Ownership of Over 70 per cent of Properties Held by Foreign Shell Companies Remains Unknown

More than two-thirds of properties in England and Wales held by overseas shell companies still do not reveal who owns them, a new report has found.

The report, published on Sunday 3 September 2023, by researchers from the London School of Economics (LSE), the University of Warwick, and the Centre for Public Data, found that 109,000 out of 152,000 English and Welsh properties held by foreign shell companies do not publish information about their owners, despite government attempts to crack down on anonymous ownership of UK property.

The UK government introduced the Register of Overseas Entities (ROE) in August last year, following Russia’s invasion of Ukraine in February 2022. The Register forms a key part of the government’s strategy to tackle global economic crime and requires overseas entities that own UK property or land to declare their beneficial owners or managing officers.

However, a new report, ‘Catch Me if You Can: Gaps in the Register of Overseas Entities’, found that for 35 per cent of properties owned via overseas shell companies (54,000 out of 152,000), even law enforcement agencies do not know the true identities of the beneficial owners.

In 10 per cent of cases (15,000 properties), the company is missing from the ROE altogether, and in a further 25 per cent (39,000 properties), essential information has not been reported.

The report’s authors believe that these information gaps are due to flaws in the ROE and that owners use various loopholes to obscure foreign ownership of properties in England and Wales held by foreign shell companies.

Researchers found that in 87 per cent of cases where beneficial ownership information was missing or inaccessible to the public, it was due to deliberate choices by the government to keep the information out of scope of the legislation, rather than rule-breaking by overseas companies.

César Poux, Research Officer at the International Inequalities Institute at the LSE, said: “The striking thing is that most of the problems with the register are self-inflicted. There certainly is some rule-breaking, but most of the problems are because the legislation is flawed.”

The authors of the report are urging the government to update the legislation to close the loopholes.

Anna Powell-Smith, Director of the Centre for Public Data, said: “We still don’t know who really owns tens of thousands of properties in the UK. The government should act to close these loopholes.”

The House of Commons is due to consider the House of Lords’ amendments to the Economic Crime Bill on Monday 4September. Updates to this legislation could help tighten requirements but are currently being opposed by the government.

The report makes ten recommendations the government could adopt to close the gaps identified. “There is no point building a dam halfway across a river. These gaps are threatening the efficacy of the entire register and the government should close them at the earliest opportunity,” said Andy Summers, Associate Professor at LSE Law School and LSE’s International Inequalities Institute.

For more information and to see the full report, click here.

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