Members of Parliament approved the Economic Crime (Transparency and Enforcement) Bill, voting unanimously in favor of the law, which was fast-tracked through the House of Commons in a single day following a seven-hour debate.
The bill had been repeatedly delayed but was hastily introduced by the government last week to target "corrupt elites" after Russia's invasion of Ukraine turned the spotlight on the amount of money held in the U.K. by Russian oligarchs.
Opening the debate, Home Secretary Priti Patel called Russian President Vladimir Putin a "gangster" whose regime is underpinned by a "mob of oligarchs and kleptocrats who have abused the financial system and the rule of law for too long."
"We want to go after the dirty money and crack down on those that violate our financial sanctions and violate our country. Putin and his thugs must not be able to hide their wealth in our country," Patel said.
Patel also confirmed a second economic crime bill would be brought forward in the next parliamentary session. The second bill will include new powers to seize crypto-assets and strengthen anti-money laundering powers and reforms of limited partnerships.
The bill will now be sent to Parliament's upper chamber for approval before it is passed into law.
Once ratified, the law will force anonymous foreign owners of U.K. property to reveal their real identities, overhaul prosecutors' powers to fight the movement of illicit finance and add teeth to the country's sanctions watchdog.
The bill will introduce a register of overseas entities that will require anonymous foreign owners of U.K. property to verify their identities with Companies House, which will also get new powers to interrogate the information.
Entities that do not declare their "beneficial owner" will face restrictions on selling property. People who break the rules could face up to five years in prison.
The reforms will also strengthen the use of Unexplained Wealth Orders, or UWOs, which were introduced in 2018 to enable prosecutors to order individuals to explain how they paid for assets that investigators suspect were bought with the proceeds of crime.
UWOs will be expanded to cover those who hold property in the U.K. in a trust, change the definition of an asset holder and create a new alternative test for the granting of a UWO on the basis that "there are reasonable grounds for suspecting that the property has been obtained through unlawful conduct."
The cost prosecutors face if they pursue reasonable cases that are unsuccessful will also be capped.
"The reforms in this bill give us greater power and more information to identify and investigate the illicit wealth of Russian criminals, their allies and their proxies," Patel said. She added that "no criminal or kleptocrat will be able to hide behind a U.K. shell company ever again."
The bill further introduces a more wide-ranging "strict civil liability test" for financial penalties, rather than the current one, which requires firms to have knowledge or a "reasonable cause to suspect" sanctions are being breached.
The change will make it easier for the Office for Financial Sanctions Implementation to impose significant fines. The OFSI will be able to publicly name organizations that have breached financial sanctions but have not been fined.
Several motions to amend the bill proposed in the committee stage were approved, including shortening the deadline for overseas companies to register their beneficial owners from 18 months to six months and increasing the criminal penalties for noncompliance from fines of up to £500 per day to up to £2,500 per day.
But proposed amendments to require the government to publish and lay before Parliament a report on the funding of enforcement agencies in connection with the reforms to UWOs and to prevent individuals named as being considered as a subject for sanctions from selling their assets or moving funds or assets out of the U.K. were defeated.
Legal experts have warned that the reforms will be meaningless unless authorities step up their prosecutions after years of lackluster enforcement and chronic underfunding.
--Editing by Vaqas Asghar.
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