March 15, 2022 – New transparency rules that will uncover the owners of offshore companies holding British real estate are a step forward in the fight against corruption - but extra vigilance is needed in the period before they kick in as dirty money looks to make a quick exit, Transparency International UK said today.

Changes made by the Economic Crime (Transparency and Enforcement) Act, which passed into law today, will require offshore companies holding property here to disclose who controls them, as is currently the case for UK companies. Failure to comply would be a criminal offence and can result in daily fines of up to £2,500.

Transparency International’s research has found companies registered in secretive jurisdictions, like the British Virgin Islands, have been repeatedly used to launder corrupt money into the UK property market.

Duncan Hames, Director of Policy at Transparency International UK, said:

“After a long campaign, we’re delighted to see these much-needed reforms make it onto the statute book. We are grateful to MPs in all parties who have championed the call for transparency in the property sector, and to the government officials who have diligently prepared legislation which was ready to be tabled when Ministers called for it. In particular, we wish to acknowledge Nick Skates of the Business Frameworks team at BEIS, who sadly didn’t live to see his efforts come to fruition this year.

“For too long, oligarchs and kleptocrats have used UK property as a bolthole for their ill-gotten gains, yet these reforms should now mean they have nowhere to hide. In the coming months, there will inevitably be a rush for the door, so businesses need to be extra vigilant against those seeking to evade sanctions or move their loot to other shores. These new rules allow companies to disclose their owners as soon as they can, so we strongly encourage this to happen rather than firms waiting to be pushed into action.

“It is now well known how the secrecy afforded by Britain’s offshore financial centres, like the British Virgin Islands, has hidden corrupt wealth and obscured foreign influence operations. While these jurisdictions have promised to open their corporate registries by the end of next year, this will be far too late, in the current context. To help prevent sanctions evasion, ministers should work with the Overseas Territories and Crown Dependencies to rapidly increase the pace of their own transparency reforms.

“This law will however only be as good as its enforcement. If the property register remains an honesty box with few checks on what’s actually submitted, this potentially groundbreaking tool will only look good on paper. Giving Companies House and law enforcement the resources needed to make these rules stick will be crucial to delivering on ministers’ strong statements.”

Notes to editors:

Reforms to increase transparency over the UK property market were first promised by the government at the 2016 anti-corruption summit in London. After years of delay, they were fast-tracked by emergency legislation in response to the war in Ukraine. 

Transparency International UK has been collating information on questionable funds from around the world being invested in UK property since 2016. This figure now stands at £6.7 billion.

Of this total, £1.5 billion worth of property was bought by Russians accused of corruption or links to the Kremlin.