UK fines offshore entities for ignoring property register, but few pay

FILE PHOTO: A pedestrian carrying an umbrella walks along the River Thames in view of City of London skyline in London

By Kirstin Ridley

LONDON (Reuters) - Britain has fined over 400 overseas entities for failing to sign up to a new register designed to shed light on illicit wealth hidden in UK property, although less than 3% of the penalties have been paid so far, new data shows.

Companies House, Britain's public corporate registry, told Reuters it had fined around 423 unregistered overseas entities a total of 21.86 million pounds ($27.7 million) to date, using powers it received last June to help disrupt Britain's cosy relationship with Russian money.

Unaudited Companies House data, reported here for the first time, shows that only 580,000 pounds of the fines have been paid - around 2.65% of the total - reflecting the challenges faced by the registrar in pursuing rule-breakers.

The U.S. and European Union have urged Britain to do more to tackle money laundering in its financial system and overseas territories. A UK parliamentary report said in April economic crime cost Britain up to 350 billion pounds each year.

Britain launched the Register of Overseas Entities (ROE) in the wake of Russia's 2022 invasion of Ukraine to try to force often anonymous owners out of the shadows and prevent corrupt oligarchs and foreign criminals from using UK property to launder money.

The register listed 30,931 entries on Thursday - 1,509 short of the 32,440 offshore companies estimated by the government to own property across Britain.

Officials told Reuters some entities could have changed names, not updated land registry records or might no longer exist. But those that fail to register - along with their officers - face civil penalties, criminal prosecution and restrictions on their properties, including sales.

If a penalty is not paid within 28 days, the registrar can also use the courts to place a charge on the property.

Companies House declined to comment on whether it had filed legal action but said it was using enhanced powers to share data with other government departments and law enforcement agencies.

"This helps support the UK's drive to disrupt economic crime and reduce criminality," Martin Swain, Companies House's director of intelligence and law enforcement engagement, told Reuters by email.

The National Crime Agency (NCA) said it was working with Companies House to identify non-compliance with the ROE. It declined to divulge further detail.

Despite the low level of fine payment, the registrar's action to date looked "really promising", said Ben Cowdock, senior investigations lead at anti-corruption campaign group Transparency International.

"I think the next step ... is to see UK law enforcement use some of this information to identify property belonging to people with allegations against them in investigations which see their assets frozen and seized," he added.

Lawmakers and anti-corruption groups have welcomed two Economic Crime Acts that introduced the register and other measures to address Britain's role as a safe haven for illicit funds.

Some are calling for the laws to be extended to ensure property ownership cannot be shrouded by opaque trusts, shifted to friends and family or jurisdictions such as the British Virgin Islands to avoid transparency.

A government consultation about widening access to trust information on the ROE ended in February. Some lawyers argue that compliant citizens have legitimate claims to privacy and data protection.

($1 = 0.7892 pounds)

(Reporting by Kirstin Ridley; Editing by Sinead Cruise and Mark Potter)