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  • Writer's pictureThe Legal Opinions

Beneficial Ownership in the UK and the Economic Crime Act 2022 – How Will it Affect You?

Overseas Entities that acquired property in England and Wales after 1 January 1999 or that will acquire property must apply for registration on the Register of Overseas Entities (there are corresponding provisions in Scotland and Northern Ireland). There will be a 6-month transition period from the commencement of the Act to allow time to apply for registration. The information provided must then be reconfirmed with Companies House every 12 months to maintain a valid Overseas Entity ID. The Overseas Entity will need to provide basic details about itself (e.g. name, country of incorporation, governing law, etc).


Furthermore, Overseas Entities must declare whether or not they have made any relevant disposals of land since 28 February 2022 and if such disposals were made the Entity must provide information about the beneficial ownership immediately before the disposal.


Exceptions to the Economic Crime Act


  • If the Overseas Entities have provided beneficial ownership information to registers in their own jurisdiction and the government considers those registers to be equivalent to the Register of Overseas Entities, it may make regulations to exempt these Entities.


  • Considered on a case by case basis, an Entity may be exempt from registering if necessary due to reasons pertaining to national security or for the purpose of preventing or detecting a serious crime.


  • The share ownership condition of 25% of the Overseas Entity’s shares means that where there are multiple owners with less than 25% of the shares, there will be no beneficial owner who must be recorded on the register.


Failure to comply with the Act may be regarded as a criminal offence not just for the Entity but also every responsible officer of it.


Consequences for Failure to Comply With the Act


  • Fines of £2,500.00 a day to unlimited fines (for instance for making a false statement) and a prison sentence up to 5 years.


  • The overseas entity will face financial penalties as well as restrictions. Without a current Overseas Entity ID, the entity will not be able to make certain dispositions of their UK property (including sales, mortgages, leases of more than 7 years) or be registered as the legal owner of the property at HM Land Registry.


  • Managing Officers of the entity can face criminal sanctions (£500.00 fines per day / prison sentence up to 5 years).


  • The Office of Financial Sanctions Implementation (OFSI) has the power to impose penalties of one million pounds or 50% of the value of the breach, whichever is higher, and also publicly name and shame those it believes, on balance of probabilities, have breached a financial sanction prohibition or failed to comply.

 

For advice and assistance with matters relating to this information in this article, please contact our team of professionals.

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