The Govt has published details on its new Economic Crime Act, aimed at making seizing overseas oligarch’s assets that bit easier. The new Act’s aim may be laudable, but the reality is it gives power to the State to simply take physical assets, cash and crypto currency at will. In essence, it’s an I Don’t Like Your Face law and no democracy should go down that road. Anyone who thinks it will only be used on Russian oligarchs or international terrorists has obviously read very little history.
On a more mundane note, the legislation will almost certainly be incorporated into the KYC regs and ESG rules that underpin so much modern compliance in the world of insurance and broking. Companies and Trusts are included too by the way, not just individuals. So those brokers/insurers specialising in HNW are going to have to work much harder in establishing true ownership, before quoting. Awkward. The net result will probably be that assets will be shifted to more, shall we say, “flexible countries of theoretical residence,” where the rules can be bent at will.
Here’s the word from HM Govt, abridged to the essential highlights;
The new Economic Crime (Transparency and Enforcement) Act received Royal Assent in the early hours of this morning (15 March), following an expedited passage through Parliament.
Introduced following Russia’s invasion of Ukraine, the new legislation will mean the government can move more quickly to impose sanctions against oligarchs already designated by our allies, as well as intensifying our sanctions enforcement.
A new Register of Overseas Entities, requiring those behind foreign companies which own UK property to reveal their identities, will also be created under the act. Entities who refuse to reveal their ‘beneficial owner’ will face tough restrictions on selling the property and those who break the rules could face a fine of up to £2,500 per day or up to 5 years in prison. This will be a valuable tool for law enforcement agencies in investigating suspicious wealth.
Companies House will now begin work to implement the register as quickly as possible, working closely with the UK’s 3 land registries. Any foreign company selling properties between 28 February and the full implementation of the register will also be required to submit their details at the point of sale.
Reforms to Unexplained Wealth Orders (UWOs) will remove key barriers to their use, increasing time available to law enforcement to review material provided in response to a UWO and protecting them from incurring substantial legal costs if they act reasonably in a case that is ultimately unsuccessful.
Furthermore, UWOs will be more effective against those who hold property in the UK via trusts and other complex ownership structures. The government has also committed to publishing an annual report on their use.
NEVER LET A GOOD CRISIS GO TO WASTE
These measures form part of a wider package of legislative proposals to tackle illicit finance which will be introduced in Parliament in the coming months, including reforming Companies House and introducing new powers to seize crypto assets more easily.
The Prime Minister also announced a new ‘Kleptocracy Cell’ based in the National Crime Agency, which has been created to target sanctions evasion and corrupt Russian assets hidden in the UK.
The Home Secretary will attend the inaugural ministerial Russian Elites Proxies and Oligarchs Task Force on Wednesday. This meeting will bring together finance and justice and home affairs ministers from the G7, EU and Australia responsible for the supervision of sanctions and enforcement work. The task force aims to ensure the effective implementation of financial sanctions on Russian elites and oligarchs to further drive collective efforts to tackle Kremlin-linked illicit finance.
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