Alex Morales
Sun., February 27, 2022
(Bloomberg) -- The U.K. accelerated plans to crack down on money laundering with sweeping new laws to register foreign owners of British property and expand government powers to investigate the source of their wealth.
Ministers on Tuesday will publish the new legislation, the Economic Crime (Transparency and Enforcement) Bill, in response to Russia’s invasion of Ukraine, the Home Office said on Monday in an emailed statement. It also announced plans for a “fundamental reform” of Companies House, the government agency which registers corporate information and makes it publicly available.
Foot-dragging by successive Tory governments over the measures -- including a register of foreign owners of British property -- sparked concerns by opposition parties and rank-and-file Conservatives alike about the persistence of a London “laundromat” used to clean up illicit wealth. The U.K.’s National Crime Agency estimates money laundering costs the U.K. 100 billion pounds ($134 billion) a year.
The move makes good on a promise made last week by Prime Minister Boris Johnson as he unveiled the U.K.’s biggest ever package of sanctions and other measures to punish Russian President Vladimir Putin’s administration.
“There is no place for dirty money in the U.K.,” Johnson said in the statement.
The new legislation is designed to help the National Crime Agency (NCA) prevent foreigners from laundering money through purchases of U.K. property, according to the Home Office.
The plans include:
Introduction of a “Register of Overseas Entities” that own U.K. property, requiring anonymous owners to disclose their identity to ensure they can’t hide behind “secretive chains of shell companies”
Powers for the Office for Financial Sanctions Implementation to more easily impose “significant” fines, and disclose the names of organizations that have breached sanctions, but not been fined
Reforms of Companies House to improve the quality of its information and allow it to verify the identity of company owners
Changes to Unexplained Wealth Orders, which were introduced in 2017 to compel respondents to reveal the source of their money
An NCA ‘Kleptocracy’ cell will be able to immediately investigate and punish those bypassing sanctions on Russia announced last week
Legislation for the new registry has been in the works for years, and wasn’t planned until after this year’s Queen’s Speech, usually held in May. Former Prime Minister David Cameron advanced the plans in 2016, and draft legislation was published two years later -- but has since languished.
The new registry will apply retrospectively to property bought by overseas owners as long as 20 years ago in England and Wales and since December 2014 in Scotland. Entities that don’t declare their owner face restrictions on selling the property, and rule-breakers could face five years in prison.
‘Dubious’ Information
Unexplained Wealth Orders will include an expanded definition of an asset’s “holder” to ensure they can’t hide behind shell companies and foundations, the Home Office said. The reforms will also lengthen the time available to law enforcement to review responses to a wealth order, and protect authorities from incurring substantial legal costs for bringing unsuccessful cases.
Separately, the government said it will publish proposals Monday to reform Companies House, which will be enshrined in separate legislation “in coming months.”
It plans to introduce a requirement for anyone setting up, running, owning or controlling a company in the U.K. to verify their identity with the agency, which will be empowered to challenge “dubious” information and inform security agencies of potential wrongdoing.
That legislation aims also to give the government new powers to seize crypto assets, and further strengthen anti-money laundering powers. It will also include reforms to crack down on the use of limited partnerships as vehicles for international money laundering and illegal arms movements.
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