctions is the introduction of a ‘strict liability test’ for imposing monetary penalties on any entity that breaches those sanctions. The changes mean that businesses can face liability even in circumstances where they were not aware that they have breached the law. The OFSI can impose a penalty of up to £1m or 50% of the value of transferred property in breach of any sanctions.
While the UK government has introduced the Act to prevent illegal activities such as money laundering through transactions in the UK property market, the changes also require actions for legitimate foreign entities that have not previously disclosed the identities of beneficial owners.
It is important that foreign companies who own UK properties understand their legal responsibilities following the Act coming into force. Non-compliance could result in significant fines, possible imprisonment and will prevent the underlying property from being sold or otherwise dealt with.
Registrations must be verified by an authorised agent such as ProSec, who has been approved by Companies House to act as an authorised agent.
ProSec provides expert services and advice for regulatory compliance, and we are able to support overseas entities in fulfilling their legal requirements under the new Economic Crime (Transparency and Enforcement) Act 2022. Please contact us if you would like to find out more about how we can help you.