Britain is fast-tracking plans to tackle “dirty money’’ and expose foreign oligarchs who launder their wealth through the country’s property market in the wake of Russia’s invasion of Ukraine.
Following the package of sanctions announced by Prime Minister Boris Johnson last week, ministers would table the Economic Crime (Transparency and Enforcement) Bill previously expected later in the session in Parliament on Tuesday.
The legislation would establish a new register of overseas entities requiring foreign owners of property in the UK to declare their true identity.
This is a move intended to ensure criminals cannot hide behind secretive webs of shell companies.
Those that failed to comply would have restrictions placed on selling the property, while those who were found to have broken the rules would face up to five years in prison.
The legislation would apply retrospectively to property bought by overseas owners up to 20 years ago in England and Wales and since December 2014 in Scotland.
The Bill would also strengthen and expand the system of Unexplained Wealth Orders (UWO), which enable law enforcement agencies to seize assets without having to prove they were obtained through criminal activity.
Law enforcement would be given more time to review material provided in response to a UWO and would be protected from incurring substantial legal costs if they brought a reasonable case that was ultimately unsuccessful.
The Treasury was at the same time, strengthening its enforcement of the economic sanctions regime by introducing a ‘strict civil liability test’.
The liability test was for imposing fines rather than having to show firms had knowledge or a ‘reasonable cause to suspect’ sanctions were being breached.
Ministers said this would make it easier for the Office for Financial Sanctions Implementation (OFSI) to impose significant fines, while organisations that were found to have breached sanctions but do not receive a fine may be named publicly for the first time.
Separately, a new ‘kleptocracy’ cell based in the National Crime Agency, announced last week by Johnson, would begin immediately to investigate sanctions evasion.
Johnson said: “There is no place for dirty money in the UK. We are going faster and harder to tear back the facade that those supporting Putin’s campaign of destruction have been hiding behind for so long.
“Those backing Putin have been put on notice; there will be nowhere to hide your ill-gotten gains.’’
The government was also publishing a detailed white paper ahead of a second Economic Crime Bill, to be published in the coming months, setting out for reform of Companies House.
Under the proposals, anyone setting up, running, owning, or controlling a company in the UK would need to verify their identity with Companies House.
Officials would be given the power to challenge the information that appears dubious and would be empowered to inform security agencies of potential wrongdoing.
It will also contain measures intended to prevent company agents from overseas creating companies in the UK on behalf of foreign criminals or secretive oligarchs.