RegulationMar 7 2022

How will the new economic crime bill work?

  • Describe the new provisions in the economics crime bill
  • Explain the rules around the register of overseas entities
  • Describe how unexplained wealth orders have changed
  • Describe the new provisions in the economics crime bill
  • Explain the rules around the register of overseas entities
  • Describe how unexplained wealth orders have changed
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CPD
Approx.30min
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CPD
Approx.30min
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CPD
Approx.30min
How will the new economic crime bill work?

Aligned with the definition used by the PSC register, a beneficial owner for the purposes of the bill may be an individual, legal entity, government or public authority that holds directly or indirectly more than 25 per cent of the votes or shares in the overseas entity; has the right directly or indirectly to appoint or remove a majority of the overseas entity's board; or has the right to exercise or actually exercises significant influence or control over the overseas entity. Trustees of a trust or members of a partnership and other entities that do not have a legal personality are subject to further rules. 

The disclosure obligations and compliance burden on overseas entities arising from these new provisions will be substantial and will need to be kept under regular review. The registrar will require verification of the identity of the beneficial owners and managing officers, and may also require an overseas entity to clarify any apparent inconsistency in the information provided. Once registered they will also be required to provide updated information to the registrar every 12 months and failure to do so may leave both the entity and its officers criminally liable. 

Beneficial owners, directors and officers who fail to adhere to the new provisions risk criminal sanctions both for themselves and the entities they control or manage. This includes liability for false statements knowingly or recklessly provided to the registrar at Companies House and for failure to register within the time limit.

In addition, the bill envisages that overseas entities will be empowered to serve information notices on individuals they believe to be either the beneficial owners themselves or to be in possession of information about the owners. The recipients of such notices may in turn be criminally liable if they fail to comply with such a notice, with some carrying maximum terms of two or five years’ imprisonment – these offences are not without serious bite. 

The register will be accessible by the public and anyone may request a copy of material on the register that is available for inspection (this should exclude personal details such as dates of birth and residential addresses). Directors and officers of overseas entities that own or wish to purchase UK property in the future will need to be mindful that the details on their registry entry will be visible not only to law enforcement authorities conducting an investigation but also other parties to business transactions and potential investors. 

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