UK Draft Bill Addresses Criminal Money Laundering Through Overseas Entities

Jones Day

Jones Day

In Short

The Situation: The purchase of property in the United Kingdom has, for various reasons, become an attractive mechanism by which to launder criminal proceeds through overseas entities.

The Solution: A draft bill is currently being considered which seeks to tackle the issue and increase transparency with the introduction of a register to record information about the beneficial ownership structure of overseas entities that hold or are acquiring property in the United Kingdom.

Looking Ahead: Having considered the views of a Joint Committee on the first draft of the Bill, the UK Government is now contemplating possible updates and improvements to the drafting, with a view to establishing a fully operational register by 2021.

What Is the Registration of Overseas Entities Bill?

The Government published a draft bill on the registration of overseas entities ("ROE Bill") on 23 July 2018 with the aim of increasing transparency regarding ownership of land in the United Kingdom. Currently, the democratic political environment, internationally respected legal system and financial protections in the United Kingdom has made the purchase of property in the United Kingdom an attractive mechanism by which to launder criminal proceeds through overseas entities. This situation is exacerbated by the facts that: (i) unlike countries such as New Zealand, India and Switzerland, ownership of land in the United Kingdom is permitted by entities based overseas; and (ii) enforcement agencies in the United Kingdom often encounter difficulties in accessing information about those who own or control such overseas entities.

In order to tackle this problem, and to maintain the integrity of the UK property market, the ROE Bill seeks to establish a publicly accessible register of the beneficial owners of overseas entities who are not exempt and who are either existing owners of, or are purchasing, land in the United Kingdom ("ROE Register"). The ROE Register will be managed by Companies House and will operate in tandem with other anti-money laundering initiatives which include: (i) the People with Significant Control ("PSC") register; (ii) suspicious activity reports; (iii) unexplained wealth orders; and (iv) the Fifth Anti-Money Laundering Directive (due to come into force by 10 January 2020 and pursuant to which beneficial ownership registers will be made public and the United Kingdom will be obliged to implement mechanisms to verify the information included on such registers). Once on the ROE Register, overseas entities will be required to update their beneficial ownership information, or confirm that the information on the ROE Register remains accurate, annually.

Current Status of the ROE Bill

A Joint Committee published a report addressed to the House of Lords and the House of Commons which considered the ROE Bill in draft form and set out a number of recommendations as to how it could be improved ("Joint Committee Report") on 20 May 2019. This report has been considered by the Government, which published its views in response in July 2019 ("Response"). It was stated in the Response that the Government anticipates that the ROE Register will be operational in 2021.

The Meaning of "Overseas Entities"

The ROE Bill defines "overseas entities" as legal entities that are governed by the law of a country or territory outside the United Kingdom. To constitute legal entities, such overseas entities must be body corporates, partnerships or other entities which are considered legal persons under the law by which they are governed. However, not all overseas entities which are either existing owners of, or are purchasing, land in the United Kingdom will be required to register details of their beneficial owners. Pursuant to the ROE Bill, the Secretary of State is afforded the authority to introduce secondary legislation exempting certain overseas entities from the requirement to register their beneficial ownership.

In the Joint Committee Report, the Joint Committee called for: (i) the publication of guidance by the Government as to the correct interpretation of the definition of "overseas entities"; and (ii) the allocation of responsibility for making determinations as to the legal personality of an entity (and therefore whether or not it falls within the scope of the ROE Bill) to Companies House. This was based on the fact that companies may not know whether or not they constitute legal entities for the purposes of the ROE Bill.

The Government disagreed in the Response that UK agencies such as Companies House should be afforded the (frankly judicial) role of determining the legal personality of entities, and considered that overseas entities are likely to already be aware of their legal status. It did, however, propose to publish guidance notes to ensure that the provisions of the ROE Bill are as clearly enumerated as possible. The Government also noted that, although third parties in the United Kingdom transacting with overseas entities subject to the Bill may be less likely to be aware of the legal status of such entities (and the attendant legal obligations under the ROE Bill such status can involve), conveyancers involved in such transactions should be in a position to bring this to the awareness of such third parties.

The Meaning of "Beneficial Owner"

The ROE Bill's classification of "beneficial owners" mirrors that used within the PSC regime, according to which a beneficial owner of an entity is one which satisfies at least one of a number of conditions, one being that he holds, directly or indirectly, more than 25% of the shares in that entity. The Government has rejected the Joint Committee's recommendation that this percentage be lowered in order to capture all true beneficial owners of overseas entities, on the basis that, according to both the ROE Bill and the PSC regime, persons that do not hold more than 25% shares in an entity will still be considered beneficial owners to the extent that they exert"significant control" over the entity. Furthermore, the figure of 25% is also consistent with other domestic and international anti-money laundering regulations. The Government has, however, committed to providing further guidance as to the meaning of "significant control".

Exempt Entities and Persons

As currently drafted, the ROE Bill provides that any entities deemed exempt from the regime pursuant to secondary legislation made by the Secretary of State will neither have to publicise beneficial ownership information on the ROE Register or provide such information to Companies House.

The Joint Committee Report recommends the amendment of the ROE Bill to address this fact, as it considers that certain types of entity, such as foreign governments, should still be required to provide beneficial ownership information to Companies House despite not having to publicly disclose it.

The Government disagrees with this suggestion and has indicated that it is considering exempting foreign governments from the regime, given that: (i) there are no clear registrable beneficial owners of foreign governments; (ii) direct purchases by foreign governments will be visible on land registries; and (iii) overseas entities through which foreign governments attempt to purchase property will, themselves, be subject to registration. However, given the potential for expansive exemptions to undermine the efficacy of the ROE Bill, the Government has agreed that it is appropriate that the power to introduce exemptions to the regime by way of secondary legislation should be subject to the affirmative resolution procedure (which requires Parliamentary approval).

The ROE Bill also currently provides for the Secretary of State to exempt individuals who would otherwise qualify as registrable beneficial owners of overseas entities which own or are purchasing land in the United Kingdom from being counted as such. The Secretary of State may exempt individuals in this way only if he is satisfied that there is a special reason why such individuals should be exempted. Given the arguable lack of clarity as to what will constitute a "special reason", and the fact that the legislative intention is that the power only be used sparingly, the Joint Committee's recommendation (which the Government is still considering) is that all reasons which would qualify as sufficiently special for this purpose be enumerated within the ROE Bill.

Modified Application and Update Requirements

The ROE Bill additionally provides that the Secretary of State may modify the requirements for applying and updating registrations in respect of registrable overseas entities where appropriate, in light of certain information that is already publically available. The Explanatory Notes which accompany the ROE Bill and which were published on 23 July 2018 ("Explanatory Notes") clarify that an example of information which would warrant modification in this way is beneficial ownership information relating to that entity contained on an "equivalent" overseas register. The Joint Committee Report, with which the Government agrees, recommends that such "equivalent" registers should be publically accessible and that users should be provided with links to such registers.

Consequences of Failing to Register

The current draft of the ROE Bill provides that beneficial owners who are subject to the requirement to register, and who fail to do so, will be subject to sanctions which include: (i) being restricted from acquiring, letting and disposing of property in the United Kingdom; and (ii) being held criminally liable for the breach. The Joint Committee Report has recommended that the ROE Bill also introduce civil penalties for such behaviour, on the basis that they are likely to be easier than criminal sanctions to enforce abroad, which the Government, in its Response, has stated that it will consider further.

The ROE Bill envisages a transition period of 18 months before which sanctions would be enforceable in respect of overseas entities that fall within the ROE Bill's scope because they already own land in the United Kingdom. This transition period would afford entities that would prefer that information about their beneficial owners not be made public the opportunity to sell any UK property before they become subject to the ROE Bill's registration requirements.

Tackling Potential Loopholes

The Joint Committee Report expressed concern as to how trusts would fit within the regime set out by the ROE Bill (and also the impending introduction of the Fifth EU Anti-Money Laundering Directive), given that they do not have legal personality and cannot directly hold land. The Government has clarified that, while trusts themselves would not be subject to the new regime, overseas entities holding land on behalf of trusts would be required to list details as to their beneficial ownership. Furthermore, offshore trusts that generate UK tax consequences (which most land-owning trusts do) are already required to provide beneficial ownership information to the Trust Registration Service ("TRS"). Whilst information listed on the TRS register is currently accessible only to law enforcement bodies, the Government envisages, with the transposition of the Fifth Anti-Money Laundering Directive in the United Kingdom, this being broadened to include individuals who can demonstrate a legitimate interest in accessing such information. The Government also envisages the scope of the TRS regime being expanded to include non-EEA trusts which acquire real estate in the European Union.

Next Steps

All overseas entities which own and/or intend to acquire property in the United Kingdom should be aware of the fact that, once the ROE Bill is enacted, they are likely to be obliged to register information about their beneficial ownership structure. It remains to be seen how the changes suggested in the Joint Committee Report and supported by the Government in its Response are incorporated into the current draft of the ROE Bill.

Four Key Takeaways

  1. The ROE Bill seeks to tackle money laundering via the purchase of property with the introduction of a register to record information about the beneficial ownership structure of overseas entities that hold or are acquiring property in the United Kingdom.
  2. Overseas entities which own and/or intend to acquire property in the United Kingdom should be aware of the fact that, once the ROE Bill is enacted, they are likely to be obliged to register information about their beneficial ownership structure.
  3. Entities that would prefer that information about their beneficial owners not be made public should consider selling any UK property before the envisaged 18-month transition period expires and they become subject to the ROE Bill's registration requirements.
  4. It remains to be seen how the changes suggested in the Joint Committee Report and supported by the Government in its Response are incorporated into the current draft of the ROE Bill.

Written by:

Jones Day

Jones Day on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.