Economic Crime Bill

4th April 2022 Business Crime

“A bill to to set up a register of overseas entities and their beneficial owners and require overseas entities who own land to register in certain circumstances; to make provision about unexplained wealth orders; and to make provision about sanctions.”

The new measures include:

Introduction of a Beneficial Ownership Register for Overseas Entities

The new Bill requires for overseas entities who currently own or wish to own property in the UK to identify its beneficial owner(s) and to register them with the Companies House. The register will apply to any company or legal entity that is governed by the United Kingdom or territory outside the UK. Further, the entity will have to have a significant control over the entity usually in the form of a beneficial owner. Information supplied will be verified by the register and has to be updated on an annual basis;        

The purpose of this Register is to impel the beneficiaries to identify themselves rather than hiding behind nominee companies or multiple owners which is seen as a common method of sophisticated money laundering. Entities who refuse to reveal their ‘beneficial owner’ will face tough restrictions on selling the property and those who break the rules could face a fine of up to £2,500 per day or up to 5 years in prison.

Modification to Unexplained Wealth Orders

Current Position

UWOs allow law enforcement to apply for a court order requiring someone to explain their interest own property and how they obtained it. If failure to comply occurs, the law enforcement can apply to the Court for a Civil Recovery Order. Civil Recovery Orders (CROs) carry a lower “civil” standard of proof meaning they only have to show to the court on a balance of probabilities unlawful conduct had occurred as the property was obtained as a result. There is no need to prove a crime was committee with a CRO.

Changes imposed by Economic Crime Bill

Created in 2017 but had a limited impact as they have been obtained nine times and relating to only four cases. The Economic Crime Act has been amended to allow investigators to target individuals who manage properties within complicated offshore arrangements even if they not the beneficiary, In addition to this, the Act has extended the legal time the NCA has to prepare cases for Court and they are protected against crippling legal coats if the NCA act reasonably and properly.

Changes to UK Sanctions

A key change being made is the introduction of a “strict civil liability” test for monetary policies. Business will now face liability, even if they have no knowledge or reasonable cause to suspect that a transaction to which they are party is in breach of sanctions.  This makes it far easier in practice for fines to be imposed.

Timeline of Bill

The Bill has received Royal Assent on the 14th March 2022 meaning the Queen has formally agreed to make the Bill into an Act of Parliament. 

Key implications for Solicitors

The Register will apply retrospectively to property bought by individuals, living overseas, up to 20 years ago. If a solicitor fails to identitfy the owner when registering they will face restrictions. The  property will be frozen, with the owner unable to lease, sell or raise a mortgage. Any solicitor who acts outside of these rules could fact up to 5 years in prison.

How we can help

For further information about the comprehensive service our lawyers can offer and if you are concerned about such proceedings under the new Bill, contact our specialist lawyers on 0345 241 5305, or contact the authors directly.

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Mike Rainford is a Partner located in Manchester in our Business Crime & Regulation department

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