May 21, 2024

Britain fines foreign companies for neglecting asset registers, but few pay

Britain has fined 400 foreign companies for failing to sign up to a new register designed to shine a light on illicit assets hidden in British assets. However, less than 3% of fines have been paid so far, new data shows.

Companies House, Britain’s public registrar, told Reuters it had so far fined 423 unregistered foreign companies a total of 21.86 million pounds ($27.7 million). In doing so, it used powers handed down last June to help disrupt Britain’s cozy relationship with Russian money.

Unaudited Companies House data, reported here for the first time, shows that only £580,000 of fines were paid – around 2.65% of the total – reflecting the challenges the registrar faces in resolving breaches.

The United States and the European Union have called on Britain to crack down on its financial system and fight money laundering overseas. A British parliamentary report in April estimated that economic crime costs the UK up to £350 billion each year.

Britain introduced the Register of Foreign Enterprises (ROE) after Russia’s invasion of Ukraine in 2022 in an attempt to bring largely anonymous owners out of the shadows and prevent corrupt oligarchs and foreign criminals from using British assets to launder money.

The register recorded 30,931 registrations on Thursday – 1,509 fewer than the 32,440 foreign companies in Britain.

Some companies may have changed their names, failed to update property records or no longer exist, officials told Reuters. But those who fail to register face civil penalties, criminal prosecution and restrictions on their possessions, including sales.

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If the fine is not paid within 28 days, the registrar can also recommend the court to attach the property.

The companies declined to comment on whether the House had taken legal action, but said they would use the expanded powers to share data with other government departments and law enforcement agencies.

It supports the UK’s efforts to combat economic crime and reduce crime,” Martin Swain, head of intelligence and law enforcement engagement at Companies House, told Reuters by email.

The National Crime Agency (NCA) said it was working with Companies House to identify violations of the ROE. She declined to provide further details.

Despite the small fines, the registrar’s actions so far have been “really promising”, said Ben Cowdock, head of investigations at the anti-corruption campaign group Transparency International.

“I think the next step will be for UK law enforcement to use some of this information to freeze and seize the assets of those who are charged,” he added.

Lawmakers and anti-corruption groups have welcomed two anti-economic crime laws that introduced a registry and other measures to address Britain’s role as a safe haven for illicit funds.

Ownership of assets cannot be hidden through opaque trusts, and some are calling for the laws to be expanded to avoid transparency for friends and family or in jurisdictions such as the British Virgin Islands.

A government consultation on expanding access to information about trusts in the ROE concluded in February. Some advocates argue that compliant citizens have legitimate rights to privacy and data protection.

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($1 = 0.7892 pounds)