The Economic Crime and Corporate Transparency Act, receiving royal assent on 26 October 2023, introduces significant reforms in the UK’s approach to corporate transparency and the battle against economic crime. This Act marks the most substantial transformation of corporate registrations since 1844, bringing with it a host of new responsibilities and changes for businesses and individuals.
Here’s a detailed breakdown of the key aspects of this landmark legislation:
Enhanced Role of Companies House
The Act empowers Companies House with greater responsibilities and authority, positioning it as a key player in combating economic crime and supporting economic growth. This shift is expected to lead to more transparent, accurate, and trusted information on company registers, ultimately boosting confidence in the UK economy.
New Responsibilities for Stakeholders: The Act introduces new responsibilities for various stakeholders, including:
Company Directors (New and Existing): Directors are required to verify their identity, ensuring accountability and transparency.
People with Significant Control (PSCs): PSCs also face identity verification requirements to prevent unlawful activities.
Individuals Filing on Behalf of Companies: These individuals must verify their identity, adding an additional layer of scrutiny and ensuring the accuracy of submitted information.
A crucial component of the Act is the introduction of identity verification for all new and existing registered company directors, PSCs, and those filing on behalf of companies. This measure aims to deter the use of companies for illegal purposes and enhance the reliability of data on company registers.
Broadening Powers of Companies House
The Act empowers Companies House to become a more active gatekeeper over company creation, ensuring more reliable and accurate financial information on the register. This change reflects the latest advancements in digital technology and aims to enable better business decisions.
Enforcement Powers and Data Sharing
Companies House is granted more effective enforcement powers, including the ability to share relevant information with partners. This enhancement is crucial for effective regulatory oversight and combating economic crime.
Protection of Personal Information
The Act strengthens the safeguarding of individuals’ personal information to protect them from fraud and other harms.
Changes to Limited Partnerships
Limited partnerships are now required to file their information through authorized agents, with an obligation to provide more comprehensive information to Companies House.
Investigation, Enforcement, and Data Sharing
Companies House’s new powers extend to more effective investigation and enforcement, as well as enhanced capabilities to share data with law enforcement agencies and other government departments.
New Statutory Objectives for the Registrar of Companies
The Act introduces new objectives for the Registrar, focusing on ensuring document delivery compliance, accuracy of register information, preventing the creation of misleading impressions, and thwarting unlawful activities.
Updates on Registered Office Addresses and Lawful Purpose Statements
The Act stipulates new rules for registered office addresses, ensuring they are always appropriate and can receive and acknowledge document deliveries. Additionally, there’s a new requirement for companies to confirm a lawful purpose at registration and in their annual confirmation statements.
Enhanced Registrar Powers
The Registrar gains increased authority to query and challenge information that seems incorrect or inconsistent, including the ability to remove inaccurate, incomplete, false, or fraudulent information.
Changes in Filing Accounts
The Act paves the way for transitioning towards filing accounts exclusively via software, streamlining the process and enhancing data quality.
Protection Measures for Personal Information
Individuals can now apply to suppress personal information from historical documents and protect personal information from public view if there’s a risk of harm.
Companies House is set to adjust its fees to accommodate future expenditures and recover costs from existing expenditures.
Register of Overseas Entities
Introduced in August 2022 under the Economic Crime (Transparency and Enforcement) Act, this register forms a key part of the strategy to tackle global economic crime, requiring overseas entities owning UK land to register and declare their beneficial owners.
The Economic Crime and Corporate Transparency Act represents a major step forward in improving corporate transparency and tackling economic crime in the UK. Its implementation will necessitate businesses to adapt to new verification processes, data submission protocols, and compliance measures, fostering a more secure and transparent corporate environment.