Land registry fines worth £1bn not yet imposed

The UK has so far failed to impose fines of up to £1bn on foreign companies that break a landmark transparency law, a BBC analysis reveals.

Since January, foreign companies owning UK property can be fined up to £2,500 a day unless they declare their owners.

Thousands are yet to do so, including companies that have been linked to oligarchs like Roman Abramovich, but no fines have yet been issued.

The government said it was “building cases” against unregistered companies.

The search was introduced as part of the Economic Crimes Act in February 2022, following the Russian invasion of Ukraine. Ministers said it would reveal who ultimately owned UK property and would also stop foreign criminals from using UK property to launder money.

Although most companies have submitted their details, around 5,000 companies with properties in England and Wales have not, more than three months after the January 31 deadline. The government suggests the figure is likely to be lower, as some companies may no longer exist and several hundred have already transferred ownership.

But even if there were just 4,000 companies not complying with the law, the total value of the fines would be £10m a day if the maximum daily financial penalty were imposed on all companies that failed to provide their information.

For the entire period from the cut-off date, over 100 days, this would add up to around £1bn.

Some foreign companies may not yet be aware of the new law, while others might find it difficult to identify and verify all of their beneficial owners, according to John Barnett of the Chartered Institute of Taxation.

But there may be others who have no intention of complying.

They could be “burying their heads in the sand” or making a deliberate decision to “risk… fines, confiscation of property,” Barnett told the BBC.

Although no financial penalties have been issued, a spokesperson for the Department of Business and Commerce said it was preparing cases against companies that failed to register by the deadline and working with law enforcement to “prioritize action against the most egregious violators.” “.

The spokesman said the UK was the first country in the world to take “this tough new approach to tackling money laundering through property”, adding: “Fines are just one tool in our arsenal to take action crackdown on non-compliance and non-compliance companies can no longer buy or sell unregistered land, cutting off the flow of money.”

But, as the government itself has acknowledged, establishing which properties are owned by oligarchs with ties to Vladimir Putin is a tricky business.

When the Foreign Ministry announced new sanctions last month against those who knowingly helped sanctioned Russians, including Abramovich, hide their assets, it said the oligarchs had “struggled to protect their wealth” with the help of financial fixers. , offshore trusts, shell companies and family members.

A 15-bedroom mansion in west London widely known as the home of Roman Abramovich (planning applications for the property were made in Abramovich’s name) was bought for £90m in 2011 by the Cyprus-based firm A. Corp Trustee. The company appears to be among those breaking the law by not providing details to the registry.

A few miles away is a multi-million dollar City of London block that the Pandora papers The document leak revealed it was owned by businessman Said Gutseriev, who was sanctioned in 2022, through an offshore company that also does not appear to have submitted its ownership details to Companies House corporate registry.

Neither Gutseriev nor Abramovich responded to BBC requests for comment.

Companies with properties linked to metals and energy magnate Oleg Deripaska, who was named in a UK court hearing as the ultimate beneficiary of a listed art deco mansion, also appear to be breaking the law by not filing on the register. Grade II listed in Surrey and a grand house in London’s Belgrave Square.

When last year the house in Belgrave Square was occupied by Demonstrators supporting housing for Ukrainian refugees, a spokesman for the billionaire said the property belonged to family members and not the oligarch himself.

Asked if the companies he was linked to were violating the new transparency law, a spokesman for the oligarch told the BBC that “none of these properties are owned by Mr Deripaska.”

A BBC and Transparency International investigation in February it found that, despite new transparency laws, the owners of some 50,000 UK properties held by foreign companies remained hidden from public view.

This included companies that ignored the law entirely or presented information in such a way that it was impossible for the public to figure out who owned it and who ultimately benefited from it.

Helena Wood, head of the UK Economic Crime Program at the Royal United Services Institute think tank, said: “While the new registry should be welcomed as a deterrent for the future, its ability to adapt an existing system based on 30 years of turning a blind eye was always going to be limited”.

Additional reporting by Alison Benjamin