The British government announced a new public register that from 2021 will require overseas companies that own or buy property in the U.K. to identify their beneficial owners to tackle money laundering through property transactions.

More than 75 percent of properties currently under investigation use offshore vehicles, a tactic to hide the true owners that is regularly seen by investigators pursuing high-level money laundering, the U.K. government said.

More than US$252 million worth of property in Britain has been brought under criminal investigation as the suspected proceeds of corruption since 2004.

The Department for Business, Energy and Industrial Strategy’s register will require overseas companies that own or buy property in the U.K. to provide details of their ultimate owners.

“This will help to reduce opportunities for criminals to use shell companies to buy properties in London and elsewhere to launder their illicit proceeds by making it easier for law enforcement agencies to track criminal funds and take action,” the prime minister’s office said in a statement.

Business Secretary Greg Clark said, “We are committed to protecting the integrity and reputation of our property market to ensure the U.K. is seen as an attractive business environment – a key part of our Industrial Strategy.”

He added, “this world-first register” will build on the U.K.’s reputation for corporate transparency, as well as helping to create a hostile environment for economic crimes, like money laundering.

The register will also provide the government with greater transparency on overseas companies seeking public contracts, he noted.

Government committed to publishing a draft bill this summer and introducing it in parliament by next year. Following legislation, the register would go live by early 2021.

The British government made the announcement during a debate of the Sanctions and Anti-Money Laundering Bill in the House of Lords in January, amid attempts to insert a clause into the legislation requiring a “public register of beneficial ownership of U.K. property by companies and other legal entities registered outside the U.K.”

Conservative Lord Faulks introduced the amendment stating that he felt dismay that large parts of central London and other parts of the country “are dark at night,” with property either wholly unoccupied or occupied for brief periods only.

“Who owns these properties? We simply do not know, there being no obligation to identify beneficial ownership of foreign companies which own property yet no restriction on foreign ownership,” he said.

“We may not know, but we have strong suspicions,” he added, citing anti-corruption organization Transparency International, which says that £4 billion-worth of property in London is bought with suspicious wealth.

“It is a supreme irony that this country’s adherence to the rule of law encourages criminals and fraudsters to invest here, when in their own countries there may be little or no respect for the rule of law,” Lord Faulks said. “Are we to stand idly by and to act in effect like a handler of stolen goods?”

Lord Hodgson of Astley Abbotts noted in support that the facts surrounding the use of companies by overseas investors to invest in U.K. property, enabling them to conceal their identity, are generally agreed.

The U.K. government had committed to creating a register to disclose the beneficial owners as early as 2016 at the Anti-Corruption Summit in London.

Lord Ahmad, the Foreign and Commonwealth Office Minister, explained that the Department for Business, Energy and Industrial Strategy has sent more than 100 pages of drafting instructions to the Office of the Parliamentary Counsel, and work preparing the clauses for the bill is under way.

Specific provision will have to be made for Scotland and Northern Ireland, which have different land registration systems and their own land registries.

Lord Ahmad noted that the department commissioned research on the potential impact of the policy on investment decision but work on the impact assessment was ongoing.

He added that the register would warrant a separate bill. “The register will be first of its kind in the world and will affect people’s property rights. A robust enforcement mechanism will be essential.”

The U.K. government believes that criminal sanctions may not be sufficient in isolation, but that additional enforcement through land registration law will also be needed if the register is to have teeth.

“A key proposal is that those who own property who do not comply with the register’s requirements will lose the ability to sell the property or create a long lease or legal charge over it. This will be reflected in a restriction on the register of title,” Lord Ahmad said.

Meanwhile, the U.K.’s National Association of Estate Agents reported that estate agents are being heavily fined for failing to comply with new anti-money laundering and anti-tax evasion legislation.

Her Majesty’s Revenue and Customs confirmed the fines handed to estate agents but could not provide any details.

Tighter rules were introduced in 2017 under the Money Laundering Regulations. They require agents to conduct anti-money laundering checks on the buyers and sellers of properties.

Under the Criminal Finances Act, industry professionals can also face sanctions for failing to prevent tax evasion.

Since the legislation was introduced, there has been a “ramping up of compliance activity,” Mark Hayward, CEO of the National Association of Estate Agents, told Business Insider.

“Fines are not publicly being made known but, anecdotally, we know they are significant,” he said.

Non-compliant firms have faced “business busting” six- and seven-figure fines, said Hayward.

HMRC confirmed issuing a total of 880 anti-money laundering-related penalties but said it could not provide a breakdown by industry.

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