The Strategist

British watchdogs creating a register to fight property money laundering

04/07/2017 - 14:35

The British government is going to create a special catalogue to register beneficial owners of foreign companies through which local real estate is bough. The authorities believe that such a register is necessary to combat money laundering and tax evasion.

Images Money via flickr
Images Money via flickr
The UK Ministry of Business, Energy and Industrial Strategy (BEIS) announced plans to create a special register of beneficial owners of foreign companies. This kind of companies is used to purchase or sell British real estate or apply to participate in government tenders. The Ministry notes that such measures are necessary to fight those who want to launder funds by buying property in the UK. "Offshore companies that give incomplete information about their real owners have attracted those who want to hide illegal funds and legalize them. From 2004 to 2014, under the investigation were real estate objects for a total of £ 180 million, which could be purchased with funds obtained as a result of corruption. In January 2016, the National Crime Agency found a scheme through which offshores, followed by the purchase of real estate in London, laundered £ 12 million stolen from Commerzbank. The secrecy of the offshore companies makes it difficult to investigate real estate owners. A higher level of transparency should simplify work of law enforcement agencies and make it more difficult for criminals and corrupt officials to use the UK to conceal or launder funds". 

In this regard, the Ministry proposes to create a register, which will list real owners of all types of companies through which transactions for the purchase or sale of British real estate are made. Identification of the company’s beneficial owner will be based on several factors: direct or indirect ownership of 25% or more of the company's shares, direct or indirect ownership of 25% or more of the company's voting rights, direct or indirect authority to appoint or remove the majority of the company's board of directors; other forms of "direct or indirect right to exercise control or influence over the company or its trust, or any other legal entity that has the rights indicated above". In addition, the beneficial owners of companies will be included in the register through which applications for participation in state tenders for the sum starting from £ 10 million are submitted.

The Ministry will be receiving comments and wishes from citizens on the proposed plan until May 15, inclusive. It is reported that timing of transformation of the proposals into a bill and the law will be aligned with particular laws and rules, including with the fourth EU Directive on combating money-laundering, which encourages all registered companies to collect information about their beneficial owners by June of this year.

The Ministry's proposals to create the special register have become another initiative of the British authorities to identify those who are trying to launder funds in the country. In May last year, the watchdogs introduced a draft law, according to which all foreigners who purchase housing in London with funds significantly exceeding their official earnings will be forced to disclose sources of income.