The deadline for registration as an Overseas Entity is today 31 January 2023, have you registered the overseas entity and its registrable beneficial owners or managing officers to the Register of Overseas Entities with Companies House?
We previously covered in our guide, ‘What you need to know about the new register of overseas entities’ exploring what steps businesses acting for foreign clients must do to ensure compliance with ‘The Register of Overseas Entities’, which came into force fast-tracked on 1 August 2022, under the Economic Crime (Transparency and Enforcement) Act 2022. This requires qualifying overseas entities to identify and verify their beneficial owners or managing officers (using an independent verification process), and submit the information to Companies House.
However, new data shows that thousands of offshore companies with UK properties are still not publicly declaring their ultimate owners due to being controlled by secretive trusts. As of January 31, 2023, 18,000 companies have registered with the government’s register, but at least 2,400 companies with UK property still do not reveal their beneficial owners because they are trusts based offshore.
Out of the 18,000 registered companies, 5,800 of the beneficial owners (about a third) are named as companies, with at least 2,412 appearing as trusts with no public information available.
As of noon on January 29, 2023, only 18,493 out of an estimated 32,000 companies have made declarations, suggesting there may be a last-minute rush to register and also a degree of non-compliance. Close to a third of the registered overseas entities are incorporated in the British Virgin Islands (30.1%), one in five in Jersey, and 12% in the Isle of Man. Nearly three-quarters of the registered entities are based in these three jurisdictions, Guernsey, or Luxembourg.
The fact that so many offshore companies are declared as owned by other companies or trusts has prompted Stephen Abbott Pugh, head of technology for Open Ownership, a non-governmental organization focused on beneficial ownership transparency, to comment that “the public still aren’t able to easily discover the people behind those companies in many cases”.
Verify 365, (KYB) know your business verification software provider, has stepped up its efforts to ensure compliance with the new Register of Overseas Entities by launching its Enterprise version. The software not only ensures that law firms, estate agents and financial service businesses can identify the ultimate beneficiary owners, subsidiaries and company structures of international businesses but also acts as an identity service provider to verify individuals who register their properties.
“Verify 365 is proud to step up as a solution provider for businesses and regulated agents with our new Enterprise version. By combining our international KYB solution with the new obligations under the Economic Crime (Transparency and Enforcement) Act 2022, we aim to enhance transparency and prevent money laundering and fraud in the legal and property sectors. As UK-regulated agents are now required to complete verification checks on beneficial owners of an overseas entity, our technology provides the necessary tools to meet these obligations efficiently and effectively with our biometric identification software powered by Dynamic ID.” said Azeem Rashid, Director of Verify 365.
Failure to comply with the registration requirements by the 31 January deadline could give rise to criminal sanctions, including fines and/or prison sentences.
Despite the exemptions given to trusts, those who have declared their beneficial ownership of offshore companies with UK properties have complied with their legal obligations to reveal their identities. The public interest in reporting on the business interests and property ownership structures of wealthy, politically connected, and influential people remains a concern.
For further information on how to register click here
