Beneficial Owners of Overseas Entities

Paul Scully Excerpts

Tuesday 21st July 2020 Written Statements

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

My right hon. friend the Under-Secretary of State, Minister for Climate Change and Corporate Responsibility (Lord Duncan), has today made the following statement:

The United Kingdom has a reputation as a good place to do business. Our high corporate standards and market transparency give people trust and confidence in our markets. We recognise that knowing whom you are really doing business with improves confidence in commerce and investment and we continue to work on improvements to the strong systems that we already have in place.

However, the same factors that make the UK an attractive location to set up and operate a business also make it attractive to exploitation. One such area of exploitation is the UK’s property market, which continues to be an attractive vehicle for criminal investment, in particular for high-end money laundering. The risks relating to the laundering of dirty money through property are most acute where property is owned anonymously through corporate structures or trusts. The Government are therefore working to crack down on this illicit activity by creating a register of the beneficial owners of overseas entities which own or buy property in the UK.

The Government committed in primary legislation, through section 50 of the Sanctions and Anti-Money Laundering Act 2018, to report to Parliament annually on the progress that has been made towards putting in place such a register. The register is included as one of the key measures of the UK’s “Economic Crime Plan 2019-22”¹, and the December 2019 Queen’s Speech included a commitment to progress the required legislation.

The draft Registration of Overseas Entities Bill underwent pre-legislative scrutiny by a Joint Committee in spring 2019. The Government’s response to the Committee’s report was published on 18 July 2019². In this response, the Government accepted many of the Committee’s recommendations, such as ensuring Companies House is given adequate resources to deal with additional filings under this register; introducing a reporting facility for inaccurate information on the register; and continuing to advance work on reforming the powers of Companies House to verify information. For example, overseas entities seeking to register with Companies House will be required to have their details verified, thereby ensuring that the new register will be sufficiently robust. The Government have been exploring how best to implement these recommendations and others proposed in the Committee’s report, such as civil sanctions, and what options are available.

This register will be novel, and careful consideration is needed before any measures are adopted, as it is imperative that the register is as robust as it reasonably can be, with reliable data and sufficient deterrent effects to make it clear that the UK property market is not a safe haven for dirty money. Engagement with members of civil society, business and the property market throughout all nations of the United Kingdom has been ongoing to ensure the proposed measures work equitably across the country.

The UK continues to lead the global fight against illicit finance and this register will strengthen our already impressive controls. The Financial Action Task Force completed a landmark review of the UK’s regime for tackling money laundering in December 2018, concluding that we have some of the strongest controls in the world.

¹ https://www.gov.uk/government/publications/economic-crime- plan-2019-to-2022

² https://www.gov.uk/government/publications/draft- registration-of-overseas-entities-billgovernment-response-to-joint-committee-report

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