In July 2015, David Cameron spoke about corruption and contesting illicit financial flows in the UK. Offshore companies buying UK property could be forced to reveal their ultimate owners under transparency plans being considered by ministers to crack down on tax evasion and money laundering. This would not only apply to foreign companies’ already holding property, but also to new buyers of property and new bidders for UK government public contracts.
This proposal would allow the UK government to focus on the foreign firms that hold billions of pounds in British property without having to declare who is behind them. It could also require foreign companies bidding for public sector contracts to do the same. Foreign companies own around 100,000 properties in England and Wales. The UK government has estimated over 44,000 of them are in London.
How will this work?
Under this proposal, forty jurisdictions with major financial centres will automatically share the beneficial ownership information. The disclosure rules will apply to companies who already own property in the UK and new buyers.
David Cameron’s statement said: “The new register for foreign companies will mean corrupt individuals and countries will no longer be able to move, launder, and hide illicit funds through London’s property market, and will not benefit from our public funds.”
In a further move to clean up the housing market, Mr Cameron stated he was looking at “reversing the burden of proof, so that if we suspect people of using stolen money to buy property we can force them to prove they accumulated their wealth legitimately – or they will face having it stripped from them by a court.”
He reported to the Guardian that the government would will also consult on whether to make companies criminally liable for failing to prevent their involvement economic crimes such as fraud and money laundering.
It is also proposed to make such information publicly accessible, and as a first step in this process the Land Registry would publish details of the legal owners and the addresses of all properties currently owned in the UK by foreign companies.
People will have to disclose the following details:
Company and residential address
Date of birth
Country or state of usual residence of the beneficial owner
Date of acquiring the beneficial interest, and how it is held
David Cameron’s statement said the UK would create the world’s first International Anti-Corruption Coordination Centre in London, in partnership with the United States, Canada, Australia, New Zealand, Switzerland, and Interpol.
According to Cameron, France, the Netherlands, Nigeria, and Afghanistan have agreed to launch their own public registers of true company ownership.
Australia, New Zealand, Jordan, Indonesia, Ireland, and Georgia agreed to take “the initial steps” towards making similar arrangements.
Cameron further stated “It needs an unprecedented, courageous commitment from world leaders to stand united, to speak into the silence, and to demand change.”
Why is it important?
The World Bank has estimated that corruption adds up to 10% to business costs globally. According to the OECD, corruption costs around 5% of global GDP every year. If this could be cut by just 5%, it would add as much to global GDP as was estimated for the Doha Development Trade Round.
Crime organisations and corrupt individuals frequently use companies to hide the proceeds of bribery, corruption and organised crime. Organised crime costs the UK at least £24 billion each year. Criminals deliberately try and obscure the ultimate ownership of these companies to distance themselves from the assets they really control and ensure law enforcement agencies, regulators, legitimate businesses and the general public are unaware of the true role the companies they control are performing.
By Imposing this Law, the Government will have control on companies and the wrong practices can be stopped. UK government has already taken a series of steps to tackle tax evasion and tax avoidance to ensure that overseas investors pay their fair share and greater transparency will help to complement those steps and ensure that the UK continues to be a safe and secure place to invest.
For further information please contact Danijel Biki (Business Development) on ++020 3820 7385 or email: email@example.com
Note: The information should not be construed as legal or other advice as it designed as an information source only © More Group 2018. All rights reserved.