ECCTA: Latest Implementation Timetable, Guidance on Financial Penalties and Identity Verification Regime.

Companies House has recently issued information on its intended implementation timetable for much of the rest of the Economic Crime & Corporate Transparency Act 2023 (ECCTA) that is not yet in force. It has also issued guidance on its new enforcement powers, including, issuing financial penalties.

Implementation Timetable - identity verification regime

On 16th October 2024, Companies House published its intended implementation timetable for measures not yet in force. The provision of most interest and significance is the new identity verification requirement. Identity verification of new and existing directors, persons of significant control (PSCs) and those delivering documents to Companies House, will commence in Spring 2025 and is expected to be completed by the end of 2026. 

Professional advisers (which must be entities regulated for anti-money laundering purposes) will be able to register as authorised corporate service providers (ACSPs), enabling them to verify the identity of those subject to the identity verification regime by Spring 2025. Identity verification will be made a compulsory part of company incorporation and new appointments for directors and PSCs by Autumn 2025. At the same time, a 12-month transition period will be put in place for existing companies to provide identity verification credentials for directors and PSCs with their next confirmation statement. By Spring 2026, presenters filing any document at Companies House will also be required to have their identities verified.

Guidance on enforcement & penalties

Since 2nd May 2024, Companies House has had the power to impose financial penalties for most offences under the Companies Act 2006. These fining powers were granted to Companies House under the ECCTA (Financial Penalty) Regulations 2024. The explanatory memorandum to the regulations noted that Companies House would not exercise its fining powers until it had published guidance on their use. Companies House has now published guidance on its approach to financial penalties, along with guidance on its enforcement policy more broadly.

Considering the publication of these two documents by Companies House we have this month:

• updated our Checklist of Headline Points for the ECCTA;
• updated our Note to Directors – Summary of key Issues under the ECCTA; and
• created new information on both enforcement and the implementation timetable with a focus on identity verification.

Companies that have not done so already must start planning now for the imminent implementation of the identity verification regime.  Our updated checklist is a good starting point and has the action points that companies should consider in communicating the changes to all relevant parties as well as the arrangements that need to be put in place to verify identity.

Companies should also ensure that all their filings are correct and up to date. Any known errors, omissions or inconsistencies with information held at Companies House should be promptly addressed and rectified, considering the financial penalties that Companies House is now able to levy for errors and non-compliance.

Guidance on information sharing measures in the ECCTA

Companies House has also published new guidance on information sharing to support firms that are regulated for anti-money laundering purposes and therefore required to carry out AML checks. These include banks, estate agencies, tax advisers, accountancy firms and law firms.

It deals specifically with the new measures for information sharing under the ECCTA and how these organisations can share information (including personal data) for the purpose of investigating, detecting and preventing economic crime without the risk of incurring civil liability for breach of confidence. This guidance can be accessed here.