In an attempt to address the pervasive issue of illicit wealth concealed within the property market, the United Kingdom has rolled out transparency legislation aimed at offshore companies. Yet, recent statistics reveal that the UK has managed to collect a mere 3 percent of the financial penalties imposed on these entities for failing to comply with the regulations. This alarming figure highlights the challenges facing enforcement mechanisms designed to unveil hidden ownership in the real estate sector.

According to figures shared with the Financial Times by Companies House, a total of 444 fines were issued to companies for non-compliance with the Register of Overseas Entities since its inception in January 2023. However, only 14 of these penalties have been successfully collected. This situation has raised concerns among transparency advocates who emphasize that while the creation of the register marks a significant step forward, it risks being ineffective if punitive measures are not adequately enforced.

The Register of Overseas Entities was established in 2022, partly as a response to the geopolitical landscape shift following Russia's invasion of Ukraine. The aim was to provide the UK government with the necessary tools to tackle oligarchs and other figures engaging in corrupt practices. Margot Mollat, a senior researcher and policy manager at Transparency International, expressed cautious optimism regarding Companies House's efforts, stating, I am encouraged to see Companies House using its powers. However, issuing penalties but failing to collect them does not provide a strong deterrent against non-compliance.

Mollat further asserted that if the UK aspires to be recognized as the anti-corruption capital of the world, it must tackle its enforcement gap decisively. The regulations associated with the register mandated that individuals who own British property through offshore entities had until the end of January 2023 to register these entities and disclose their ownership publicly. These regulations, which empower Companies House to impose penalties, were introduced in June of that year.

As of July 2023, the Financial Times reported that a staggering 3,103 entities were still non-compliant with the legislation, although Companies House indicated that some of these entities may no longer be operational.

Joe Powell, Labour Member of Parliament representing Kensington and Bayswater, and chair of the All Party Parliamentary Group on Anti-Corruption and Responsible Tax, acknowledged that while the register possesses significant potential, the lack of enforcement could lead to it ultimately failing to fulfill its intended purpose. He remarked that the UK government must work to close existing loopholes, particularly those related to trusts that continue to obscure ownership through complex corporate structures.

The penalties imposed by Companies House are determined by the council tax band of the property in question, with fines ranging anywhere from 10,000 to 50,000 per property. Since the register's launch, only 700,000 has been collected out of a staggering total of 22.99 million levied in fines against non-compliant entities. The Companies House website warns that if fines remain unpaid for 28 days, the registrar may seek to enforce the debt through legal channels, which could result in a charge being placed on the entitys property.

In a slightly more positive note, Companies House reported that since the introduction of the register, over 30,000 entities have complied with the regulations, thereby enhancing transparency regarding land and property ownership in the UK. They have also collaborated with various partners to identify overseas entities that fall under the scope of the legislation and ensure their compliance. The agency remains focused on improving the quality of the register to further bolster transparency efforts in the property market.