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Property Law Update - Economic Crime (Transparency and Enforcement) Act 2022

on Monday, 21 March 2022.

As the conflict in Ukraine continues into its fourth week with no signs that a ceasefire is imminent, western governments have been stepping up their sanctions in an attempt to cause damage to the Russian economy and its oligarchs.

The UK Government has reacted by fast-tracking the Economic Crime (Transparency and Enforcement) Bill, which is aimed at targeting 'dirty' money and increasing transparency. The Government introduced the bill on 1 March and it received Royal Assent on 14 March 2022.

The Economic Crime (Transparency and Enforcement) Act 2022 (the Act) introduces:

  • a new public register of overseas companies
  • changes to the Unexplained Wealth Order (UWO) regime

Register of Overseas Companies

The Act sets up a public register of 'overseas entities' at Companies House, to identify their beneficial owners requiring, for the first time, those overseas entities which own land in the UK to register in certain circumstances. The intention is to increase the transparency of overseas entities investing in the UK, and to provide clarity as to their ownership and control.

No application may be made to the Land Registry to register an overseas entity as the proprietor of a freehold estate in land or a leasehold estate in land in England and Wales granted for a term of more than seven years, unless at the time of such application for registration the overseas entity is either a 'registered overseas entity' or an 'exempt overseas entity'.

The definition of overseas entity includes any legal entity that is not governed by UK laws. This would therefore include entities organised under the laws of the Isle of Man or the Channel Islands, as well as of jurisdictions such as the British Virgin Islands.

The Act applies not only to future land transactions involving overseas entities, but also overseas entities that are currently registered as the owner of a property at the Land Registry and became registered pursuant to an application made on or after 1 January 1999.

There will be a transitional period of six months for overseas entities owning 'qualifying estates' in property in England and Wales to apply for entry on the new Companies House register and provide the relevant details of their beneficial owners.

The overseas entity will be required to identify any beneficial owner who:

  • holds, directly or indirectly, more than 25% of the shares in the entity
  • holds, directly or indirectly, more than 25% of the voting rights in the entity
  • has the right, directly or indirectly, to appoint or remove a majority of the board of directors of the entity
  • has the right to exercise, or actually exercises, significant influence or control over the entity
  • is a person that is trustee of a trust, or member of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed but which meet any of the conditions above in relation to the entity and such person has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.

Duty to Update

The overseas entity has a duty to update the information held at Companies House in respect of its beneficial owners on a yearly basis including providing a statement that the entity has taken steps to identify registrable beneficial owners.



Failure to comply with the provisions of the Act is an offence by the entity and by every officer in the entity who is in default. Any individual person guilty of an offence may be liable to imprisonment for up to five years in the most serious cases or a fine (or both).

Unexplained Wealth Orders

Part 2 of the Act relates to Unexplained Wealth Orders (a 'UWO'), a tool introduced by the Criminal Finances Act 2017 and used by enforcement agencies to require individuals to prove that their assets were acquired through legitimate means. The individual owner bears the burden of proving that his/her assets are legitimate as opposed to the general position in criminal law where burden of proof lies with the prosecution.

To date UWOs have not been widely used, although there have been a number of high profile cases, such as that of Zamira Hajiyeva, whose husband was jailed for fraud and embezzlement, and who owned a £11.5m Knightsbridge property as well as a golf course. The changes set out on the Act are an attempt to increase their use by making them easier to use, with less financial risk on the enforcement agencies which use them. This is done by reform to the cost rules such that the enforcement agency must pay the costs of an unsuccessful UWO only when it has acted unreasonably, dishonestly or improperly.

In addition, enforcement agencies will be given additional time to review material provided in response to an UWO.


Top of mind is whether the government will commit sufficient resources to enforce the provisions of the Act. However, given the current focus on illegitimate wealth and London's reputation as a playground for oligarchs, the stated aim to ensure that the UK ceases to be seen as a haven for "dirty money" may lead to the provisions of the Act being vehemently enforced. As ever, time will tell.NOTE: The Act will also apply to land owned or to be acquired by overseas entities in Scotland and Northern Ireland however the comments above are limited to those provisions in respect of England and Wales.

For more information on how we can assist any overseas entities in disclosing beneficial owners of land in England & Wales registered with the Land Registry since 1 January 1999, please contact Steven Faragher in our Real Estate team on 07788 214179, or complete the form below.

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