Impact of UK’s Economic Crime (Transparency and Enforcement) Act on British Virgin Islands (BVI) entities

New obligations on BVI entities holding property or land in the UK are now in force with the introduction of a Register of Overseas Entities and beneficial owners. 

To tackle economic crime, the UK government fast tracked the passing of the Economic Crime (Transparency and Enforcement) Bill (the Bill) through the House of Commons and the House of Lords after the invasion of Ukraine and the focus of Russian money in the UK, and on 15 March 2022, The Economic Crime (Transparency and Enforcement) Act 2022 (ECA) came into force (subject to certain provisions not being operative at commencement).

The ECA’s main purpose is to provide a framework for the disclosure of beneficial ownership of UK property by launching a Register of Overseas Entities and their beneficial owners, as well as amendments to unexplained wealth orders and amendments to and strengthening of sanctions legislation. 

How will this impact BVI entities who hold property in the UK and / or Scotland? 

Each BVI entity that owns UK land / real property or proposes to acquire UK land, will be required to undertake the following: 

  • register with UK Companies House (which will be a pre-requisite to a BVI entity’s ability to acquire or dispose of or lease UK property or to create a charge against it)
  • take reasonable steps to identify its beneficial owners or managing officers and provide verified information about them to UK Companies House, and
  • provide annual updates 

The ECA applies to both future acquisition of land / real property, and previous acquisition of land / real property acquired by a BVI entity in England and Wales since January 1999 and in Scotland since December 2014. It should be noted that all information provided to the UK Companies House, including the identities of  the BVI entities and its beneficial owners will be open for public inspection. 

With these new obligations being implemented under the ECA, a BVI entity should be aware of the requirements as set out in the ECA, as failure to identify the beneficial owner with the UK Companies House may lead to criminal liabilities, with up to five years’ imprisonment depending on the offence and imposition of a financial penalty. In addition, if a BVI entity fails to identify the beneficial owners of its property, the property may be frozen, which immediately disables the owner to lease, sell or charge it. However, BVI entities should check with their BVI legal advisor to see if there are any applicable exemptions from registration under the Act.  

Disclaimer

This updater has been prepared for clients and professional associates of Marbury. The information and expressions of opinion contained are not intended to be a comprehensive study or to provide legal advice. Readers are advised to seek specific advice concerning individual situations. For more information, please contact your usual Marbury advisor or info@marburys.com