New measures to tackle corrupt elites and dirty money become law

A new Register of Overseas Entities, requiring those behind foreign companies which own UK property to reveal their identities, will also be created under the Economic Crime (Transparency and Enforcement) Act. Entities who refuse to reveal their ‘beneficial owner’ will face tough restrictions on selling a given property, while those who break the rules could face a fine of up to £2,500 per day or up to five years in prison.

This development represents a valuable tool for law enforcement agencies when it comes to investigating suspicious wealth. Companies House will now begin work to implement the Register of Overseas Entities as quickly as possible, working closely with the UK’s three land registries. Any foreign company selling properties between 28 February and the full implementation of the Register of Overseas Entities will also be required to submit their details at the point of sale.

In tandem, reforms to Unexplained Wealth Orders (UWOs) will remove key barriers to their use, increasing time available to law enforcement to review material provided in response to any UWO and protecting them from incurring substantial legal costs if they act reasonably in a case that ultimately proves to be unsuccessful.

Furthermore, UWOs will be more effective against those who hold property in the UK via trusts and other complex ownership structures. The Government has also committed to publishing an annual report on their use.

Strengthened response

Home Secretary Priti Patel explained: “This Government has moved quickly to strengthen our response to Putin’s cronies and ensure that corrupt elites have nowhere to hide their dirty money in the UK. We will continue to work with our international partners in taking the strongest possible action against those who enable this unprovoked aggression towards Ukraine.”

Business Secretary Kwasi Kwarteng noted: “There is absolutely no room for illicit finance in the UK. By bringing forward this Economic Crime (Transparency and Enforcement) Act at unprecedented speed, we’ve put Putin and the corrupt elites propping him up on notice. Our new Register of Overseas Entities, the first of its kind in the world, will have an immediate dissuasive effect on oligarchs attempting to hide their ill-gotten gains, ensuring that the UK is a place for legitimate business only.”

Chancellor of the Exchequer Rishi Sunak stated: “Our Economic Crime (Transparency and Enforcement) Act will enable us to crack down harder and faster on dirty money and those who support Putin and his regime. We are using all of our financial might to send a clear message to the Kremlin that this criminal venture will end in total failure.”

These measures enacted by the Government form part of a wider package of legislative proposals to tackle illicit finance which will be introduced in Parliament in the coming months, including reforming Companies House and introducing new powers to seize crypto assets more easily.

‘Kleptocracy Cell’

Prime Minister Boris Johnson has also announced a new ‘Kleptocracy Cell’ based in the National Crime Agency, which has been created to target sanctions evasion and corrupt Russian assets hidden in the UK.

The Home Secretary will attend the inaugural ministerial Russian Elites Proxies and Oligarchs Task Force on Wednesday 16 March. This meeting will bring together finance and justice and home affairs ministers from the G7, the European Union and Australia responsible for the supervision of sanctions and enforcement work.

The Russian Elites Proxies and Oligarchs Task Force aims to ensure the effective implementation of financial sanctions on Russian elites and oligarchs to further drive collective efforts designed to tackle Kremlin-linked illicit finance.