The Register of Overseas Entities: Questions & Answers

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The Register of Overseas Entities: Questions & Answers

April 1st, 2022, Legal Updates, News
Why is the Register of Overseas Entities being introduced?

The UK government is introducing a ‘Register of Overseas Entities’ to achieve transparency of property ownership where any UK property is held by an overseas entity. The government is looking to disincentivise foreign criminals from using UK property to launder money while continuing to provide legitimate businesses with an opportunity to invest in the United Kingdom.

The deadline for registration will be 6 months from the commencement of this new law.

Who will the measures apply to?

 The measures will apply to the following foreign owners of UK property:

  • any companies or legal entities governed by the law of a country or territory outside the United Kingdom
  • individuals who have significant influence or control over the entity.
 What property will the measures apply to?

 The measures will apply to property bought since January 1999 in England and Wales and since December 2014 in Scotland.

 What will the Register do?

The ‘Register of Overseas Entities’ will:

  • provide more information for law enforcement to assist with identifying criminals who use UK property to launder money
  • require anonymous foreign owners of UK property to reveal their identity
  • bring the regulations in line with those for UK companies owning property in the United Kingdom who are already obliged to disclose their beneficial owners to Companies House
  • impose sanctions for non-compliance.
What will foreign property owners have to do?

 This regime is modelled on the “People with Significant Control” (PSC) regime which is already in place for UK Companies. Foreign entities will now have to register their beneficial owners at Companies House.

Beneficial owners include those individuals who own more than 25% of the shares or have significant influence or control over the foreign entity.

 What will the sanctions for noncompliance be?

 There will be civil sanctions in the form of financial penalties of up to £500 per day, restrictions on dealing with property as well as criminal sanctions for both owners and managing officers.

 Review

 Currently there are approximately 90,000 properties in the UK that are owned by offshore companies and this new legislation has been sitting on the shelve for 4 years. However, it has taken the crisis in Ukraine to put this now on the top of the political agenda.

It is doubtful how this new legislation will succeed in dealing with those criminals or individuals on the Sanction list who use UK property to launder their funds. The flaws of the new legislation is the same as those being faced by the current PSC regime for UK Companies. The main disadvantages being that it is still possible to create structures so that the real individual is hidden from the register and that there is no mechanism to check that the information that is provided is true.

If you have any questions, please do not hesitate to contact James Cohen directly on jcohen@gscsolicitors.com or 0207 822 2257.

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