March 17, 2022 The Economic Crime (Transparency and Enforcement) Act
Parliament has sometimes been accused of moving with glacial slowness as bills wind their way through various committees and amendments. But there are times when a measure is of such national or global importance that the speed at which due process is followed is almost breathtaking.
That certainly applied to the Economic Crime (Transparency and Enforcement) Act. Introduced on 1st March 2022, the Act received Royal Assent and passed into law in the early hours of 15th March. Brought into being by the invasion of Ukraine the Act will, in the Government’s words “help the National Crime Agency prevent foreign owners from laundering their money in UK property and ensure more corrupt oligarchs can be handed an Unexplained Wealth Order (UWO).”
Key to the new measure is the setting up of a register of property ownership. This is designed to prevent individuals who own property in the UK from hiding behind a web of shell companies or trusts. Failure to disclose the ‘beneficial owner’ could lead to a spell of up to five years in prison as well as a restriction on selling property. Moreover the register will apply retrospectively to property bought up to twenty years ago in England and Wales and since December2014 in Scotland. Initially the register will be compiled by reference to the UK’s Land Registries. This may take some time so in the meantime any foreign companies which sell property between the 28 February and the full implementation of the register will also be required to submit an ownership details return.
In addition to the above, Companies House has announced that it is working on further measures to strengthen corporate transparency. These include a requirement for those setting up, running, owning or controlling a company to verify their identity with Companies House and an improvement in the quality of information required to be provided to Companies House.
As part of this reform, filing processes for small businesses are to be streamlined. Under the terms of the ‘Corporate Transparency and Register Reform’ policy paper presented to Parliament at the end of February 2022 this streamlining would include the removal of abridged and filleted reporting options with all small companies being required to file profit and loss accounts. They may also have to file a director’s report, unless they sit under the micro-entity threshold. It is expected that these further measures may be put before Parliament in the coming months.
How Elemental can help
On 1 August 2022, on the day the new rules went live, Elemental was one of the first providers to launch a fully managed Register of Overseas Entities Service for law firms, professional advisors, and clients looking for help with registration and verification.
