Progress on the Register of Overseas Entities and new capabilities to tackle abuse of UK corporate structures

Statement

My noble friend the Parliamentary Under Secretary of State for Business, Energy and Corporate Responsibility (Lord Callanan) has today made the following statement:

The Register of Overseas Entities is a vital new information tool for our law enforcement agencies and is part of the Government’s comprehensive and ongoing programme to tackle and prevent economic crime and illicit finance.

The Government legislated for it within weeks of the invasion of Ukraine, and with the assistance of Parliament expedited regulations needed to launch the Register, which opened on 1 August 2022.

Yesterday marked the end of the six-month period for overseas companies and other legal entities in scope to register. By 5pm yesterday, about 19,665 overseas entities were successfully registered and there were approximately 5,054 pending registrations that were submitted before the deadline. As such, the UK now has a valuable new database for law enforcement and others to access.

Throughout this period Companies House has been working closely with the three UK land registries to ensure overseas entities are aware of and comply with the new requirements. Companies House sent 57,000 notice letters to all entities in scope in August, including duplicate letters to those that had multiple contact addresses recorded at the land registries. In October 2022, HM Land Registry issued a notice letter to the entities registered in England and Wales to alert them that a restriction notice had been placed on their land. In early January 2023 Companies House issued further reminders to those who hadn’t yet registered.

Companies House has endeavoured to ensure it has the best possible information about those that have not yet complied, matching registrations against data from the land registries. Whilst some entities may have changed their name, not updated the land registry records or may no longer exist, Companies House continues to research and to work with company registries in those jurisdictions with the highest number of in-scope entities to determine the status of all unregistered entities.

An estimated 7,000 overseas entities have not yet complied with the provisions of the Register. From today, those entities will find that they cannot freely lease, charge or dispose of their land. This is a significant and effective sanction for non-compliance. Data about unregistered entities may also provide valuable information for law enforcement.

Companies House is now assessing and preparing cases for additional enforcement action. These cases will be prioritised using an intelligence-led approach and Companies House will work with those entities making a genuine attempt to comply. Warning letters will shortly be issued to all unregistered overseas entities. Those wilfully failing to comply may find themselves subject to financial penalties or criminal prosecution.

The Government is also announcing that, through an investment of up to £20m of allocated spending on economic crime, new anti-money laundering intelligence teams will be created to tackle the misuse of UK companies, corporate entities and property. Intelligence analysts and data scientists will be recruited over the coming months. They will play a key role in supporting the prevention, detection and disruption of money laundering, terrorist financing and kleptocracy through identifying, analysing and disseminating intelligence about high level threat actors and enablers of those activities, to a wide variety of law enforcement and regulatory agencies. There will be a strong focus on networks controlled from overseas, for example those operating from former Soviet states. The new functions will be based within Companies House and the Insolvency Service, and will work closely with the National Economic Crime Centre and their private sector partners. The teams will use and support the existing powers of both agencies and new powers being introduced by the Economic Crime and Corporate Transparency Bill.