Do you have clients with property interests in the UK, or who are about to acquire or recently sold property there? If you do, then you and your clients will need to know much more about a new piece of UK legislation designed to tackle money laundering.

With effect from 1 August 2022 any overseas entity that wants to buy, sell, or transfer property or land in the UK, (i.e. freehold estates or a lease granted for a term of more than seven years) must register with UK Companies House. They must declare who their registrable beneficial owners or managing officers are before 31 January 2023. Entities that disposed of property or land after 28 February 2022 will also need to register and give details of that disposal.

The Economic Crime (Transparency and Enforcement) Act 2022 provides the legislative background to this new requirement. This legislation creates the Register of Overseas Entities.

The procedure for making registration applications is set out in the Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 and the rules around verification are contained in the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 (2022/725).

The requirements for registration apply to property acquired in:

  • England and Wales, since 1 January 1999;
  • Scotland, since 8 December 2014 and
  • Northern Ireland, since 1 August 2022.

Overseas entities that currently hold qualifying property have six months from 1 August to register with Companies House. Failure to register is a criminal offence.

The Department for Business, Energy and Industrial Strategy (BEIS) has produced some guidance for those who may undertake verification on behalf of an overseas entity.

Accountants take care

According to the ICAEW and the UK Law Society, because of the potential liabilities for incorrectly carrying out verification checks, it is critical for any accountants seeking to carry out this service for a foreign entity that they fully understand that the client due diligence (CDD) process usually carried out to comply with anti-money laundering regulations is not of the same standard required for verification of ownership of Overseas Entities.

The BEIS guidance highlights that “there are differences between what’s required under the UK Money Laundering Regulations (MLRs) by way of client due diligence and what is required by way of verification under the 2022/725 Regulations. As such, a relevant person cannot only do what they would normally do under the MLRs and as set out in related industry guidance. Relevant persons should refer to the Act, the 2022/725 Regulations and this guidance when conducting verification checks.”

The ICAEW has said ‘If a professional accountant undertakes verification and does not carry out the process correctly, then they open themselves up to criminal prosecution, regulatory sanctions, and liability for professional negligence.’

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We have just released our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.

We have also just released an updated AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms.

To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.

For our latest Audit Quality Control Manual (October 2021) (implementing the latest Irish Audit & Accounting Supervisory Authority standards including ISQC1 on audit quality control) click here. View the Table of Contents here.