Series
Blogs
Series
Blogs
Some years after it was first proposed, draft legislation aimed specifically at tackling deficiencies in the UK’s financial system that can be exploited by overseas money launderers and other criminals, has been published.
The Economic Crime (Transparency and Enforcement) Bill (the Bill) is intended to address the use of the ownership or control of UK property and land by overseas companies as a means to launder or conceal illegally obtained funds, by introducing a requirement for them to disclose, on a register to be maintained by the Registrar of Companies, the ultimate beneficial owners of those companies. Failure to do so could result in restrictions being placed on the ability to sell the property and sanctions, such as fines or even imprisonment, for company officers. The requirement to register would apply retrospectively to property in England and Wales bought by overseas owners since 1 January 1999, and since 8 December 2014 in Scotland.
The Bill also contains provisions to beef up the system of unexplained wealth orders (“UWOs”). These orders enable enforcement authorities such as the NCA, HMRC and the Serious Fraud Office ultimately to seize funds and assets held by people who cannot prove they obtained that wealth legitimately. The Bill would extend the use of UWOs to obtaining information about the source of wealth held in the UK through a trust and also extend the period for which such orders may be obtained. To assist and encourage authorities further in their use of UWOs, the Bill would place a cap on the amount of costs an authority may have to pay in respect of unsuccessful proceedings to obtain such an order, unless the application was made unreasonably, dishonestly or improperly. It has been suggested that the fear of incurring substantial costs while seeking an UWO has contributed to the apparent lack of use of UWOs by UK prosecutors.
Lastly, the Bill proposes amendments to the power to impose monetary penalties for breaching financial sanctions, by removing the obligation for a person to have known, suspected or believed any matter when determining whether they have breached financial sanctions legislation. Under current rules, companies are only liable if they have knowledge or a “reasonable cause to suspect” that sanctions are being breached. This proposal is intended to make it easier for the Office for Financial Sanctions Implementation (OFSI) to impose significant fines for sanctions breaches; OFSI has been criticised for a lack of such enforcement action since it was set up in 2016.
At the same time, the government published a white paper on corporate transparency and register reform, which sets out proposals for the reform of Companies House and the role of the Registrar of Companies. The proposed reforms are aimed at tackling the misuse of UK companies for financial crime purposes and protecting personal information included on the register. The paper notes that the government is intending to introduce legislation on these aspects at a later date.
2 March 2022
Up next