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Beneficial Ownership, Transparency & AML in Britain

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Beneficial_Ownership_Transparency.jpgOn 4 March 2016, BIS published a discussion paper on enhancing the transparency of beneficial ownership information of foreign companies that buy land or property in England and Wales, or enter into public procurement contracts in England.

The principal aim of the proposals is to prevent the proceeds of corruption and organised crime being laundered through investments in high-value property.

Under Discussion

Under the proposals in the paper, it is ultimately being considered whether such foreign companies should face a similar obligation as UK companies to maintain a PSC Register.

The discussion paper sought views as to the extent of beneficial ownership information to be provided by relevant foreign companies and how such information should be held. Specific consideration has also been given to how these rules could apply to the approximately 100,000 property titles that are currently registered to foreign companies.

Related: UK To Expose Beneficial Owners

Publicly Accessible

In a further move towards transparency, it is proposed that such information would be made publicly accessible, and as a first step in this process the Land Registry would publish details of the legal owners and the addresses of all properties currently owned in the UK by foreign companies.

The current proposals would require that, prior to being registered at the Land Registry as the owner of a property, any relevant foreign company would need to have provided information on their beneficial ownership to a new foreign companies beneficial ownership register (‘FCBOR’), and then provide their identifier number from the FCBOR to the Land Registry.

A failure to comply with these obligations would result in civil and criminal sanctions including the imposition of a daily fine and imposing restrictions on the ability of the company to take actions in respect of property (such as to charge or sell property or purchase new property). Other penalties may be imported into the new registration requirement in due course.

Establishing a Further Register

With regards to the physical maintenance of such records, one option proposed is to establish a further register managed by Companies House alongside the PSC Register.

The paper also sought views on how any new requirements should be enforced, and suggests that it may be appropriate to have alternative or additional methods of enforcement to cover situations where foreign companies provide false or inaccurate beneficial information to the register or fail to keep it up to date. Possible additional civil and criminal sanctions could include imposing a daily fine and/or sanctions linked to the specific activity the foreign company needs to register for.

Related: EU Takes Forward Plans For Beneficial Ownership Registries

Exemptions

The government is considering exempting foreign companies incorporated in jurisdictions which already have an accessible central register of beneficial ownership information from providing similar information to a UK foreign company beneficial ownership register. This would avoid duplication with the requirements of Article 30 of the Fourth Money Laundering Directive  which requires Member States to ensure entities hold adequate, accurate and current beneficial ownership information in a central registry.

Related: Update On 4th EU Money Laundering Directive

AML

The remainder of the discussion paper seeks views on the proposals for obtaining information on the beneficial owners of foreign companies intending to bid on contracts with the UK government.

The threat of money laundering is again cited as a justification for this requirement, although no details are provided as to how public contracts can be used for the purpose.

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