The government will introduce the register of overseas entities (ROE) on 1 August 2022. The ROE requires anonymous foreign owners of UK property to reveal their identities. It’s being introduced to make it more difficult for foreign criminals to launder money though UK property.
The Law Society has now issued detailed guidance for solicitors.
What is ROE?
On 12 July 2022, the government announced that the new register of overseas entities (ROE) created under the Economic Crime (Transparency and Enforcement) Act 2022, will come into force on 1 August 2022.
It requires anonymous foreign owners of UK property to reveal their identities. This will allow them to buy and sell land or property in the UK.
The ROE regime applies to an overseas entity that is the registered owner of:
- a freehold estate, or
- a lease granted for a term of more than seven years on or after 1 January 1999
Who’s affected?
- Clients who are acting in property transactions involving overseas entities
- Solicitors who are asked by clients to verify an overseas entity purchasing UK property
As a solicitor, if you choose to verify but are not compliant with the law, you’ll leave yourself open to criminal prosecution and may be professionally negligent.
What’s an overseas entity?
An overseas entity includes a company or organisation governed by the law of a country or territory outside the UK. The Republic of Ireland is an overseas jurisdiction for the ROE.
Find out more about overseas entities
When do they have to register?
Overseas entities buying property in the UK
Overseas entities buying property in the UK must register the beneficial owners on the ROE before they can apply to HM Land Registry to become the registered owners. The land registration elements of the act will come into force on 5 September 2022.
Failure to register could be a criminal offence.
Overseas entities that already own property in the UK
Overseas entities that already hold one or more qualifying estate(s) will have six months from 1 August 2022 to register:
- their beneficial owners, and
- (in some cases) information on their managing officers and any superior trust(s)
Registration must therefore be completed on or before 31 January 2023.
Failure to register by this date is a criminal offence.
What does our guidance cover?
The Law Society’s guidance sets out areas to be considered by solicitors when undertaking verification responsibilities in respect of the ROE, including highlighting the risks that should be considered.
It’s possible solicitors may mistakenly interpret what’s required for verification under the ROE as being identical to the risk-based approach to client due diligence under the money laundering regulations. The requirements are not the same, and the Law Society’s guidance clarifies this.
What solicitors should do now
Solicitors should approach verification with diligence and caution, only verifying what is within their actual knowledge or is based on a qualified, reliable and independent source.
There’s no presumption that law firms will conduct verification for ROE purposes.
You should consider carefully:
- what information you’re able to verify, and
- the circumstances in which you’re prepared to do so
When considering the above, speak with:
- your compliance officer for legal practice or money laundering compliance officer (as applicable), and
- those within your firm responsible for client due diligence
If you think you may verify, it would be useful to:
- ensure there’s top-level agreement as to how and when ROE verification will be delivered by your firm
- put in place rigorous internal procedures for the approval of ROE verification requests
Useful resources
The Department for Business, Energy and Industrial Strategy (BEIS) will be issuing technical guidance on the ROE and additional guidance to support verification.
Read the:
- Economic Crime (Transparency and Enforcement) Act 2022
- Register of Overseas Entities (Verification and Provision of Information) Regulations 2022
- Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022
- The Law Society’s interim note to property lawyers ahead of the ROE launch
