The Register of Overseas Entities (ROE) introduced by the UK government in Spring 2022 has aimed to unveil the true identities of anonymous foreign owners of UK properties. This article delves into the key findings and recommendations from the research paper titled "Catch me if you can: Gaps in the Register of Overseas Entities" conducted jointly by the London School of Economics, the Centre for Public Data, and the University of Warwick.
Highlights from the document
The document sheds light on the inadequacies and deficiencies in the current system for identifying beneficial owners of properties held by overseas entities, emphasising the need for improved transparency and better enforcement of reporting requirements.
Incomplete Property Information
The Register of Overseas Entities was implemented with the intention of exposing the real owners behind the vast number of properties in England and Wales held by overseas entities. However, the research reveals significant shortcomings in achieving this goal. Key findings include:
- Lack of Essential Information: A staggering 71% of properties owned by overseas entities lack vital information about their beneficial owners.
- Legislative Gaps: Major gaps in the legislative scope of the ROE contribute to these problems, leading to issues beyond non-compliance.
- Five Main Issues: The document identifies five main problems, including failures to register, missing beneficial owner registrations, trusts obscuring ownership, unincorporated partnerships hiding beneficial owners, and corporate entities registered as beneficial owners without a valid basis.
- Government's Position: The government contends that the purpose of the ROE is to unveil the beneficial owners of the overseas entity rather than the property itself.
- Missing Information: Even for government purposes, essential information is still missing for around 38% of overseas entities within the current ROE scope.
The research concludes with recommendations to enhance the ROE's effectiveness, including the publication of more detailed property information, frequent data updates, robust enforcement actions, lowering the shareholding threshold for identifying beneficial owners, and greater transparency regarding trusts, partnerships, and corporate ownership.
Beneficial Ownership Explained
This section clarifies the concept of beneficial ownership under the ROE, highlighting that the primary objective is to combat money laundering and increase transparency in land ownership in the UK.
The importance of publicly accessible information about beneficial owners is emphasised, and concerns regarding the withholding of information related to trusts are discussed. Failures to register by some overseas entities and the reasons for unmatched proprietors in the Overseas Companies Ownership Dataset are also addressed.
Issues with Registration
This section delves into two main issues related to the registration of overseas entities and their properties in England and Wales:
- 1Missed Matches: The lack of common identifiers shared between datasets from Companies House and HM Land Registry leads to missed matches between registered overseas entities and title data. An estimated 700 missed matches exist.
- 2Failure to Register: Approximately 3,400 overseas entities (12%) have failed to register under the ROE, indicating a significant problem with non-compliance. A risk-based approach to detect and address non-compliance is recommended.
Reporting Requirements for Overseas Entities
This section discusses reporting requirements for overseas entities, with a focus on share ownership and trust structures. It highlights a gap in reporting for overseas entities owned by unregulated trustees and suggests possible reforms to address this gap.
Following the registration, every entity listed on the register is required to submit an Annual update statement, confirming the accuracy and update of the information held by Companies House.
Gaps in ROE for Trusts and Partnerships
This section identifies gaps in the ROE related to trusts and unincorporated partnerships. The document suggests reforms to require registered overseas entities to provide comprehensive trust information and disclose information about all partners in unincorporated partnerships.
Deficiencies in ROE
This section examines challenges and deficiencies in the current ROE system, highlighting problems with obtaining valid information about beneficial owners, issues with the Persons of Significant Control (PSC) Register, and the inclusion of regulated overseas corporate trustees. The need for improvements, such as requiring additional statements from overseas entities and enhancing the verification process for beneficial owners, is emphasised.
Beneficial Ownership Gaps
This section discusses gaps in the current system for identifying the beneficial owners of properties held by overseas entities. Key findings include the lack of reported individual beneficial owners for 85% of these entities and the need for reforms, including publishing title numbers, increasing data updates, and requiring trust information from overseas entities acting as trustees or nominees.
OE & Title Attributes
This section provides an overview of various attributes and characteristics related to overseas entities and their ownership chains at both the entity and title levels. It assesses the validity of overseas entities and titles based on several factors and identifies sources of invalidity.
The Register of Overseas Entities (ROE) has made strides in increasing transparency in property ownership, but significant gaps and deficiencies persist. Addressing these challenges is crucial to achieving the government's goal of revealing the true identities of anonymous foreign property owners and setting a global standard for transparency. Reforms in reporting, registration, and verification processes, as well as increased enforcement measures, are needed to enhance transparency and combat corruption in property ownership.
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