March 9, 2022 – Securing access for law enforcement to company data in Britain’s offshore financial centres is crucial to prevent the sale of assets bought with dirty money from Russia and elsewhere before new economic crime legislation comes into force, Transparency International UK warned today.

MPs on Monday considered the Economic Crime Bill and several welcome amendments that would strengthen the legislation. A proposed 18-month implementation period was shortened to six months and fines for non-compliance were increased from £500 per day to £2,500.

The Bill will provide transparency over who really owns property here by requiring more than 90,000 overseas companies that hold UK real estate to reveal the names of their owners.

But the effectiveness of the UK’s sanctions and its defences against dirty money are at risk if additional measures aren’t taken.

Rachel Davies, Head of Advocacy at Transparency International UK, said:

“We welcome amendments from MPs that will help strengthen this landmark legislation and provide a major boost to Britain’s defences against dirty money. Whilst we recognise these new rules cannot be brought in overnight, measures to bridge the gap and prevent assets bought with illicit wealth from Russia and elsewhere from being sold before new laws come into force are essential. Authorities in the UK can only go after assets if they know where they are, which is why open access to company data in Britain’s offshore financial centres would be a gamechanger.”

Working with the Crown Dependencies and Overseas Territories to prevent asset flight

Nearly 95,000 properties in England and Wales are owned by overseas companies. Three-quarters of this total is held by companies in Britain’s Overseas Territories and Crown Dependencies.

These jurisdictions have no public company registers making it difficult to understand who really owns firms there, and therefore the UK real estate they hold.

Alongside the Economic Crime (Transparency and Enforcement) Bill, we are urging the government to negotiate full access for UK authorities to the company registers in Britain’s Crown Dependencies and Overseas Territories. British authorities could then search for companies owned by those targeted by sanctions and prevent them from selling any UK assets before the implementation period ends. Full access to these registers for UK authorities - rather than access to individual company registration information by request - should be sought until these jurisdictions make their company registers public.

Closing the ‘no beneficial owner’ loophole

The current draft provides a way for companies that hold UK property to avoid declaring any names on the property register by claiming they have no beneficial owner. This is already a common problem with the UK’s company register.

Requiring companies that claim they do not know who their beneficial owner is, or do not believe they have one, to outline how that company is controlled would make it harder for those trying to skirt the rules.  

Increasing the frequency of ‘trigger events’

The current wording of the Bill requires overseas companies to report all changes to their beneficial owners within 14 days after the end of the ‘update period’, which is usually 12 months.

This is far less frequent than is the case for UK companies, who must report to Companies House any changes to their beneficial owners within a specified period of time after a ‘trigger event’ rather than after a year-long update period. 

In instances where property changes hands via a share transfer within the overseas company, information about this event would not be available for up to a year afterwards.

Requiring overseas companies to report changes to their beneficial owners within 14 days of it occurring would provide a major boost to identifying and pursuing potential money laundering.

Notes to editors:

Transparency International UK has found over £6.7 billion worth of UK property bought with suspect wealth in recent decades. Of this, £1.5 billion was acquired by Russians accused of corruption or links to the Kremlin - £830million (55%) of which is held by secretive companies in Britain’s Overseas Territories and Crown Dependencies.