The government has now released its response to the draft legislation issued in 2018 for the creation, to take effect from 2021, of a register of beneficial owners of overseas entities owning UK property.
The draft bill was first scrutinised by a joint committee of MPs and Lords who made recommendations which the government via the BEIS have commented upon in the published response.
Several of the recommendations have been deemed unnecessary by the government including:
- a pre-clearance mechanism to confirm in advance of transactions whether legal entities are registrable.
- Lowering the 25 per cent ownership and voting rights thresholds in respect of the beneficial ownership definition (in respect of the requirement to register).
- Retrospective registration by overseas entities who acquired UK land and property before they were required to identify themselves as overseas entities by the land registries (1999 for England and Wales and 2014 for Scotland).
- Expressly including trusts on the register.
The government has however agreed to consider many of the joint committee recommendations, the key of which are:
- A requirement to update the register before a transaction takes place to capture information at the point where any potential money laundering might occur.
- Asking money laundering regulated professionals to verify beneficial ownership information submitted to the Register.
- Civil penalties alongside the criminal sanctions already proposed.
The committee had serious concerns over the use of offshore trusts and the government has confirmed:
- trusts will not need to register twice, if they are on the trusts register (TRS) this will be sufficient.
- the draft bill captures circumstances in which an overseas entity is being used by a trust to hold land in the UK.
- the existing TRS will be expanded to include non-EEA trusts (including discretionary trusts) acquiring property in the EU as part of the Fifth Anti-Money Laundering Directive (5AMLD) which takes effect from April 2020.
- They are considering introducing a requirement for overseas entities registering with Companies House to declare if they are representing a trust
One interesting point made in the report is that in 2018 the Financial Action Task Force (FATF) found that the UK has the strongest Anti Money Laundering regime of over 60 countries assessed to date, and said that the UK “is a global leader in promoting corporate transparency”.
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