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An explanation of the Act's three main measures on: (1) a beneficial ownership register of Overseas Entities owning UK property; (2) Unexplained Wealth Orders; and (3) Sanctions.
Economic Crime (Transparency and Enforcement) Act 2022 (680 KB , PDF)
The Economic Crime (Transparency and Enforcement) Act 2022 was introduced in the House of Commons on 1 March 2022. The Government fast-tracked the Bill as part of the Government’s urgent response to the Russian invasion of Ukraine. All remaining Commons stages took place on 7 March.
The Bill (as amended in the Commons) was then introduced in the House of Lords on 8 March. Second reading was on 9 March and remaining Lords stages took place on 14 March.
Commons consideration of Lords amendments took place immediately after Lords Third reading. Royal Assent was announced shortly after midnight on 14 March (the early morning of 15 March).
Background documents are available on the Bill’s page on the Parliament website and on the Government Fact Sheets for Parts 1 and 2 of the Bill.
The Act has 70 sections and five Schedules, divided into three main measures:
Part 1 of the Act (sections 1 to 44, and Schedules 1 to 5) establishes a public register of beneficial owners of non-UK entities that own or buy land in the UK, operated by the Companies House registrar. Beneficial owners are those who ultimately own or control an asset.
Any overseas entity wishing to own UK land needs to identify their beneficial owners and register them. Not all beneficial owners must register. A beneficial owner generally only needs to be registered if: they hold more than 25% of the shares or voting rights in an entity; can appoint a majority of its directors; or have some other significant influence or control over it (including through a trust or partnership structure). This is in line with the threshold for becoming a registrable beneficial owner under the existing people with significant control (PSC) regime for companies.
The register needs to be updated annually. Failure to register (or submitting false information) is a criminal offence and also prevents the entity from being able to buy or sell (or mortgage) UK property in future. A transfer of land by the overseas entity in breach of the registration requirement is a criminal offence committed by the entity and every responsible officer of it, punishable by a fine or up to five years’ imprisonment.
The requirement to register applies retrospectively to land bought on or after 1 January 1999 in England and Wales, and 8 December 2014 in Scotland. The Act, when first introduced as a Bill, gave overseas entities an 18-month transitional period to dispose (sell off) their land or register. In Northern Ireland the requirement to register only applies prospectively so there is no need for a transitional period.
11 amendments were made to Part 1 in the Commons (at Committee stage). These mainly:
64 amendments were made to Part 1 in the Lords (at Report stage). These mainly:
Part 2 of the Bill (sections 45 to 53) seeks to strengthen the Unexplained Wealth Order (UWO) regime. It made four main changes:
During Commons Committee stage a new clause was inserted requiring the Secretary of State to lay an annual report before Parliament on the number of applications made, and UWOs granted, in England and Wales (currently section 51).
No amendments were made to Part 2 in the Lords.
Part 3 (clauses 54 to 66), when originally introduced, sought to amend existing legislation on UK sanctions to:
Ten amendments (including nine new clauses) were made to Part 3 in the Commons (at Committee stage). These mainly created a new Chapter 2 in Part 3 which:
No amendments were made to Part 3 in the Lords.
The Act’s measures apply across the UK. Certain parts of the Bill make different provision for different jurisdictions (catering, for example, for differences in land law between England and Wales, Scotland and Northern Ireland in Part 1) but the overriding policy objectives are similar across the UK. An annex to the explanatory notes summarises the territorial extent and application of the provisions in the United Kingdom.
A legislative consent motion (LCM) wasn’t required from the Welsh Parliament. An LCM was obtained from the Scottish Parliament but not from the Northern Ireland Assembly (although the UK Government said it consulted with and had the support of the Northern Ireland Government).
Leader of the Opposition, Keir Starmer, noted at Prime Minister’s Questions on 2 March 2022 that Labour intended to support the measures. The Royal United Services Institute (RUSI) and campaign group Spotlight on Corruption welcomed the Bill when introduced, but said it was long overdue.
Mr Starmer and Transparency International UK (TI) originally criticised Part 1 of the Bill for its 18-month transitional periods which they argued allowed too much time for people unwilling to register to sell their properties. (As described above, this was shortened to six months in the Commons). TI also criticised what they view as gaps in the legislation.
The Financial Times noted criticisms of the Government for omitting reforms of Companies House from the Bill, as well as for not providing more resource to tackle economic crime in the UK.
A Government press release on 15 March said the Act would “mean the government can move more quickly to impose sanctions against oligarchs already designated by our allies, as well as intensifying our sanctions enforcement”.
RUSI said the legislation was welcome but that “bolder systemic reforms” were needed to deal with the UK’s “dirty money problem”, including more enforcement, and reform of Companies House and the regulation of “enablers” like lawyers and accountants that service “wealthy Russian oligarchs and kleptocrats”. Director of Policy at TI Duncan Hames said he was “delighted to see these much-needed reforms” but warned that “This law will however only be as good as its enforcement.”
The Government has committed to introduce a further economic crime bill in the upcoming (2022-23) parliamentary session. Home Secretary Priti Patel said it would be a “very substantial piece of legislation” including reform of Companies House and limited partnerships, powers to seize crypto-assets from criminals, and information sharing on money laundering.
Minister Paul Scully confirmed it would be introduced “early” in the session. At Lords Second reading Business Minister Lord Callanan committed that the upcoming Economic Crime Bill would be subject to full scrutiny (rather than also being fast-tracked), and would run to “something like 150 pages”.
Economic Crime (Transparency and Enforcement) Act 2022 (680 KB , PDF)
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