As published on estateagenttoday.co.uk, Thursday 23 March, 2023.
New analysis may called into question the experience of firms approved to check the Government’s flagship register of overseas entities (ROE).
The register came into force on 1 August last year, requiring foreign companies that own land or property in the UK to declare their beneficial owners or managing officers.
A UK-regulated agent must complete verification checks but research by anti-money laundering (AML) platform Thirdfort shows only 27 law firms and one estate agency – Brithomes - make up 146 firms who have signed up to become UK-regulated agents to verify overseas entities, new analysis reveals.
Of the remaining 119 firms registered, 75 are accountancy firms and the rest are a mixture of company formation, wealth management or other financial services brands.
This follows analysis by the Government which announced that only 19,510 registered overseas entities – out of 32,440 – had declared their beneficial owners before the 31 January deadline.
The number of law firms registered represents just 0.3% of the 9,550 legal brands in England and Wales, according to the Solicitors Regulatory Authority.
Before the introduction of the ROE, the Law Society advised law firms to take extra caution when considering becoming a regulated agent. It stated that because of the “verification regulations…any law firm acting as a verifier will face significant challenges and expose itself to significant risk, including possible criminal prosecution, regulatory sanction, and reputational damage.”
Harriet Holmes, AML services manager at Thirdfort, said: “The lack of law firms becoming UK-regulated agents for verifying overseas entities suggests that firms have taken heed the Law Society’s warnings before the introduction of the ROE. Law firms are uncomfortable with the additional regulatory requirements they are forced to meet and the potential prosecution, sanction, or reputational risks.
“With 60% of overseas entities having registered by the 31 January 2023 deadline, it’s clear that the ROE has been a positive step forward and has revealed some of the criminals that own UK property. But with more than 10,000 entities having missed the registration deadline, there is a significant amount of work to do and a big question mark on whether Companies House has adequate resources to deal with a large amount of non-compliant entities.”