UK Warns of 'Severe' Penalties for Offshore Property Owners
Overseas owners of property in the UK face the prospect of financial penalties or prosecution after a deadline passed for them to register with British authorities and declare the identities of their beneficial owners.
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(Bloomberg) — Overseas owners of property in the UK face the prospect of financial penalties or prosecution after a deadline passed for them to register with British authorities and declare the identities of their beneficial owners.
The UK government is preparing enforcement action against entities that haven’t complied with the Jan. 31 deadline, who may face “severe sanctions,” the Department for Business, Energy & Industrial Strategy said in an e-mailed statement Wednesday. An estimated 12,930 out of a total of 32,440 registered overseas organizations are yet to declare their beneficial owners, BEIS said.
“There is nowhere for the criminals and corrupt elites to hide,” said business minister Martin Callanan in the statement. “We will be using all the tools at our disposal, including fines and restrictions, to crack down on foreign companies who have not complied.”
The registry opens up a part of the UK’s traditionally opaque property market, which has become a global haven for the world’s super-rich. An influx of high net worth buyers, including Russian oligarchs, has earned the UK capital the nickname “Londongrad.”
The register sets the UK on a different course to neighboring nations after the European Court of Justice struck down public beneficial ownership registers for European Union nations. That sparked outcries from transparency advocates.
Following Russia’s invasion of Ukraine in 2022, the UK took other measures to crack down on dirty money, including scrapping its flagship “golden visa.” That program was designed to reward foreign investors with the right to live in the country. Home Secretary Suella Braverman said in January that the so-called Tier 1 Investor Visa was used by 10 Russians who were later placed under sanctions.
“The catalyst for it was Ukraine,” Piers Master, a London-based partner who focuses on wealthy individuals at law firm Charles Russell Speechlys, said of the register. “It suddenly got the political traction it had been lacking for the past several years.”
“There’s a lot of speculation about what’s going to happen to entities that fail to meet the deadline. If they’ve made an attempt to comply, we hope the UK is going to be lenient on them,” he said.
In a report issued Tuesday, watchdog Transparency International criticized the UK over political and spending scandals, but praised it for its work in setting up the register, calling it “one of the leaders when it comes to beneficial ownership transparency.” Nevertheless, it said over 90,000 properties were owned anonymously through offshore companies.
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