The Economic Crime and Corporate Transparency Act – what it means to you!

Limited Company, News,

The Economic Crime and Corporate Transparency Act has finally made its way through Parliament and received Royal Assent on the 26th October 2023. This was a significant moment in Companies House’s history, as the Act will bring about the most significant changes the Registry has ever seen.

The primary goal of this legislation is to provide clearer visibility among UK companies and legal entities. This new legislation introduces several key changes, including mandatory identity verification for all registered company directors, individuals with significant control, and those submitting documents to the registrar.

The Act also strengthens anti-money laundering measures, especially when it comes to information sharing, and grants more powers for confiscating and reclaiming cryptocurrency assets..

Companies House’s CEO, Louise Smyth, welcomed the Act, saying ‘This is the most significant change for Companies House in our long history. The aim is crystal clear – to thwart criminals from exploiting UK companies for fraud, money laundering, and economic crime.’

Four new objectives have been drafted for the Registrar of Companies as part of the Act, and decisions made in future will be based on these objectives:

  1. Ensuring compliance with document submission requirements to the registrar.
  2. Maintaining the register’s accuracy and completeness.
  3. Preventing the registrar’s records from misleading the public.
  4. Deterring companies and others from engaging in or abetting illegal activities.

Key features of the Act, such as enhanced verification and identity checks, will be implemented gradually as the appropriate systems are developed or secondary legislation is passed.

The initial stages of the Act’s implementation are likely to begin in early 2024, and will include:

  • Enhanced authority to examine and potentially reject or remove suspect information.
  • More robust checks on company names.
  • Stricter guidelines for registered office addresses, including the prohibition of PO Box usage.
  • Mandatory provision of a registered email address by all companies.
  • Annual confirmation by companies of their lawful operational intent.
  • Register annotations alerting to potential data issues.
  • Steps to be taken to clean up the register, using data matching to identify and remove inaccurate information.
  • Data sharing with other government departments and law enforcement agencies.

The Act gives the Registrar greater powers to question information provided as part of new company formations, and to ensure the reliability of the information it holds, which has not been the case in the past. It enables Companies House to examine, discard, or reject information.

Companies House will also gain enhanced investigative and enforcement powers, including better data cross-referencing with other public and private entities, and more effective collaboration with law enforcement agencies.

The focus of anti-money laundering efforts will be on prevention and investigation of economic crime. There are some significant changes coming, but they should improve the security and accuracy of the data held on public record.

Whilst we take care of many of the submissions to Companies House on behalf of many clients, and will of course keep you up to date with the changes as they’re implemented, you may well wish to follow the progression of the Act directly with Companies House. If so, you can register to receive Companies House newsletters or visit the new website set up that provides more detail.

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