The Register of Overseas Entities entered into force on August 1, 2022, in the United Kingdom (U.K.), requiring “overseas entities that own land or property in the UK to declare their beneficial owners and/or managing officers.” Without such registration, which is kept on a publicly available register held by the Companies House, an overseas entity will no longer be able to buy, sell, lease, or create a charge against land in the U.K.
The register was introduced amid concerns that criminals were using overseas entities to conceal their identity and were hiding illicit funds, or laundering money, by investing in properties and land in the U.K. The register was provided for by the Economic Crime (Transparency and Enforcement) Act 2022, which was fast-tracked through Parliament “following concern about illicit money in the UK originating from Russia, in response to the invasion of Ukraine.” The register brings the regime for beneficial owners of overseas entities into line with the regime for U.K. entities, which has a register for the beneficial owners of entities known as the “people with significant control” register.
The Register of Overseas Entities is “part of the government’s strategy to combat economic crime, while ensuring legitimate businesses continue to see the UK as a great place to invest.” It aims to provide transparency for property purchases that will provide law enforcement with the ability to “investigate suspicious wealth more effectively.” The government intends that the Register of Overseas Entities and other provisions of the Economic Crime (Transparency and Enforcement) Act 2022 will:
- Deter and disrupt crime, by making it more difficult to use corporate vehicles in the pursuit of crime.
- Deter criminals from money laundering in the U.K.
- Preserve the integrity of the financial system.
- Increase the efficiency of law enforcement investigations, particularly in relation to identifying and tracing the proceeds of crime.
- Require the same transparency of the relevant overseas entities as of UK companies.
Section 1 of the Economic Crime (Transparency and Enforcement) Act 2022 defines an overseas entity as a legal entity, such as a partnership, body corporate, or other entity that is a legal person under the law of the country or territory where it is governed, which must be outside the U.K. A beneficial owner is a person or entity that has significant influence or control over the overseas entity. The beneficial owner can be an individual person; a legal entity; a government or other public authority; a trustee; or a member of a firm that holds, either directly or indirectly, 25% or more of the shares or voting rights in the entity, or holds the direct or indirect right to appoint or remove the majority of the board of directors of the entity, or has the right to, or actual exercise of, significant influence or control over the entity.
Overseas entities must register with the Register of Overseas Entities at the Companies House and state who the beneficial owners or managing officers are. The overseas entity must include one of the following statements:
- that the overseas entity has identified one or more registrable beneficial owners and has no reasonable cause to believe there are any others and is able to provide the information about each beneficial owner it has identified;
- that it has no reasonable cause to believe it has any registrable beneficial owners; or
- that it has reasonable cause to believe there is at least one beneficial owner that it has not identified and/or that the entity is unable to provide this information about one or more registerable beneficial owners that it has identified.
Schedule 1, part 2, of the Economic Crime (Transparency and Enforcement) Act 2022 stipulates that the information that must be provided to the Companies House includes the overseas entity’s name; country of formation; registered office address and any address correspondence should be sent to; email address; the legal form of the entity and the law by which it is governed; and any public register in which the entity is registered and relevant registration number. Information about the beneficial owner that must be provided includes the full name, date of birth, nationality, home and correspondence address, the date the person became the beneficial owner, and the nature of control the beneficial owner has over the company.
The Companies House must also be informed whether the individual is on the sanctions list, made under the Sanctions and Anti-Money Laundering Act 2018, or if their personal information must be protected at the Companies House. Personal information may be protected if the individual faces a serious risk of violence or intimidation as a result of the company’s activities. In cases where no beneficial owner can be identified, the managing officer’s information must be provided.
An agent that is both based and regulated in the U.K. under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 must conduct verification checks on all beneficial owners and managing officers before registration. The agent must provide to the Companies House a statement that checks have been conducted and that the findings comply with the law. In return, the agent will receive an assurance code, which is required to register the overseas entity. Upon registration, overseas entities are provided with a unique overseas entity ID that must be given to the land registry when the overseas entity purchases, sells, transfers, leases, or charges property or land in the U.K.
According to section 9(10) of the Economic Crime (Transparency and Enforcement) Act 2022, the act applies retroactively, requiring overseas entities that purchased property or land on or after January 1, 1999, in England and Wales; December 8, 2014, in Scotland; and September 5, 2022, in Northern Ireland to register with the Companies House by January 31, 2023. The act also applies to overseas entities that disposed of property or land after February 28, 2022. Section 6 of the act provides that, upon conviction, violations of the law can result in fines of up to £2,500 (approximately US$3,000) per day, or a prison sentence of up to five years. Additional sanctions may be imposed, which include “restrictions on buying, selling, transferring, leasing or charging their land or property in the UK.”
Clare Feikert-Ahalt, Law Library of Congress
November 30, 2022
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