Contribution
My Lords, noble Lords will be aware that, since 2022, the UK has kept a beneficial ownership register of overseas entities owning property in the UK, which I will refer to as the ROE. The regulations that we are debating today will strengthen the transparency of trust information on the ROE, improving transparency around the control and ownership of land.
The Economic Crime (Transparency and Enforcement) Act 2022, which I will refer to as the 2022 Act, created the legislative basis for the ROE. The ROE requires overseas entities owning or buying property in the UK to give information about their beneficial owners and/or managing directors to Companies House. Currently, there is no public access to information on trusts related to overseas entities on the ROE, other than the name of the trustee. This approach protects the right to privacy for those who operate trust structures for a variety of legitimate reasons. However, the Government understand the concerns around the use of trusts to facilitate economic crime, partly because their anonymity makes assets easier to hide; that is why we have brought these measures forward for your Lordships’ consideration.
I will now set out the two measures contained in the regulations. First, they will enable anyone to apply to access trust information held on the ROE, through applications to Companies House. This marks a significant step forward in transparency, empowering the public and civil society to scrutinise trust beneficiaries on the ROE. Applicants must provide their personal information; the name of the trust related to the relevant protected trust; and the overseas entity’s name and ID.
Applicants seeking trust information related to minors or more than one overseas entity in a single application, also known as bulk access, must show a legitimate interest in the requested information. This safeguard protects personal information while providing that critical information is available to those with a valid need, such as investigative journalists. For an applicant to demonstrate that they have a legitimate interest, they must: show that they are investigating money laundering, tax evasion, terrorist financing or the breaching of sanctions; provide a statement that they are requesting the disclosure to further that investigation; and provide a statement of how they are planning to use the information disclosed to them. If no such interest can be demonstrated, the registrar of Companies House may withhold some or all information. The registrar will notify the applicant of the decision with reasons. If a legitimate interest can be demonstrated, the registrar will release any unprotected information.
As an additional safeguard, the registrar will have the discretion to impose conditions under which the trust information is disclosed, such as restricting its use or further disclosure. Failure to comply with these conditions will be a criminal offence. The registrar may also refuse an application where that disclosure may prejudice an ongoing criminal investigation or adversely affect national security, or where the trust is a pension scheme.
I turn to the second measure. This involves provisions for the protection of sensitive information, which will come into force before the disclosure provisions go live. We are expanding the category of individuals who can apply to Companies House to have their information protected. This ensures that those connected to a trust—settlors, trustees and beneficiaries—who are at risk of violence or harm can have their information protected. Those who are aged under 18 or lack capacity can also apply to have their information protected.
The protection measures will come into force on 28 February this year, while the disclosure provisions will come into force on 31 August. This will allow time for those who are eligible to apply to Companies House for protection. An application for protection does not exempt an overseas entity from full compliance with the requirements of the ROE in general, such as the update duty and filing with Companies House. The registrar will still be able to use their general information-sharing power to share protected information with law enforcement agencies and public authorities for purposes connected to the exercise of their functions.
These regulations further the Government’s mission to improve the transparency around beneficial ownership, driving confidence for investment in the UK and exposing bad actors who seek to take advantage of our open economy. I urge noble Lords to support these regulations and beg to move.