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The UK has collected just 3 per cent of financial penalties issued to offshore companies that failed to comply with transparency legislation designed to uncover illicit wealth hidden in the property market.

The figures, released to the Financial Times by Companies House, showed that of the 444 fines issued to companies for non-compliance with the Register of Overseas Entities since January 2023, just 14 were collected. 

Transparency campaigners said that while the creation of the register was a positive step, the law was “just a piece of paper” if penalties were not enforced.

The index was introduced in 2022 after Russia’s invasion of Ukraine to help the UK government crack down on oligarchs and other kleptocrats.

Margot Mollat, senior researcher and policy manager at Transparency International, said that while she was “encouraged” to see Companies House using its powers, “issuing penalties but not collecting them did not provide a strong deterrent against non-compliance”.

“If the UK wants to be the anti-corruption capital of the world, it needs to deal with its enforcement gap,” she added.

Individuals that own British property through offshore vehicles had until the end of January 2023 to register such entities and publicly reveal their ownership at Companies House, with regulations enabling the government body to impose penalties introduced in June of that year.

The FT previously reported that as of July 2023, 3,103 entities had failed to comply with the legislation. Companies House said at the time that some of those may no longer exist.

Joe Powell, Labour MP for Kensington and Bayswater and chair of the All Party Parliamentary Group on Anti-Corruption and Responsible Tax said the register had “real potential,” but without enforcement risked “falling short of its purpose”.

Powell added that the UK government “needed to close the remaining loopholes — particularly the use of trusts, which continue to obscure ownership through opaque company structures”.

Companies House state that the size of fines is calculated based on the council tax band of the property with penalties ranging between £10,000 and £50,000 per property. Since the introduction of the register, just £700,000 has been collected from a total £22.99mn levied in fines.

If a penalty is not paid within 28 days, the Companies House website warns: “The registrar may seek to enforce the debt through the courts. This may result in a charge being placed on the entity’s property.” 

Companies House said that since the register was introduced, more than 30,000 entities had complied which helped “to improve the transparency of land and property ownership in the UK”.

They added that they worked with partners to “identify overseas entities in scope” and ensure their regulatory compliance, with their focus remaining on “improving the quality of the register, so transparency is further enhanced”.