On the 1 August 2022, the UK government introduced the register of overseas entities. The deadline to register overseas entities is 6 months after the commencement date, 31st January 2023.
Law firms, Accountants, and Company Service Agents acting on behalf of clients, particularly lawyers dealing with property transactions involving overseas entities will need to consider whether they are impacted.
The Register of Overseas Entities
What is the Register of Overseas Entities?
From the 31st January 2023, any overseas entity must register their UK property on the Register of Overseas Entities. The Companies House will be facilitating the public register and property owners must disclose certain information including the Ultimate Beneficial Owners (UBO). Fast-tracked through Parliament, the UK responded to the Russia/Ukraine conflict by stepping up its Anti Money Laundering (AML) initiatives to combat the financial crime that occurs through poor transparency of overseas ownership of UK property.
Overseas entities are now responsible for assessing their need to comply with the new regulation, including establishing whether their property ownership is within its scope, verifying UBO information and taking the necessary steps to adhere to the requirements. After an initial filing is made to Companies House, annual filings will also be required. The Maples Group is well placed to assist, with an existing understanding of our clients’ cross-border holding company structures, combined with hands-on experience assisting clients to comply with the introduction of the People with Significant Control Register (“PSC Register”) in 2016 and daily interactions with UK Companies House.
What is meant by ‘overseas entity’?
Any persons or companies governed by foreign law are impacted by the legislation, this includes:
-overseas entities, namely companies,
-partnerships
-any other legal person
-the person with significant influence of a trust or partnership and/or
-any beneficial owner of the entity
Who can verify the beneficial owners before entering entities onto the register?
The new Register will require overseas entities to declare their beneficial owners and/or managing officers. Companies House has now confirmed that before an overseas entity registers its beneficial owners or managing officers on the new Register, a UK-supervised ‘relevant person’ will need to verify the required information about them. The relevant person cannot be family member or close associate of the individual concerned.
The relevant person includes but not limited to:
-credit institutions
-financial institutions
-auditors, insolvency practitioners, external accountants and tax advisers
-independent legal professionals
-trust or company service providers
-estate agents and letting agents
How can a relevant person register an overseas entity ?
The information required for the Register of Overseas Entities about the Ultimate Beneficial Owner includes:
– their name
– Date of birth
– Address and
– Date when the individual became a registrable beneficial owner for the overseas entity.
– Details of trusts (if required)
– Details about the relevant person who verified the information will also be on the public register.
Tip for lawyers or other relevant persons
Lawyers should encourage clients to:
– collect the information required by Companies House in relation to the beneficial owners of the entities.
– decide which third party they’ll use to provide the required verification statement to Companies House and obtain their agreement to do this.
– obtain the required confirmations from the beneficial owners
Once the relevant filings have been made to Companies House, the overseas entity will be provided with an overseas entity ID, with annual filings required until the property is sold and a request is made to be removed from the register.
What happens if entities don’t comply?
Failure to comply is potentially a criminal offence both for the entity and its officers, (subject to mitigation and transitional provisions) punishable by a fine and/or imprisonment. The seriousness of the offence should not be underestimated: fines are £500 per day per officer of the overseas entity and reckless or false statements can lead to five years imprisonment.
How can Verify 365 assist?
With this legislation now effective, Verify 365 would be delighted to assist ‘relevant persons’ in the verification process of their overseas clients.
Identity Verification
As a leading AML & ID verification solution, Verify 365 can verify individuals in over 195 countries using NFC based biometric ID verifications. As UK-registered ‘relevant persons’ would be covered by the UK AML regulations it is important that they verify the identity of the individual with absolute certainty and accuracy. We are proud to announce that our identity verification checks are the most comprehensive, accurate and instant available.
Address Verification
Within our platform, you can verify the address of your client using smart data capture and real time address verifications. This is checked alongside live data sources or a document can be uploaded and checked alongside the identity verifications.
PEPs/Sanctions
You can check the overseas entities alongside global PEPs/Sanctions lists ensuring you have full knowledge on the nature and circumstances of the individual you are acting for. Relevant persons can also benefit from ongoing monitoring which updates in real time.
Open Banking
Accurate financial information is one of the most crucial aspects of a good KYC/AML framework and relevant persons should take careful measures where necessary to understanding the financial information associated with the individual or corporation. Open Banking seamlessly connects to multiple mobile banking apps and pulls in accurate, raw data from the financial institution.
For more detail on exactly what the Act means for your law firm, contact our team who can help with providing the technology to complete fast verifications of your clients.
Our UK-based team of highly experienced professionals have an intimate knowledge of the UK’s regulatory environment and AML compliance culture, including the HM Land Registry, SRA, and PSC Register and the UK’s regulatory environment and AML compliance culture, including the HM Land Registry, SRA, and PSC Register.
