Fact sheet: The Register of Overseas Entities (web accessible)
Updated 26 October 2023
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What is the government doing and why?
The government is introducing a ‘Register of Overseas Entities’ to crack down on foreign criminals using UK property to launder money.
The new register will require anonymous foreign owners of UK property to reveal their real identities to ensure criminals cannot hide behind secretive chains of shell companies, setting a global standard for transparency.
This measure forms part of the government’s strategy to combat economic crime, while ensuring legitimate businesses continue to see the UK as a great place to invest.
How is the government going to do it?
The ‘Register of Overseas Entities’ will:
- provide more information for law enforcement to help them to track down those using UK property as a money laundering vehicle
- require anonymous foreign owners of UK property to reveal their real identity to ensure criminals can’t hide behind secretive chains of shell companies
- level the playing field with property owned by UK companies, who already need to disclose their beneficial owners to Companies House
- impose sanctions for non-compliance, including restrictions on registering or disposing the title of the land
- apply retrospectively to property bought since January 1999 in England and Wales and since December 2014 in Scotland
Who will this apply to?
The measures will apply to foreign owners of UK property. They will apply to:
- any company or similar legal entity that is governed by the law of a country or territory outside the UK (overseas entity)
- individuals who have significant influence or control over the entity, e.g. they hold 25% or more of the shares or voting rights (beneficial owners)
What will happen if they don’t comply?
If a foreign company does not comply with the new obligations, its managing officers can face criminal sanctions, including fines of up to £500 per day or a prison sentence of up to 5 years. We are also introducing civil sanctions in the form of financial penalties and an overseas entity will face restrictions when trying to sell or lease their land.
If they are already registered, they will face restrictions over dealing with their land.
We expect this to have a major dissuasive effect.
What will an overseas entity have to do who owns or wishes to own land in the UK?
An overseas entity will be required to identify its beneficial owner(s) and to register them with Companies House. Information supplied to the register will be required to be verified.
Once registered, an overseas entity ID number will be provided and the entity will be required to update its information annually, until such time as it successfully applies to be removed from the live Register of Overseas Entities.
To register title to land, an overseas entity will have to demonstrate it is registered and must comply with the duty to update information.
When will this come into effect?
Implementation will proceed at pace following Royal Assent of the Bill.
We expect the Register of Overseas Entities will have an immediate dissuasive effect on those who were intending to buy UK property with illicit funds.
Annex: Summary of changes between draft 2018 Bill and draft 2022 Bill
A draft Bill on the Register of Overseas Entities was published in July 2018 and underwent pre-legislative scrutiny in March 2019 by a Joint Ad-Hoc Committee, which concluded that “the draft legislation is timely, worthwhile, and, in large part, well drafted”.
The Committee made several well-considered recommendations, the majority of which we accepted and have incorporated in the updated Bill. We have added:
A requirement for overseas entities to be verified – information regarding registrable beneficial owners and managing officers will be verified. A verification mechanism was recommended by the report of the Committee, because they recognised that without verification, the requirements placed on overseas entities might be circumvented by those seeking to hide their true identities.
Financial penalties – the registrar will have the power to impose financial penalties on a person if satisfied, beyond reasonable doubt, that the person has engaged in conduct amounting to an offence. The Committee recommended that financial penalties be available to the registrar because it recognised that, in some cases, a prosecution against non-compliant overseas entities or individuals might not be possible, as many of those in scope of the requirements will be overseas.
Updating duty – this was amended to include a ‘record of events’ to ensure the details of anyone who became, or ceased to be, a registrable beneficial owner within the update period, as well as the dates when they became, or ceased to be, registrable beneficial owners, are captured. The Committee noted that being required to provide only a ‘snapshot’ at update time could be a loophole.
A new mechanism by which innocent third parties can seek redress – where an innocent third party has been affected by non-compliance on the part of an overseas entity, they will be able to apply, under certain conditions, for consent to register their title to land.
Other changes have been made to ensure that the requirements are robust and effective, some key changes are:
Exemptions – these provisions were amended to specify the limited circumstances when the Secretary of State can exempt a person from registering, which are in the interests of national security, in the interest of the economic wellbeing of the UK, and for the purposes of preventing or detecting serious crime. The Committee recommended that the reasons for which such exemptions can be granted be explicit.
Power to protect other information – this was amended to oblige the registrar to report on the frequency of determinations in favour of an applicant asking for information to be suppressed, which was a Committee recommendation.
Applications: required information – this was amended to collect the name and contact details of an individual who may be contacted about a “managing officer” who is not an individual, e.g. a company. Information about a “managing officer” is provided if the overseas entity has no registrable beneficial owner.