BEIS: Targeting criminals
Solicitors could be jailed or fined for failures in the way they verify entries on the register of overseas entities (ROE), which went live yesterday.
Foreign companies wanting to buy property in the UK or having recently bought property are required to give details of their beneficial owners on the ROE, details which must be verified by a “relevant person” such as their lawyer.
The Department for Business, Energy and Industrial Strategy said that “to ensure criminals are targeted effectively”, the register applied retrospectively to property bought since January 1999 in England and Wales, and December 2014 in Scotland.
“Those foreign companies that do not comply with the new obligations could face severe criminal sanctions, including fines of up to £2,500 per day or a prison sentence of up to five years.”
The register, introduced under the Economic Crime (Transparency and Enforcement) Act 2022, is held by Companies House.
Under section 32 of the Act, anyone who delivers a document to Companies House that is misleading, false or deceptive, as part of the verification process commits a crime and could be fined, or, if they knew it was misleading, jailed for up to 12 months.
The department said the register was “designed to root out corrupt oligarchs and elites attempting to hide ill-gotten gains through UK property” and ensure those seeking to buy UK land revealed “their true owners, ensuring criminals cannot hide behind secretive chains of shell companies”.
Business minister Lord Callanan commented: “We have been clear that the UK is a place for legitimate business only, and to ensure we are free of corrupt elites with suspicious wealth, we need to know who owns what.
“By getting this first of its kind register up and running at breakneck speed, we are lifting the curtain and cracking down on those criminals attempting to hide their illicitly obtained wealth.”
In guidance on the issue, the Law Society said: “A critical element of the ROE regime is the requirement to verify independently intangible elements such as the exercise of control. That verification is to be confirmed to Companies House and will subsequently appear on its public record.
“Given the drafting of the verification regulations, the Law Society considers that any law firm acting as a verifier will face significant challenges and expose itself to significant risk, including possible criminal prosecution, regulatory sanction and reputational damage.”
The society said there should be “no presumption” that law firms would conduct verification.
“It is anticipated that many firms will not conduct ROE verification. It is also recognised that for many firms it will not be appropriate to conduct ROE verification.”
President I Stephanie Boyce added: “We have long supported UK government’s overarching ambition to improve transparency of ownership, including the introduction of the register.
“However, we have expressed significant concerns as to the expectations which may be placed on solicitors to verify the accuracy of information put onto the register.”
Ms Boyce said there was “a real risk” that lawyers “might mistakenly interpret what is required for verification under the ROE as being identical to what is required for anti-money laundering compliance client due diligence”, which was not the case. “Solicitors should exercise extreme caution.”
Leave a Comment