The creation of an Open Register of Beneficial Owners to help combat money laundering and property fraud has taken another step forward after this month’s Joint Ministerial Council meeting with the Minister for Overseas Territories, Stephen Doughty, and Leaders and Representatives of the Overseas Territories.
While some Overseas Entities have taken steps to publish a list of beneficial owners of UK land and property, not all have done so and there has been some push back from some governments of Overseas Entities to produce an accessible list in recent months.
The UK Government, however, has an ambition that Publicly Accessible Registers of Beneficial Ownership should become an international norm, with the hope that Overseas Territories and Crown Dependencies follow suit.
Under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, all estate agents and letting agents who are renting property with monthly rents of over 10,000 euros, are required to conduct customer due diligence checks on their clients.
VERIFYING THE BENEFICIAL OWNER
As part of these checks, it is compulsory for agents to verify who the beneficial owner or ‘beneficiary’ of the property is going to be.
The UK is viewed as a highly attractive destination for criminals due to the high value of property and the size of its market, as substantial amounts of money can be laundered through single transactions.
“This can impact small independent and large agencies working in sales, lettings and auctions.”
This can impact small independent and large agencies working in sales, lettings and auctions.
Homes are taken out of the market if bought with laundered money and regularly sit empty.
UNTRACEABLE CRIMINAL FUNDS
Criminal funds can be concealed and made to look legitimate through an untraceable ‘company’ and subsequently the purchasing of property.
When property agents try to determine the beneficial owner, they find only documents listing shell companies. If agents have access to the list of owners, they can more easily identify the beneficial owner and verify the potential money laundering risk of the property transaction.
Propertymark has been calling for an open and accessible Register of Overseas Entities in its position paper on reducing economic crime in the property sector.
HELPING AGENTS
Henry Griffith, Policy and Campaigns at Propertymark, says: “Propertymark welcomes progress on developing an open register of beneficial owners.
“After some initial concerns raised by the Overseas Territories on the public register having the potential to breach data privacy requirements, the commitment to complete plans to implement Accessible Registers of Beneficial Ownership will go a long way in helping agents.
“This will identify where an individual or organisation is looking to purchase property through a third party in order to circumvent any financial sanctions or to hide their identity.”
