On 7 March 2022, the Economic Crime (Transparency and Enforcement) Bill (the “Economic Crime Bill”) was rushed through the House of Commons. This is in response to growing calls to prevent money laundering and illicitly acquired money entering the United Kingdom from Russia, in response to the Ukraine Crisis.
The case in point
In brief the Economic Crime Bill is intended to make it more difficult for individuals based overseas to hide their wealth in the UK. Contained in the Economic Crime Bill are numerous measures targeted at overseas individuals including oligarchs and companies associated with Vladimir Putin, who are trying to hide their illicitly acquired money through property purchases in the UK. In attempts to fast-track the placement of such measures, the Economic Crime Bill was debated over the course of a single day. The Bill was agreed to be backed by all parties and successfully made its way through the House of Commons unopposed.
Since 2016, it is alleged that UK property worth £1.5 billion has been purchased by Russians accused of corruption or those with alleged links to the Kremlin according to research conducted by Transparency International, a campaign group for anti-corruption.
Accordingly, one of the main provisions of the Economic Crime Bill is to set up a register of overseas entities which would detail the true ‘beneficial owners’ of the property or land owned in the UK by overseas individuals and companies. This measure aims to prevent overseas oligarchs and criminals from utilising agents to create companies as a façade or alternatively, to purchase property in the UK to hide their illicitly acquired money. This register will require a company to declare the identity of the ultimate owner of the asset with failure to do so being a criminal offence punishable by up to five years in prison.
There is a six-month grace period in which existing overseas owners will have to register and disclose their identity. There are some concerns that this will afford individuals the opportunity to dispose of or transfer illicit assets to circumvent these transparency requirements.
In 2018, Unexplained Wealth Orders (“UWO”) was a new power available to authorities to curb suspected proceeds of crime invested into property. Individuals suspected of acquiring wealth through criminal or illicit means can be compelled to explain how they acquired such wealth. The Economic Crime Bill will strengthen the powers of UWOs by increasing the range of people who could be subject to an UWO, such as company directors, and the number of grounds under which one can be granted. Additionally, authorities will have more time to review case material and be afforded greater protection from substantial legal costs if they decide to pursue reasonable cases which are ultimately unsuccessful. To date, only four UWOs have been granted with one resulting in property being surrendered.
The Economic Crime Bill will also simplify the rules in relation to individuals already sanctioned elsewhere such as the United States and the European Union. These sanctioned individuals may also face sanctions under authorities in the United Kingdom.
Home Secretary, Priti Patel, said, “the UK must send a strong signal that it will not be a home for corruption.” The Shadow Home Secretary, Yvette Cooper further added that, “we must vow that never again will we allow our major institutions to be so corrupted and so influenced by corrupt elites, that we will give those involved in corruption and economic crime no place to hide, be it for Russia or anyone else in the world, we will no longer stand for this here in the UK.”
The Economic Crime Bill is expected to receive Royal Assent later this month as it now goes to the House of Lords. It will be interesting to see how effective the Economic Crime Bill will be once it comes into force. In the meantime, Rosenblatt is well placed to assist with any enquiries or advice surrounding this new legislation.
Rosenblatt can help
Rosenblatt has a wealth of experience in financial crime and is uniquely placed to support clients that are the subject of an investigation and prosecution, having defended one of the largest prosecutions brought by the Financial Conduct Authority.
https://www.rosenblatt-law.co.uk/services/financial-crime/#financial-crime
Contact us
Should you wish to discuss the services we offer further please contact Anil Rajani at anil.rajani@rosenblatt.co.uk.
Sources
- Economic Crime Bill: MPs back measures to speed up oligarch sanctions – BBC News
- UK fast-tracks law to tackle Russian ‘dirty money’ – BBC News
- Stats reveal extent of suspect wealth in UK property and Britain’s role as global money laundering hub | Transparency International UK
- What is the economic crime bill and how effective will it be? | Business | The Guardian
We at RBG Holdings/Rosenblatt support and encourage free/independent thinking in relation to issues which are sometimes considered to be controversial subject matters. However, the views and opinions of the authors of articles published on our website/s do not necessarily reflect the opinions, views, practices, and policies of RBG Holdings/Rosenblatt.
