The Economic Crime Bill: How It will Affect Money Laundering in the UK

With sanctions taking centre stage in the international response to Russia's invasion of Ukraine, property ownership transparency has become a top issue for the UK government. The government has pushed through the Economic Crime Bill with the aim of making it more difficult for the proceeds of crime to be laundered through the purchase of UK property.

On 15 March 2022, the Economic Crime (Transparency and Enforcement) Act 2022 was passed into law. The bill seeks to establish a register of overseas entities and their beneficial owners, amend financial sanctions law, and reform the UK's Unexplained Wealth Orders to empower criminal investigators.

A New Register of Overseas Entities

The main provision in the Economic Crime Bill is the establishment of a register of foreign entities that own property in the UK. Companies House will be in charge of the registry. If foreign businesses or legal entities fail to declare the beneficial owner of an asset, they will be charged with a criminal offence and sentenced to five years in prison. Financial penalties are also available.

The Unexplained Wealth Order (UWO) Regime

The measure in the Economic Crime Bill will strengthen the regime of Unexplained Wealth Orders (UWOs). When it appears that the beneficial owner cannot explain the source or origin of monies used to purchase UK property, UWOs are utilised. The regime's powers will be expanded so that the National Crime Agency (NCA) can target property owned by individuals and businesses as well as opaque institutions like trusts and foundations.

Although the NCA will be the primary force behind investigations into unexplained wealth, HMRC will play a key role if there are suspicions or dangers that the monies used to purchase the property may be liable to UK taxes.

The UK’s Golden Visa Scheme

Labour former minister Dame Margaret Hodge has long campaigned for light to be cast on Londongrad, she told The National News.

The UK's infamous golden visa scheme, which was discontinued in February this year, was a crucial component in England's money laundering issues.

The Labour government introduced the plan in 2008, allowing people with a minimum of £2 million in investment capital and a UK bank account to apply for residency.

In other words, the more money an applicant had and planned to invest in the UK, the faster their visa application was processed. On the same occasion, the applicant was granted indefinite leave to reside in the UK. The scheme allowed oligarch money to pour in. The issue was that the money was often dirty.

“In theory there were checks on this but, in practice, it didn't work,” Ms Hodge said.

“Of course, it was abused by oligarchs and kleptocrats who wanted to bring their dirty money into London and use the scheme to establish legitimacy and credibility in what was seen as a trusted jurisdiction.”

According to the anti-corruption monitor Spotlight, 6,312 golden visas — nearly half of all those given — were probed by UK authorities for threats to national security.

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