Jurisdictions
Beneficial ownership – in the UK and the Economic Crime Act 2022

It is time to raise the awareness of the UK’s registers that it has put into place and intends to introduce regarding beneficial ownerships, which refers to the person who ultimately owns or controls an asset such as a property or a company and may differ from the legal owner. The purpose of beneficial ownership registers is to prevent individuals from being able to hide assets and income on which they own tax.

September 12, 2022

What the royal assent and more is all about, you can read below!

Existing register: People with Significant Control (PSC) register

The UK already has the People with Significant Control (PSC) register, which has been publicly available since 2016. To increase the accuracy of information provided by the PSC register, the UK government published a white paper setting out 58 proposed UK company and PSC regimes. Reforms are expected to be included in an Economic Crime Bill in the 2022/23 parliamentary session.

 

Existing register on Trusts & EU’s Anti-Money Laundering Directive

The existing register on trusts was introduced in 2017 and is not public but as a requirement of the EU’s Fourth Anti-Money Laundering Directive (4AMLD), the UK introduced a non-public register of beneficial ownership for trusts in July 2017. The Fifth Anti-Money Laundering Directive (5AMLD) extended access to members of the public if they can demonstrate a legitimate interest (Commons Library Research Briefing – 23rd March 2022).

 

UK Economic Crime (Transparency and Enforcement) Act 2022

The UK introduced a secondary legislation to extend the registration deadline from 10th March 2022 to 1st September 2022 after since 2016, the UK Government indicated that it planned to launch a public beneficial ownership register for UK property. In response to the Russian invasion of the Ukraine, the Economic Crime (Transparency and Enforcement) Act 2022 (The Act) was fast-tracked and royal assent was obtained on 15th March 2022, of which the Register of Overseas Entities is discussed below.

 

«The Act» has 70 sections and is divided into three main measures:

(1) register of Overseas Entities;

(2) unexplained wealth orders; and

(3) sanctions.

 

«The Act» is applicable across the UK and it was introduced to increase transparency on the overseas owners or lease holders of land in the UK. «The Act» requires overseas entities to identify and register beneficial owners of any land they own in the UK. The overseas entity must register with the UK Companies House, which is publicly accessible, review and update relevant information on an annual basis. There is a short transition period of 6 months from commencement date of «The Act» to allow timely registration.

 

An overseas entity is governed by the law of a country outside of the UK. Overseas entities that acquired property in the UK after 1st January 1999 or that acquire it in the future are subject to the Act. Any exemptions under «The Act» are narrow.

 

The UK Companies House launched the Register of Overseas Entities on 1st August 2022. According to the latest sources, HM Revenue & Customs will launch a new campaign in September 2022 to address non-compliance linked to offshore entities owning UK real estate (Chartered Institute of Taxation (CIOT) – 23rd August 2022).

 

Non-Compliance

Non-compliance will result in criminal sanctions, ranging from fines of £ 2,500 a day to unlimited fines and prison sentence of up to five years.

 

What is required to be provided by Overseas Entities

The overseas entities will need to provide basic details about itself such as name, country of incorporation, registered office, service address, legal form and applicable governing law, details of any overseas public register and registration number.

 

The overseas entity concerned will be required to provide one of the three following statements

(1) The entity has identified one or more registrable beneficial owners; it can provide information about each beneficial owner and that there is no reason to believe that there are others;

(2) The entity has no reasonable cause to believe that it has any registrable beneficial owners; and

(3) The entity has reasonable cause to believe that there is at least one registrable beneficial owner that is has not identified or the entity is not able to provide the required information about one or more of the registrable owners it has identified or both aforementioned point under statement 3 apply.

 

Assistance by Leo Trust Switzerland AG

Leo Trust Switzerland AG supports you (not only) in the review of structures and reporting entities / persons, review of required documents and reactivation of entities, negotiate outstanding fees and penalties for the restoration / reactivation of a company and related matters.

Do you have any inquiries? Dr. Roderik J.P. Strobl, Relationship Manager Key Clients, will provide you with the information you need.

This article is aimed at providing a general overview and summary of the issue. It is non-binding, and does not and should not be taken to constitute legal advice.

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