Our Practice Advice Service considers the requirement for overseas entities that own UK land to register on the register of overseas entities, and whether rent paid to an unregistered overseas entity could constitute criminal property under the Proceeds of Crime Act 2002
We act for the prospective tenant of premises being let by a landlord that is an overseas entity. The landlord is not yet registered on the register of overseas entities (ROE) with Companies House, in accordance with the Economic Crime (Transparency and Enforcement) Act 2022. The lease being granted to our client is for a term of five years. Therefore, it is not a ‘registrable disposition’. We are concerned, however, that arranging the lease with the landlord might mean that rent payments to that overseas entity could constitute proceeds of crime.
Section 340 of the Proceeds of Crime Act 2002 (POCA) states that property is criminal property “if it constitutes a person’s benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and the alleged offender knows or suspects that it constitutes or represents such a benefit … A person benefits from conduct if he obtains property as a result or in connection with the conduct.”
Arguably, there is a close enough connection between the failure of the landlord to register on the ROE (a criminal offence) and the letting of that property which generates rent paid by the tenant for it to be considered criminal property.
On that basis, section 328 of POCA may apply: “A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person.”
Whether or not the tenant’s position is covered by adequate consideration, your own position should also be clarified. Consider whether you, and your client, may need a defence against money laundering from the National Crime Agency. Otherwise, consider awaiting the landlord’s registration on the ROE before the client signs the lease.
See the Law Society’s guidance on ROEs and section 16 of Anti-money laundering guidance for the legal sector.
While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.
This article is compiled by the Law Society’s Practice Advice Service. Comments relating to the questions should be sent to practiceadvice@lawsociety.org.uk
