UK lawmakers recently unveiled a new plan to fight domestic and international corruption within its borders. From the perspective of investigators tasked with uncovering hidden assets, the most striking piece of this legislation is the plan’s proposed establishment of a central register of beneficial owners of companies. The plan would also make it a crime to fail to disclose the true owner of a company or to provide false information on ownership of companies.
The UK already differs significantly in the US in that it has a central registry of companies for England and Wales called Companies House. Companies House provides a wealth of free online information, including the name, type, address, date of incorporation, country of origin, nature of business, status, previous names, and current officers of many UK companies. Documents such as annual reports are also available for download for a nominal fee. The proposed legislation would take this transparency even further, revealing the names of all beneficial owners of each company. Unfortunately, the proposed plan would not extend to British territories like the Cayman Islands, which are used to hide billions of dollars gained through corruption and criminal enterprises.
This contrasts starkly with the system in place in the US, in which each state determines whether and to what extent information on businesses is made publicly available. Some states, like Delaware, only provide free information on the date of a company’s formation. There is a fee to access what little other information is available, such as the company’s status and incorporation documents. Delaware requires very little information to be included in a company’s incorporation documents, so you often do not learn much even when you do pay to access them.
The proposed UK legislation has been criticized by some because, while it may decrease corrupt individuals from hiding money in shell companies, it does nothing to stem the flow of ill-gotten money into the British real estate market. According to an article in The Guardian, overseas trusts own nearly 45% of London homes valued at over £2 million. According to The Guardian, Transparency International called the lack of property information a “really obvious” omission.
The availability of property ownership information in the US is even more variable than business information, as it generally varies by county, not state. In most states, property ownership is recorded with the county, and may be available either through the county clerk’s office, the recorder’s office, or the tax assessor’s office. The information is often accessible only in person, and is often not searchable by name. Even when the information is available online, there is little chance of discovering who truly owns the property if the property is owned by a trust, as information about trusts, foreign or domestic, is not public. Often, the only way to find the identity of the settlor or beneficiary of a trust is to search for records of litigation involving the trust.