The Economic Crime Act, which became UK law in March 2022, is designed to create more transparency in the ultimate ownership of overseas entities to prevent financial crimes such as money laundering.
The Economic Crime (Transparency and Enforcement) Act 2022 passed into UK law in March. It aims to improve transparency and registration of overseas entities,making it harder to hide and launder money in the UK. The legislation defines “overseas entity” as a legal entity governed by the law of a country or territory outside the UK.
The new act:
● Sets up a register of overseas entities, including information about their beneficial owners
● Compels overseas entities to register if they own land in the UK
A new Companies House register
As a result of the act, Companies House will create and maintain a register of overseas entities that own land or property in the UK. These entities need to identify their beneficial owners and have a duty to update their information on theregister annually.
According to the legislation, provision of false or misleading information in an application is a criminal offense, as is failing to update the information with Companies House within 14 days of the renewal period.
The register will be publicly available, barring some sensitive personal information about owners, such as their private address and date of birth.
This legislation follows similar changes to anti-money laundering laws passed in other countries, including the US Corporate Transparency Act, the Canada Business Corporations Act, and the Companies Act in Singapore.
The UK accelerated passing the Economic Crime Act in response to Russia’s invasion of Ukraine. The law enables the government to impose sanctions on many more individuals, and to align its actions more quickly with those taken by other governments, including the United States, Canada, and the European Union.
Data for enhanced due diligence
The new Companies House register will add to the sources of information currently available to regulated firms, helping them understand corporate structures and ownership across their business networks. Regulated businesses have always had a responsibility to know who their customers, suppliers, and vendors are, but reliable data sources can be difficult to find. Enhanced due diligence relies on accurate data, which the register seeks to provide.
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