Expats owning property in the UK will have to make their names public on a public register from next year.
The new law is aimed at criminals who try to hide their identities to launder cash by buying homes in Britain by putting the purchase in an offshore shell company.
These companies are also tax-efficient ways for law-abiding expats to own property.
The shell companies often have nominated or ‘shadow’ directors who are not the ultimate owners of the property.
Now, the British government is making holding a property in a shell company a criminal offence if the identity of the beneficial owner is not revealed.
Jail and unlimited fines
The offence comes with a jail sentence of up to five years and unlimited fines.
The government estimates property worth around £4.2 billion is held through an offshore shell company in the UK.
UK government minister for Scotland Lord Duncan said: “For too long criminals have been able to use the property industry as a front for investing dodgy funds, hiding dirty money and evading the law. This stops now.
“The UK government is clear that there is no longer any room for those that seek to exploit the system to hide.”
Besides the register, the new law will ban any company from selling or renting out property without revealing the owner’s identity. Anyone entering false details on the new register faces up to two years in prison and an unlimited fine.
Research shows that the new offence will reduce illegal money laundering, says the government.
Business Minister Richard Harrington said: “The UK is known around the world for its open and dependable business environment and this reputation is maintained by keeping under review our required high standards.
“That is why we are introducing the world’s first public register which will expose the ultimate owners of overseas shell companies, giving authorities the information, they need to come down on criminals who launder their dirty money through the UK’s property market and to seize the proceeds of crime.
“While most foreign companies which buy property in the UK do so legitimately, this world-leading register will help ensure the UK remains a great dependable place to work, invest and do business.”
The register will be maintained by Companies House.