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Company and Jurisdictions

United Kingdom

Private Limited Company (Ltd)

Legislation: Standard capital: Issued Share Capital
Companies Act. GBP 1 The minimum issued capital is one share, but additional capital is usually issued to reflect the stability and strength of the company.
Annual government fees: Corporate Taxation:
£30 0%, 19% and 30%. Marginal rates apply on certain bands.
Time to incorporate: Ready-made companies:
2 to 15 days Yes.
Minimum members: Registered office required:
One, individual or corporate. Yes, must maintain a registered office address within the UK.
Local registered agent: Minimum number directors:
Yes. One, individual or corporate. A UK company must have at least one director and a company secretary. A sole director cannot also be the secretary.
Officer to be locally resident: AGM required:
No. Yes.
Annual return required: Financial statements to be prepared and/or audited:
Yes. An annual return giving details of directors and shareholders is required for all companies. Yes. Generally a UK company must appoint an auditor and audited accounts must be lodged with the authorities within 10 months of the financial year end. However, generally, companies having a turnover of less than £5,600,000 need only produce an abbreviated set of accounts with a special accountant’s report. A Tax Return must be filed with HM Revenue & Customs 1 year after the end of the accounting period with any tax due paid in full 9 months and 1 day after the end of the accounting period.
Balance sheets to be filed: Share register required:
Yes, all companies do file accounts including a balance sheet. Yes, at registered office
To be filed with Registrar: Open to public inspection:
Yes. Yes.
Exchange controls: Redomiciliation permitted:
No. Yes.
Language of incorporation: Confidentiality:
English. There are no specific laws relating to the unauthorised disclosure of information on a UK company, its directors or owners but UK law recognises the common law duty that professionals have towards their clients to keep their affairs confidential.
Bearer shares permitted:  
No


Advantages

Disadvantages


Stable high tax country, not a tax haven.
Massive range of tax treaties.
Excellent infrastructure and services

Expensive.
Cumbersome regulation


International Agreements

OECD Harmful Tax Practices

In 2000, the OECD Committee on Fiscal Affairs identified 47 preferential tax regimes in OECD Member States as potentially harmful, but none in the UK. A tonnage tax regimes for shipping activities, introduced since 2000 by the UK was subsequently examined, but was not considered to constitute a harmful tax practice.
The UK remains responsible for any international obligations arising from any international fiscal treaties, agreements or commitments that affect its Overseas Territories or Crown Dependencies within the framework of the OECD Harmful Tax Practices initiative, including any necessary to fulfil commitments entered into by those Overseas Territories or Crown Dependencies.

Tax Information Exchange Agreement (TIEA)

TIEAs in respect of the EU Savings Directive agreements were concluded on 19 November 2004 with Guernsey, Jersey and the Isle of Man, and were approved by Parliament on 14 March 2005. EU Savings Directive agreements with EU Member States' dependent and associated territories in the Caribbean (Aruba, Anguilla, BVI, Cayman Islands, Montserrat, Netherlands Antilles and Turks & Caicos Islands) concluded between December 2004 and April 2005 were approved by Parliament on 24 May 2005. The provisions of all the TIEAs under the EU Savings Directive apply from 1 July 2005. The TIEAs with Anguilla, Cayman Islands and Turks & Caicos Islands are non-reciprocal.

EU Savings Tax Directive

As a Member State of the EU, the UK is required to collect and exchange information about savings income derived by taxpayers of other Member States, as of 1 July 2005.

Financial Action Task Force (FATF)

The UK is a member of the FATF and the European Union. The UK has implemented the provisions of the European Union’s two Directives on the prevention of the use of the financial system for the purpose of money laundering and the FATF Forty Recommendations on Money Laundering. Narcotics-related money laundering has been a criminal offence in the UK since 1986. The laundering of proceeds from other serious crimes is criminalised by subsequent legislation. Banks and non-bank financial institutions in the UK must report suspicious transactions.

In November 2001, anti-money laundering regulations were extended to money service bureaus (eg, bureaux de change, money transmission companies). As of 1 January 2004, more business sectors became subject to formal suspicious transaction reporting (STR) requirements, including attorneys, solicitors, accountants, real estate agents, and dealers in high-value goods such as cars and jewellery. Sectors of the betting and gaming industry that are not currently regulated are being encouraged to establish their own codes of practice, including a requirement to disclose suspicious transactions.

Mutual Legal Assistance Treaties (MLATs)

The MLAT between the UK and the United States has been in force since 1996. The US and UK recently negotiated an asset sharing agreement that is awaiting signature by the appropriate parties. The UK also has an MLAT with the Bahamas. Additionally, there is a memorandum of understanding between the US Customs Service and HM Revenue & Customs.

The National Criminal Intelligence Service (NCIS), which serves as the UK’s Financial Intelligence Unit (FIU), is an active member of the Egmont Group and has information sharing arrangements in place with the FIUs of the US, Belgium, France, and Australia.

Tax Treaties

The UK has signed double taxation treaties with more than 100 countries and thus enjoys the most extensive double taxation treaty network in the world. Tax treaties are in force with the following countries:


  • Abu Dhabi
  • Afghanistan
  • Albania
  • Algeria
  • Angola
  • Antigua and Barbuda
  • Argentina
  • Aruba
  • Australia
  • Austria
  • Azerbaijan
  • Bangladesh
  • Barbados
  • Belarus
  • Belgium
  • Belize
  • Benin
  • Bolivia
  • Bophuthatswana
  • Botswana
  • Brazil
  • British Virgin Islands
  • Brunei
  • Bulgaria
  • Burkina
  • Burundi
  • Cameroon, United Republic of
  • Canada
  • Central African Republic
  • Chad
  • Chile
  • China
  • Ciskei
  • Colombia
  • Congo, The Republic of
  • Cook Islands
  • Costa Rica
  • Cyprus
  • Czech Republic
  • Czechoslovakia
  • Denmark
  • Djibouti
  • Dominica
  • Dominican Republic
  • Dubai
  • Ecuador
  • Egypt
  • El Salvador
  • Eritrea
  • Estonia
  • Ethiopia
  • Falkland Islands
  • Faroe Islands
  • Fiji
  • Finland
  • France
  • French Polynesia (Tahiti)
  • Gabon
  • Gambia, the
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Grenada
  • Guadeloupe
  • Guam
  • Guatemala
  • Guernsey
  • Guinea
  • Guyana
  • Guyane
  • Haiti
  • Honduras
  • Hong Kong
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iran
  • Iraq
  • Ireland
  • Isle of Man
  • Israel
  • Italy
  • Ivory Coast
  • Jamaica
  • Japan
  • Jersey
  • Jordan
  • Kazakhstan
  • Kenya
  • Kiribati
  • Korea
  • Kuwait
  • Kyrgystan
  • Laos
  • Latvia
  • Lebanon
  • Lesotho
  • Liberia
  • Libya
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Macau
  • Macedonia
  • Madagascar
  • Malawi
  • Malaysia
  • Mali
  • Malta
  • Martinique
  • Mauritania
  • Mauritius
  • Mexico
  • Moldova
  • Monaco
  • Mongolia
  • Montserrat
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Nepal
  • Netherlands
  • Netherlands Antilles
  • New Caledonia
  • New Zealand
  • Nicaragua
  • Niger
  • Nigeria
  • Northern Mariana Islands
  • Norway
  • Oman
  • Pakistan
  • Panama
  • Papua New Guinea
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Qatar
  • Ras Al Khaimah
  • Reunion
  • Romania
  • Russia
  • Rwanda
  • St Kitts & Nevis
  • St Lucia
  • St Vincent
  • Samoa
  • Saudi Arabia
  • Senegal
  • Seychelles
  • Sharjah
  • Sierra Leone
  • Singapore
  • Slovak Republic
  • Slovenia
  • Solomon Islands
  • Somalia
  • South Africa
  • Spain
  • Sri Lanka
  • Sudan
  • Surinam
  • Swaziland
  • Sweden
  • Switzerland
  • Syria
  • Taiwan
  • Tajikistan
  • Tanzania
  • Thailand
  • Togo
  • Transkei
  • Trinidad & Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Tuvalu
  • Uganda
  • Ukraine
  • United Arab Emirates
  • United States of America
  • US Virgin Islands
  • Uruguay
  • Uzbekistan
  • Venda
  • Venezuela
  • Vietnam
  • Yemen
  • Yugoslavia
  • Zaire
  • Zambia
  • Zimbabwe

General Info

Full Country Name: United Kingdom (of Great Britain and Northern Ireland); UK
Area: 244,820 sq km
Population: 60,441,457 (July 2005 est.)
Capital City: London
Nationality: Briton(s), British
People: English 81.5%, Scottish 9.6%, Irish 2.4%, Welsh 1.9%, Ulster 1.8%, West Indian, Indian, Pakistani and other 2.8%
Languages: English, Welsh (about 26% of the population of Wales), Scottish form of Gaelic (about 60,000 in Scotland)
Currency: British pound (GBP); GBP 0.5393 per US dollar (2004)
Government: Constitutional monarchy
Legal system: common law tradition with early Roman and modern continental influences; has judicial review of Acts of Parliament under the Human Rights Act of 1998; accepts compulsory ICJ jurisdiction, with reservations
Head of State: Queen Elizabeth II

Geography

The UK consists of a group of islands off the western coast of Europe between the North Atlantic Ocean and the North Sea, northwest of France. The largest, Great Britain, comprises three countries: England, Scotland and Wales. Ireland, to the west, consists of the UK's province of Northern Ireland and the Irish Republic. There are several offshore islands and island groups, the largest lying off Scotland. The UK has excellent communications; it has three major international airports in Heathrow, Gatwick and Manchester with extensive worldwide connections. Recently the UK was physically joined to Continental Europe by the opening of the Channel rail tunnel link which provides frequent train services for passengers and cars to Paris and Brussels.


History

A group of islands close to continental Europe, the British Isles have been subject to many invasions and migrations, especially from Scandinavia and the continent, including Roman occupation for several centuries. Contemporary Britons are descended mainly from the varied ethnic stocks that settled there before the 11th century. The pre-Celtic, Celtic, Roman, Anglo-Saxon, and Norse influences were blended in Britain under the Normans, Scandinavian Vikings who had lived in Northern France.

The Roman invasion of Britain in 55 BC and most of Britain's subsequent incorporation into the Roman Empire stimulated development and brought more active contacts with the rest of Europe. As Rome's strength declined, the country again was exposed to invasion – including the pivotal incursions of the Angles, Saxons, and Jutes in the fifth and sixth centuries AD – up to the Norman conquest in 1066. Norman rule effectively ensured Britain's safety from further intrusions; certain institutions, which remain characteristic of Britain, could develop. Among these are a political, administrative, cultural, and economic center in London; a separate but established church; a system of common law; distinctive and distinguished university education; and representative government.

Both Wales and Scotland were independent kingdoms that resisted English rule. The English conquest of Wales succeeded in 1282 under Edward I, and the Statute of Rhuddlan established English rule two years later. To appease the Welsh, Edward's son (later Edward II), who had been born in Wales, was made Prince of Wales in 1301. The tradition of bestowing this title on the eldest son of the British Monarch continues today. An act of 1536 completed the political and administrative union of England and Wales.

While maintaining separate parliaments, England and Scotland were ruled under one crown beginning in 1603, when James VI of Scotland succeeded his cousin Elizabeth I as James I of England. In the ensuing 100 years, strong religious and political differences divided the kingdoms. Finally, in 1707, England and Scotland were unified as Great Britain, sharing a single Parliament at Westminster.

Ireland's invasion by the Anglo-Normans in 1170 led to centuries of strife. Successive English kings sought to conquer Ireland. In the early 17th century, large-scale settlement of the north from Scotland and England began. After its defeat, Ireland was subjected, with varying degrees of success, to control and regulation by Britain.

The legislative union of Great Britain and Ireland was completed on January 1, 1801, under the name of the United Kingdom. However, armed struggle for independence continued sporadically into the 20th century. The Anglo-Irish Treaty of 1921 established the Irish Free State, which subsequently left the Commonwealth and became a republic after World War II. Six northern, predominantly Protestant, Irish counties have remained part of the United Kingdom.
Begun initially to support William the Conqueror's (c. 1029-1087) holdings in France, Britain's policy of active involvement in continental European affairs endured for several hundred years. By the end of the 14th century, foreign trade, originally based on wool exports to Europe, had emerged as a cornerstone of national policy.

The foundations of sea power were gradually laid to protect English trade and open up new routes. Defeat of the Spanish Armada in 1588 firmly established England as a major sea power. Thereafter, its interests outside Europe grew steadily. Attracted by the spice trade, English mercantile interests spread first to the Far East. In search of an alternate route to the Spice Islands, John Cabot reached the North American continent in 1498. Sir Walter Raleigh organised the first, short-lived colony in Virginia in 1584, and permanent English settlement began in 1607 at Jamestown, Virginia. During the next two centuries, Britain extended its influence abroad and consolidated its political development at home.

Great Britain's industrial revolution greatly strengthened its ability to oppose Napoleonic France. By the end of the Napoleonic Wars in 1815, the UK was the foremost European power, and its navy ruled the seas. Peace in Europe allowed the British to focus their interests on more remote parts of the world, and, during this period, the British Empire reached its zenith. British colonial expansion reached its height largely during the reign of Queen Victoria (1837-1901). Queen Victoria's reign witnessed the spread of British technology, commerce, language, and government throughout the British Empire, which, at its greatest extent, encompassed roughly one-fifth to one-quarter of the world's area and population. British colonies contributed to the UK's extraordinary economic growth and strengthened its voice in world affairs. Even as the UK extended its imperial reach overseas, it continued to develop and broaden its democratic institutions at home.

By the time of Queen Victoria's death in 1901, other nations, including the USA and Germany, had developed their own industries; the UK's comparative economic advantage had lessened, and the ambitions of its rivals had grown. The losses and destruction of World War I, the depression of the 1930s, and decades of relatively slow growth eroded the UK's pre-eminent international position of the previous century.

Britain's control over its empire loosened during the interwar period. Ireland, with the exception of six northern counties, gained independence from the United Kingdom in 1921. Nationalism became stronger in other parts of the empire, particularly in India and Egypt.

In 1926, the UK, completing a process begun a century earlier, granted Australia, Canada, and New Zealand complete autonomy within the empire. They became charter members of the British Commonwealth of Nations (now known as the Commonwealth), an informal but closely-knit association that succeeded the empire. Beginning with the independence of India and Pakistan in 1947, the remainder of the British Empire was almost completely dismantled. Today, most of Britain's former colonies belong to the Commonwealth, almost all of them as independent members. There are, however, several former British dependent or associated territories – Anguilla, Bermuda, British Indian Ocean Territory, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Guernsey, Jersey, Isle of Man, Montserrat, Pitcairn Islands, Saint Helena & Ascension, South Georgia & the South Sandwich Islands, Turks & Caicos Islands – which have elected to continue their political links with London.

Although often marked by economic and political nationalism, the Commonwealth offers the UK a voice in matters concerning many developing countries. In addition, the Commonwealth helps preserve many institutions deriving from British experience and models, such as parliamentary democracy, in those countries.

The UK has been a member of the European Community (now European Union) since 1973.


Government and Politics

Executive branch
Head of State: Queen Elizabeth II (since 6 February 1952); Heir Apparent Prince Charles (son of the queen, born 14 November 1948)
Head of Government: Prime Minister Anthony (Tony) BLAIR (since 2 May 1997)
Cabinet: Cabinet of Ministers appointed by the prime minister
Elections: none; the monarchy is hereditary; following legislative elections, the leader of the majority party or the leader of the majority coalition is usually the prime minister
Legislative branch

Bicameral Parliament comprised of House of Lords (consists of approximately 500 life peers, 92 hereditary peers and 26 clergy) and House of Commons (659 seats; members are elected by popular vote to serve five-year terms unless the House is dissolved earlier)

Elections

House of Lords – no elections (note – in 1999, as provided by the House of Lords Act, elections were held in the House of Lords to determine the 92 hereditary peers who would remain there; pending further reforms, elections are held only as vacancies in the hereditary peerage arise); House of Commons – last held 5 May 2005 (next to be held by April 2010)

Election results

House of Commons – Tony Blair became the first Labour Prime Minister ever to win a third consecutive term when he was re-elected on 5 May 2005. Labour has a 67-seat majority in the House of Commons. The Conservative (Tory) Party and Liberal-Democrats (LibDems) form the major opposition parties.

Judicial branch

House of Lords (highest court of appeal; several Lords of Appeal in Ordinary are appointed by the monarch for life); Supreme Courts of England, Wales, and Northern Ireland (comprising the Courts of Appeal, the High Courts of Justice, and the Crown Courts); Scotland's Court of Session and Court of the Justiciary.

Political parties and leaders

Conservative and Unionist Party [Michael Howard]; Democratic Unionist Party (Northern Ireland) [Rev. Ian Paisley]; Labour Party [Anthony (Tony) Blair]; Liberal Democrats [Charles Kennedy]; Party of Wales (Plaid Cymru) [Dafydd Iwan]; Scottish National Party or SNP [Alex Salmond]; Sinn Fein (Northern Ireland) [Gerry Adams]; Social Democratic and Labour Party or SDLP (Northern Ireland) [Mark Durkan]; Ulster Unionist Party (Northern Ireland) [David Trimble]


Economy

Basic economic facts

GDP (2004 est): USD 1.782 trillion

Growth rate (2004 est): 3.2%

Per capita GDP (2004 est): USD 29,600

Main industries: London is one of the world's leading centres for banking, insurance and other financial services; lying between New York and Tokyo, it is the third leg of the world's capital markets. GDP composition by sector is 72.7% services, 26.3% industrial and 1% agricultural. Principal exports are machinery, transport equipment, chemicals and manufactured goods, while principal imports are machinery, transport equipment, manufactured goods, chemicals and food.

The UK, a leading trading power and financial centre, is one of the quartet of trillion dollar economies of Western Europe. Over the past two decades the government has greatly reduced public ownership and contained the growth of social welfare programmes. Agriculture is intensive, highly mechanised, and efficient by European standards, producing about 60% of food needs with less than 2% of the labour force. The UK has large coal, natural gas, and oil reserves; primary energy production accounts for 10% of GDP, one of the highest shares of any industrial nation. Services, particularly banking, insurance, and business services, account by far for the largest proportion of GDP while industry continues to decline in importance. GDP growth slipped in 2001-03 as the global downturn, the high value of the pound, and the bursting of the "new economy" bubble hurt manufacturing and exports. Output recovered in 2004, to 3.2% growth.

The economy is one of the strongest in Europe; inflation, interest rates, and unemployment remain low. The relatively good economic performance has complicated the government's efforts to make a case for the UK to join the European Economic & Monetary Union (EMU). Critics point out that the economy is doing well outside of EMU, and they cite public opinion polls that continue to show a majority of Britons opposed to the euro. Meantime, the government has been speeding up the improvement of education, transport, and health services, at a cost in higher taxes.

Despite the fact that the UK is by no means a low tax country, UK companies can be used effectively and advantageously in a tax planning structure. Indeed one of the major benefits of utilising UK companies is the fact that the UK is not a tax haven so UK based tax planning structures do not generally attract the same level of attention as those based in an offshore jurisdiction.

A UK company is incorporated in England or Wales and registered in Cardiff, Wales. Details on incorporating in Edinburgh, Scotland or Belfast, Northern Ireland are available on request.

UK corporation tax rates are amongst the lowest in the European Union and, from April 2002, for smaller companies having a profit of under £10,000 per annum, the rate of tax has been cut from 10% to 0%. The small companies’ rate is currently levied at 19% on a UK company which has net profits between £50,001 and £300,000 and a tax rate of 30% is levied on profits above £1,500,000. Marginal rates of tax are applied outside of these bands.

Generally speaking, a UK company is taxable on its world wide income at the rates indicated above but various possibilities exist to create low tax or no tax UK entities, which can be used to great advantage:

  • Holding Company – a UK company is an extremely useful vehicle for the collection of foreign dividend income as, in general terms, a full credit is given against UK tax for any tax paid on the remitted profits before arrival in the UK. Thus, provided the dividend income has already suffered tax at a rate higher than or equal to the applicable UK rate (30%/19%), no UK tax will be payable on that income either on arrival or on distribution. For example, a Danish subsidiary of a UK company would pay tax on its profits at 34%. If the Danish subsidiary distributed profit by way of dividend to the UK parent no further tax would be levied on arrival in the UK because a credit would be given for tax paid in Denmark. This makes the UK company an extremely attractive holding company vehicle for investment into Europe or otherwise and in most cases will be more attractive than competitive structures available through the Netherlands, Austria, Switzerland etc. At the same time, if the UK company is owned by an offshore tax exempt company, the dividend income received by the UK company from its foreign subsidiary can be absorbed by the offshore exempt company parent. It should be noted that any sale of shares would be subject to capital gains tax but there are a number of methods that can be used to reduce or avoid this tax.
  • Non-Resident Company – a UK incorporated company may be classified as non-resident for tax purposes, and therefore non taxable in the UK on non UK-source income, if it is managed and controlled from a country with which the UK has signed a double taxation treaty which contains a recognised “tie-breaker clause”. By careful selection of the country from which the UK company is managed, it may therefore be possible to create a non-taxable UK entity. For example, Cyprus has a suitable tax treaty with the UK so a UK company managed from Cyprus would not be taxable in the UK but would instead pay the Cypriot company tax rate of 4.25%. A major benefit of this structure is to create a low-taxpaying entity that has the added respectability of a UK persona.
  • Company Trading as Fiduciary – a UK company is incorporated and enters into an agreement with the offshore company that it will trade on behalf of the offshore company as its nominee. All contracts of purchase and sale, all the invoicing and all the general correspondence will be made in the name of the UK company and the UK company receives all the revenues from such business as nominee for the offshore principal. The agreement should state that all monies received are received as nominee for the principal except insofar as there will be an agreed fee which will be retained by the UK company. That fee may either be expressed as a flat fee for all the trading done on an annual basis or, more usually, expressed as a percentage of the gross revenues received. The standard form is that 10% of the invoice total in respect of each transaction is retained by way of fee by the UK company. The practice of the UK revenue is to accept, subject to certain conditions, that non UK-source monies which are first received by the UK company but will ultimately be passed over to the offshore company, are received as nominee and are not therefore subject to UK corporation tax. On the basis that 10% of profit is retained by the UK company, UK corporation tax will have to be paid on this amount. The effective rate of UK taxation will be reduced to approximately 3% (10% of the 30% maximum corporation tax rate). In order to protect the trading profits from UK taxation it is essential that no trading activity must occur within the UK. The offshore company must of course be non-resident in the UK for tax purposes itself. This means that its central management and control must reside outside of the UK. The nominee fees received by the UK company will of course be liable to taxation insofar as they generate a profit for the UK company. The amount of remuneration which the UK company receives may also be subject to UK transfer-pricing legislation as contained in the Income and Corporation Taxes Act 1988. Such legislation is likely to apply where the UK nominee and the offshore principal are under common control. One solution to the problem of common control is that the UK company should be beneficially owned by a third person. Any client that has doubts as to the safety of such an arrangement, should realise that the contract between the two companies is enforceable and that in any event the vast majority of monies will be immediately passed over to the offshore company. But even when there is common control between the two companies, provided a commercially viable relationship exists between the two companies and the rate of fee retained by the UK company is in line with what might be expected of an arms-length transaction, there is no reason why the inland revenue might make a direction adjusting the UK company’s deemed remuneration.
  • General Partnership for Trading – under this arrangement a UK resident company enters into a partnership with an offshore company. The UK company is designated as the minority partner carrying out the paperwork with the offshore company acting as the principle in the trading activities. The partnership agreement would stipulate that the UK company receives 5%-10% of partnership profits on which it is taxable at normal UK rates but the majority of those profits accrue to the offshore company and are not taxable. The existence of the partnership agreement does not have to be disclosed to any third party and all communications and correspondence are carried out by the UK company giving the arrangement a UK persona.

The UK plays a leading role in European and world finance and remains attractive to money launderers because of the size, sophistication, and reputation of its financial markets. The UK has implemented the provisions of the European Union’s two Directives on the prevention of the use of the financial system for the purpose of money laundering and the Financial Action Task Force (FATF) Forty Recommendations on Money Laundering. Narcotics-related money laundering has been a criminal offence in the UK since 1986. The laundering of proceeds from other serious crimes is criminalised by subsequent legislation. Banks and non-bank financial institutions in the UK must report suspicious transactions.

In November 2001, anti-money laundering regulations were extended to money service bureaus (bureaux de change, money transmission companies). As of 1 January 2004, more business sectors became subject to formal suspicious transaction reporting (STR) requirements, including attorneys, solicitors, accountants, real estate agents, and dealers in high-value goods such as cars and jewellery. Sectors of the betting and gaming industry that are not currently regulated are being encouraged to establish their own codes of practice, including a requirement to disclose suspicious transactions.

The Proceeds of Crime Act 2002 was enacted on 24 July 2002, and entered into force on 1 January 2003. The final regulations took effect on 1 March 2004. The Act created, for the regulated sector, a new criminal offence of failing to disclose suspicious transactions in respect to all crime, not just narcotics or terrorism-related crimes, as was the case previously. Along with the Act came an expansion of investigative powers relative to large movements of cash in the UK. In light of this, Her Majesty’s (HM) Customs has increased its national priorities to include investigating the movement of cash through money exchange houses and identifying unlicensed money remitters. A total of $159.6 million (£84 million) has been seized under the Act to date.

Private banking constitutes a significant portion of the British banking industry. Both resident and non-resident accounts are subject to the same reporting and record keeping requirements. Individuals typically open non-resident accounts for a tax advantage or for investment purposes. Bank supervision falls under the Financial Services Authority (FSA). The FSA’s primary responsibilities relate to the safety and soundness of the institutions under its jurisdiction. The FSA also plays an important role in the fight against money laundering through its continued involvement in the authorisation of banks, and investigations of money laundering activities involving banks.


The UK is a founding member of the North Atlantic Treaty Organisation (NATO) and is one of NATO's major European maritime, air, and land powers; it ranks third among NATO countries in total defence expenditure. The UK has been a member of the European Community (now European Union) since 1973. In the United Nations, the UK is a permanent member of the Security Council. The UK assumed the Presidency of the G-8 on 1 January 2005; it will also hold the EU Presidency July to December 2005.

HM Queen Elizabeth II is the Head of the Commonwealth, a voluntary association of 53 independent sovereign states that have experienced direct or indirect British rule, or have been linked administratively to another Commonwealth country. The Commonwealth Secretariat is headed by the Commonwealth Secretary General and is located at Marlborough House in London.

The UK cooperates with foreign law enforcement agencies investigating narcotics-related financial crimes. The UK is a party to the 1988 UN Drug Convention and the UN International Convention for the Suppression of the Financing of Terrorism. The UK has signed, but not yet ratified, the UN Convention against Transnational Organised Crime and the UN Convention against Corruption.





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