UK and International Tax news

The Economic Crime and Corporate Transparency Act 2023

Tuesday 14th November 2023

The Economic Crime and Corporate Transparency Act 2023 received Royal Assent on 26 October 2023.

The ECCTA includes provisions for the introduction of reforms to Companies House, in particular, reforms to prevent the abuse of limited partnerships, additional powers to seize and recover suspected criminal cryptoassets, reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime and new intelligence gathering powers for law enforcement and removal of nugatory burdens on business.

The Government expects these provisions will bear down further on kleptocrats, criminals and terrorists who abuse the UK’s financial system, strengthening the UK’s reputation as a place where legitimate business can thrive, whilst driving dirty money out of the UK.

Companies House reform

These include:

  • Introducing identity verification for all new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar, in order to improve the accuracy of Companies House data, to support business decisions and law enforcement investigations.
  • Broadening the Registrar of Companies House’s powers so that the Registrar can become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the companies register.
  • Improving the financial information on the register so that the register is more reliable, complete and accurate, reflects the latest advancements in digital technology, and enables better business decisions.
  • Providing Companies House with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies, and allowing Companies House to proactively share information with law enforcement bodies where they have evidence of anomalous filings or suspicious behaviour.
  • Enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.
  • Broader reforms to clamp down on misuse of corporate entities.

Limited partnership reforms

These include:

  • tightening of registration requirements
  • require limited partnerships to maintain a connection to the UK
  • increasing transparency requirements
  • enabling the Registrar to deregister limited partnerships which are dissolved, no longer carrying on business, or where a court orders that it is in the public interest to do so

Cryptoassets

Additional powers are being introduced to law enforcement to allow quicker and easier seizure and recovery of  cryptoassets which are the proceeds of crime or associated with illicit activity such as money laundering, fraud and ransomware attacks.

These powers principally amend both criminal confiscation powers in Parts 2, 3 and 4 of the Proceeds of Crime Act 2002 (POCA) and civil recovery powers in Part 5 of POCA to enable enforcement agencies to more effectively tackle criminal use of cryptoassets.

Strengthening anti-money laundering powers

The reforms will:

  • enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime
  • enable proactive intelligence gathering by law enforcement and strengthening the National Crime Agency’s Financial Intelligence Unit’s ability to obtain information from businesses relating to money laundering and terrorist financing by removing the requirement for a pre-existing Suspicious Activity Report to have been submitted before an Information Order can be made
  • focus private sector and law enforcement resources on high value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering SAR

If you would like further information on the new Act, please contact Keith Rushen on 0207 486 2378.

 

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