The U.K.’s new Economic Crime Transparency and Enforcement Act (ECTE), which  in less than a day in reaction to Russia’s invasion of Ukraine, is  for falling short of its intention to identify the ultimate beneficial owners (UBOs) of U.K. land and properties.

There are concerns that  will restrict the act’s effectiveness and fall short of what transparency campaigners have long been demanding. This debate goes to the heart of an argument I have long been making: that any legislation is only as good as its enforcement and the punishment carried for contravening it.

A key element of the act, the creation of a register of overseas entities, will require foreign corporations that bought land or property in the U.K. within the last 20 years to publicly register their identities. The provision, which had languished since it was proposed in 2018, also requires corporations to provide information about their beneficial owners within six months of the law coming into force and to update it.

But the register requires only that the beneficial owner of the overseas entity that holds title to the property is identified. This means that companies still won’t have to identify the true owner behind the property, if it is held by an overseas nominee company.

If we look at the definitions that underpin the fundamental ambitions of the act, we can see where the problems will lie. For example, a UBO is defined as somebody who owns 25 per cent of an entity’s voting rights. If the voting rights/ownership was divided five-ways among family members/associates, then the threshold point isn’t reached and the UBO definition does not apply. If land is sold along with the company owning it, then this too can avoid the requirement to identify the UBO.

The reality is that crooks being crooks, . Liars can be caught out, but how? The only means of doing so, of undermining their UBO statements, is to investigate them fully. Who is going to investigate a long chain of offshore entities, forming a web of complex ownership structures, to pin the “UBO tail” on the “oligarch donkey?” As importantly, who is going to resource the process, and where are you going to find suitably qualified and experienced investigators to undertake the task?

The pressure for action has been growing for some time, catalyzed by the crimes being perpetrated by Russia against Ukraine. Economic sanctions are biting hard, and over the next few months will prove to be a meaningful weapon. But what of the oligarchs?

While media headlines have highlighted the seizure of super yachts and private jets from alleged Putin-supporting oligarchs, governments are still failing to explain the reality of asset seizures to their publics. Nobody is explaining that these are temporary measures.

For ultimately this will end up in the courts. Governments will invariably be called upon to prove how the asset was acquired and ultimately controlled by the oligarch. That is a major law enforcement undertaking, an investigative and legal process that can take several years. During this time the yacht becomes a depreciating asset, as it slowly rots in dock, with upkeep and crew needing to be paid. In one instance, the legal process to seize assets from a former Ukrainian prime minister convicted of money laundering, . 

This is where governments should be focusing their attention: by strengthening the confiscation processes and making it easier (and thus swifter) to remove the ownership of these assets from the oligarchs, instead of seeing the process dragged out through the courts at great expense to taxpayers.

At the moment, these individuals have (in some cases) bottomless pits of money, and will no doubt be protected by the best enablers – lawyers, bankers, accountants – to help fight for and maintain ownership of any asset even after it is seized (with plenty of circumstantial evidence suggesting the ownership of some of those assets  as the invasion of Ukraine got underway and governments cracked down on Putin’s financial supporters). The newspapers are full of stories where such “low-hanging fruit” assets have been captured, but few explain that these assets – as well as others – remain in the oligarchs’ portfolios.

Beyond the register itself, the new economic crime law also makes it easier for prosecutors to win with  (UWOs). The UWO was introduced in 2018 to allow prosecutors to order individuals to explain how they paid for assets that investigators suspect were bought with the proceeds of crime, but has rarely been used or .

The new law creates an alternative test for whether a court should grant a UWO. In addition to having reasonable grounds for suspecting the target’s lawful income is insufficient to afford the property, such an order can be granted if authorities suspect the assets were obtained illegally.

Time will tell how effective such measures will be. But the tardy response of governments, particularly the U.K., to economic crime (with London’s reputation as “,” alongside the  of the minister responsible for tackling fraud in January, after massive COVID-related fraud losses) has not inspired great confidence. Given the events in Ukraine right now, time is not on our side.

If the oligarchs believe they can get away with it, then the danger is that they will ride out the current storm in the hope that the world’s governments will forgive and forget once a peace process gets underway.

Martin Kenney is a veteran asset recovery lawyer and managing partner of Martin Kenney & Co., Solicitors, in the BVI