Catch me if you can: Gaps in the Register of Overseas Entities

Over 70% of properties held via overseas shell companies (109,000 out of 152,000 properties) still do not publish information about who really owns them, despite government commitments to crack down on anonymous ownership of UK property.

A new report – released on the day Parliament returns to debate the Economic Crime Bill – finds that for 35% of properties owned via overseas shell companies (54,000 out of 152,000), even law enforcement agencies do not know the true identities of the properties’ beneficial owners. In 10% of cases (15,000 properties), the company is missing from the Register altogether, and in a further 25%, (39,000 properties) essential information has not been reported.

Catch me if you can: Gaps in the Register of Overseas EntitiesLink opens in a new window highlights that these gaps are overwhelmingly due to design flaws in the Register of Overseas Entities, which was introduced in response to the Russian invasion of Ukraine with a pledge to “require anonymous foreign owners of UK property to reveal their real identities to ensure criminals cannot hide behind secretive chains of shell companies”. It finds that:

• An overwhelming 87% of cases where the researchers found that beneficial ownership information was missing or inaccessible to the public, was due to deliberate choices by government to keep the information out of scope of the legislation, rather than rule-breaking by overseas companies.
• Rule-breaking accounts for only 6-9% of cases.
• Another 4-7% comes from out-of-date or poorly documented records.

On Monday 4th Sept, the House of Commons will consider Lords’ amendments to the Economic Crime Bill, aimed at closing some of these loopholes, but the government is currently opposing these.

The new analysis, by researchers from the London School of Economics (LSE), the University of Warwick, and the Centre for Public Data, combines data from Companies House and HM Land Registry to quantify the scale of the missing information, and the reasons behind it.

The biggest reason for missing or inaccessible information on beneficial owners is the use of trusts. These account for an astonishing 63% of all properties where beneficial owners are hidden from the public (69,000 out of 108,000). An amendment to the Economic Crime Bill proposed by Lord Agnew – who last year resigned from government over its failure to tackle corruption – would shut this loophole but is being opposed by the government.

The report also highlights that flaws in the register of owners of UK companies – known as the ‘PSC Register’ – could also be facilitating corruption. Currently, nominees and trustees owning shares are not required to tell Companies House who they are acting for. The government is opposing an amendment by Lord Vaux that would bring transparency to these arrangements.

The report makes ten recommendations that the government could adopt to close the gaps identified.

Read the full working paper

Catch me if you can: Gaps in the Register of Overseas EntitiesLink opens in a new window, by Arun AdvaniLink opens in a new window (Associate Professor, University of Warwick, CAGE), Cesar, Poux (LSE International Inequalities Institute), Anna Powell-Smith (Visiting Fellow, LSE, Director of Centre for Public Data) and Andy Summers (Associate Professor, LSE Law, CAGE Associate).

CAGELink opens in a new window is a research centre based in the Department of Economics at the University of Warwick, conducting independent-policy driven research informed by history, culture and behaviour.

Related articles

• Five ways kleptocrats can keep hold of their UK assetsLink opens in a new window, by Dr Arun Advani,The Guardian, 4 September 2023
• Owners of 100,000 properties held by foreign shell companies unknown despite new UK lawsLink opens in a new window, by Jasper Jolly in The Guardian, 3 September 2023
• Most offshore owners reman a mysteryLink opens in a new window, by Andrew Ellson in The Times (paywall), 4 September 2023