Here is a short extract from the article*. If you wish to read the full article, please visit Wealth Adviser website.
The introduction of a register of overseas entities that own land in the UK, under the cumbersomely named Economic Crime (Transparency and Enforcement) Act 2022, recognises two fundamental truths about money launderers. The first is that they remain particularly interested in the UK property market, as a place to store and grow the value generated from criminal conduct. The second is that they dislike transparency, of which the new requirements on such entities to ascertain and provide details of their beneficial owners, is a prime example. The theory is that introducing such transparency to that market will weed out dirty money from the system. But the costs and risks of doing so are enough to make it worth subjecting that theory to some scrutiny.
How will it work?
The new requirements build on existing systems for the registration of land and for UK entities to self-report their Persons with Significant Control (PSC) to Companies House, as well as the anti-money laundering (AML) requirements on banks, conveyancers, estate agents and others – gatekeepers for the UK property sector – to conduct due diligence on their customers, and to report discrepancies in the PSC register to Companies House, and suspicions of money laundering, to the National Crime Agency (NCA). In broad terms, the new requirements are expected to prompt more such reports, and/or to discourage launderers from attempting to abuse the sector.
It is not, of course, an assumption of that plan that a determined launderer, faced with such requirements, would obligingly place their head in the noose, by stating the name of a criminal or kleptocrat whose wrongdoings could be ascertained by a rudimentary Google search. Rather, the requirements placed an additional cost on the launderer to find someone, an individual or an entity, to ‘front’ for the criminal, or perhaps to provide information or evidence that would help reporters, or law enforcement, to expose a discrepancy or a lie. That, ultimately, could help law enforcement to prosecute people or seek the freezing and forfeiture of assets that represent the proceeds of crime.
*This article was first published by Wealth Adviser on 09 August 2022. If you wish to read the full article, please visit Wealth Adviser website.