The Economic Crime (Transparency and Enforcement) Bill (the Bill) was published last week directly in response to the war in Ukraine, but it picks up long-standing concerns and plans to address hidden foreign investment in the UK as part of the government’s strategy to crack down on overseas criminals using UK property for money-laundering. 

There are, already, 27 pages of tabled amendments and so, whilst we have a good understanding of the effect of the legislation, its final detail will not be known until the parliamentary process is complete.

Overview

The Bill applies to ‘Overseas Entities’ which are legal entities governed by the law of a country or territory outside the UK, and so includes entities incorporated in the Channel Islands and the Isle of Man. 

It establishes a new Register of Overseas Entities at Companies House and requires overseas entities owning or acquiring certain land interests in the UK to register themselves and details of their beneficial ownership with Companies House. 

That registration process will need to be completed before any transfer or lease of land can be registered in the name in an overseas entity at HM Land Registry, and before most dispositions of land by overseas entities.

To address existing land ownership, HM Land Registry will be required to place a restriction on title on any land registered in the name of an Overseas Entity and which has been acquired since 1 January 1999. This restriction will prevent the registration of any transfer, lease or charge over that land unless registration formalities at Companies House have been completed.

Similar provisions apply across England, Wales, Northern Ireland and Scotland and criminal sanctions will apply to any Overseas Entity that fails to comply with its registration requirements at Companies House.

Timing

The Bill is being rushed through Parliament and is due to pass through the House of Commons today. There is no timetable yet for its passage through the House of Lords, but we can anticipate that this will happen very quickly and the Bill could be passed as soon as the middle of March. Once it receives Royal Assent, it will be brought into force on a date to be specified by regulations. 

The actual timing and implementation of the Bill is likely to depend on Companies House putting procedures and infrastructure in place for the new register and for new ID verification requirements which are being introduced.