Government introduces dirty money legislation

It will help the National Crime Agency prevent foreign owners from laundering their money in UK property, ensuring more corrupt oligarchs can be handed an Unexplained Wealth Order (UWO).

The legislation will see the development of a new register that will require anonymous foreign owners of UK property to reveal their real identities, ensuring criminals can’t hide behind secretive chains of shell companies. 

Entities who don’t declare their “beneficial owner” will face restrictions over selling their property, with those breaking the rules could face up to five years in prison.

Under the reforms being brought in on UWOs, those who hold property in the UK in a trust will be brought within its scope. The definition of an asset’s “holder” will also be expanded to ensure individuals can’t hide behind opaque shell companies and foundations.

Commenting on the news, Prime Minister Boris Johnson said: “There is no place for dirty money in the UK. 

“We are going faster and harder to tear back the façade that those supporting Putin’s campaign of destruction have been hiding behind for so long.Those backing Putin have been put on notice: there will be nowhere to hide your ill-gotten gains.”

Business secretary Kwasi Kwarteng added: “The new register will shine a light on who owns what in the UK so we can flush out the oligarchs, criminals and kleptocrats who think they can use UK property to hide their illicitly obtained wealth.” 

The treasury is also set to intensify sanctions enforcement by introducing a more wide-ranging “strict civil liability test” for monetary penalties. This is instead of the current rules which require firms to have knowledge or a “reasonable cause to suspect” sanctions are being breached.

This will make it easier for the Office for Financial Sanctions Implementation (OFSI) to impose significant fines. A further change will mean OFSI will be able to publicly name organisations that have breached financial sanctions, but have not received a fine.

Additionally, a new Register of Overseas Entities was introduced to parliament earlier this week. These rules will apply retrospectively to property bought by overseas owners up to 20 years ago in England and Wales and since December 2014 in Scotland.

This week, the government has also published a detailed white paper setting out its plans to upgrade Companies House. This will mean anyone setting up, running, owning or controlling a company in the UK will need to verify their identity with Companies House.

Alongside this, the government agency will be given the power to challenge the information that appears dubious - a move which is designed to empower and inform security agencies of potential wrongdoing. The quality of the information provided by companies to Companies House will also be improved.

Reform of Companies House will form part of further legislation which will be introduced in the coming months via a further Economic Crime Bill to clamp down on illicit finance and improve corporate transparency.