Economic Crime Act
Position as of November 2023
Economic crime is considered to pose a serious threat to the UK’s national security, economy and its institutions as well as causing serious harm to society and individuals. The UK government is committed to tackling this issue and the Economic Crime and Corporate Transparency Act (ECCTA) is a key part of this strategy. The Act received Royal Assent on 26th October 2023.
The ECCTA is multifaceted and includes for example provisions related to cryptoassets and new intelligence gathering powers for law enforcement. However, for private companies the most significant reform will be to the role and powers of Companies House (CH).
There are 4 new statutory objectives which CH must seek to promote under the ECCTA. These are:
- Ensure that any person who is required to deliver a document to the Registrar does so and that the requirements for proper delivery are complied with.
- Ensure that documents delivered to the Registrar are complete and accurate and that the register contains everything it ought to contain.
- Minimise the risk of records kept by the Registrar creating a false or misleading impression to the public.
- Minimise the extent to which companies and others carry out or facilitate unlawful activities.
To achieve these objectives, there will be several key changes introduced at CH. These will include identity verification checks for new and existing directors, Persons of Significant Control (PSCs) and those delivering documents to CH, greater powers for CH to check and remove information, better financial information on the register, powers for CH to cross check data with other bodies and more protection of personal information. There are also changes being made to the statutory registers, company incorporation process and annual confirmation statement as well as a new company email address requirement and a restriction on the use of corporate directors.
The ECCTA will need as yet unpublished implementing secondary legislation before it is in force. Many of the changes will also require significant development and upgrades to CH systems and procedures. The ECCTA will therefore take some time before it is fully in force to give both companies and CH the chance to prepare. The Registrar of Companies has however indicated that the first changes likely to be implemented in early 2024 include:
- the requirement for all companies to register an email address with CH;
- the new rules on registered office addresses;
- the lawful purpose confirmation requirements; and
- CH's enhanced powers to query and check information, to remove inaccurate information and to share data with other government departments and law enforcement agencies.
The pages below give an overview of the key changes to be introduced by the ECCTA, particularly the ID verification regime.
The government has produced a series of useful factsheets, these can be accessed here. Companies House has also created a new central hub of information about the changes being made. This can be accessed here.
It is also worth noting that the Act introduces a new strict liability offence of failure to prevent fraud (limited to large companies) and amends the "identification doctrine" (where companies can be held criminally liable for the acts of their officers or employees if they represent the company's "directing mind and will" such that their actions can be attributed to the company concerned) to make it easier to prosecute companies for certain economic crimes.
- Changing Role of Companies House
- Overview of Identity Verification Regime
- Changes to Company Accounts
- Maintaining a Company Email Address
- Appropriate Registered Office Address
- Integrity of Company Names
- Transparency Requirements of Company Formation
- Maintenance of Company Registers