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UK committed to public beneficial ownership despite concerns

Posted April 18, 2017

By Kirsten Hastings

A first-of-its-kind public beneficial ownership register of overseas companies that own UK property is being pushed forward by the UK government despite concerns that the information should not be made freely available.

In June 2016, the UK became one of the first countries in the world to introduce a domestic register of beneficial ownership. Called the People with Significant Control (PSC) register, it should be fully populated by July 2017.

However, the government is equally concerned about the potential for illegal activity to take place through overseas companies investing in the UK property sector.

As a result, the department of business, energy and industrial strategy launched a consultation document on Wednesday about setting up a similar register for non-UK companies.

Resistance to public access

The overseas register would require the same information as the domestic one, which has prompted some resistance from industry.

In a March 2016 consultation, the government said there was a “very high degree of support” for the general principle of requiring information about beneficial owners of overseas companies that own property.

However, about half of respondents did not support making the information publicly accessible, as “some beneficial owners may have legitimate reasons for wanting to keep their details private”.

In its response, the government said that “for the [overseas] register to provide the level of transparency that the PSC register has achieved, […] it must be publicly accessible”.

Information

The government said it believes it is appropriate to gather the same information about overseas and domestic beneficial owners, however, some details will not be available to the public. These include:

  • The individual’s name;
  • Date of birth (the day of their date of birth is not publicly accessible);
  • Nationality;
  • Country or state (or part of the United Kingdom) where they usually reside;
  • A service address for them;
  • Usual residential address (this is not publicly accessible);
  • The nature of his or her control over the company;
  • The date on which they became a person with significant control over the company;
  • If there are any restrictions in place on using or disclosing any of the individual’s PSC particulars (this is in cases where the individual’s details are not made publicly accessible due to that person having made a successful application for protection under the protection regime).

Protection regime

In addition to not releasing some details to the public, individuals will be able to apply for their information to be suppressed if they fall into one of the four criteria outlined in the consultation:

  • The individual is at risk of violence or intimidation due to the activities of the entity, or the way the property is being used.
  • Certain characteristics or attributes of that individual when associated with that entity or property could put them or someone who lives with them at risk of violence or intimidation.
  • Publicly linking the property or entity to the individual will lead to an elevated public safety risk.
  • Protection for minors or people with diminished capacity. We believe this may be necessary as a minor or someone with diminished capacity might be unable to make an informed decision about the purchase of the property, and therefore the inclusion of their name in the new register.

Non-compliance

Companies that fail to disclose details of their beneficial owners will be prevented from buying or selling property in the UK.

As with the domestic register, companies will have a year to comply with the new regulations.

Obscures investigation

The consultation document states: The use of offshore corporate vehicles to obscure the true owners of UK property has attracted those who wish to hide illicit funds and launder the proceeds of crime.”

Over £180m ($224.6m, €210.6m) worth of property was investigated in the UK between 2004 and 2014 as suspected proceeds of corruption.

In January 2016, the National Crime Agency convicted a money launderer who used offshore companies to launder £12m stolen from Commerzbank through council properties in London.

“The secrecy that these offshore companies provided made it difficult for investigators to identify who owned the properties. Greater transparency of property ownership will make the job of enforcement agencies easier and will discourage criminals and the corrupt from choosing the UK to hide or launder their money,” the government said.

The 28 question consultation document closes on 15 May.

This article was originally published by International Adviser

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