The Government has recently posted two further statutory instruments in relation to the implementation of changes created by the Economic Crime (Transparency and Enforcement) Act 2022.
The Act is part of a wider programme of seeking enhanced corporate transparency, including in respect of overseas entities. Proposals for a register have been on the radar for a number of years, but implementation was significantly accelerated as part of the Government’s response to the ongoing Russo-Ukrainian conflict.
It primarily aims to address concerns about the UK property market being used as a tool to launder money, to promote greater transparency and provide additional tools to combat financial and economic crimes.
Overseas Entity Registration System
The Act requires overseas entities which are the beneficial owners of land and property purchased in England and Wales to be listed on a public register. (this is similar to existing requirements to publicly list the beneficial ownership of UK companies on the Persons with Significant Control (PSC) register).
An entity is “overseas” for these purposes if it is governed by the law of a country or territory outside the UK.
The expectation is for the register to improve the transparency of the property market, and in addition to capturing new acquisitions of land it will provide a retrospective view to include land and property purchased by overseas entities since 1 January 1999 in England and Wales.
There will be a transitional period of six months from the date on which the new registration system comes into force for entities which already own land to comply with the registration requirements. The current anticipated commencement date for the relevant Regulations and the introduction of this system is 1 August 2022, which would mean any affected parties need to ensure they have carried out the required steps to register a relevant overseas entity by early next year. Overseas entities in the process of acquiring land when the Act comes into force will not be able to complete on that acquisition after 1 August 2022 unless they have registered, so they may be impacted even sooner.
Any failure to comply with registration requirements before the relevant deadline may constitute a criminal offence (with resulting penalties) and will restrict the ability of non-compliant entities to register dealings in land with HM Land Registry if they cannot provide a valid Overseas Entity ID.
The most recent statutory instrument, the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022, laid by the Government at the end of June, fleshes out how the register of overseas entities will function. There will be requirements for the information provided about an overseas entity to be verified by a specified UK body. The registration process is still being formalised and full details on how to register are not yet available.
Key points to note
- overseas entities which acquired land in England and Wales after 1 January 1999 will need to register.
- the proposed commencement date for the register of overseas entities is 1 August 2022.
- overseas entities who currently own land will need to comply with the requirement to register within six months of the commencement date (currently this looks likely to be by 1 February 2023).
For further information please contact our corporate and commercial team.