The Economic Crime and Corporate Transparency Act 2023 (the Act) received Royal Assent on 26 October 2023, but although parts of the Act are law immediately, others require a statutory instrument before they come into force. The Act follows on from the Economic Crime (Transparency and Enforcement) Act 2022 and together they aim to prevent the abuse of United Kingdom corporate structures and to tackle economic crime.
The Act has several key objectives:
- prevent organised criminals, fraudsters, kleptocrats and terrorists from using corporate entities to abuse the UK's open economy. The Act will reform the powers of the Registrar of Companies and the legal framework for limited partnerships to safeguard businesses, consumers and the UK's national security;
- strengthen the UK's broader response to economic crime, in particular by giving law enforcement new powers to seize cryptoassets and enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime; and
- support enterprise by enabling Companies House to deliver a better service for UK companies as well as improving the reliability of its data to inform business transactions and lending decisions across the economy.
Among other measures, the Act gives more power to the Registrar of Companies; introduces new identity verification requirements for new and existing registered company directors, people with significant control, and those delivering documents to the Registrar; tackling the abuse of limited partnerships; amending the Register of Overseas Entities to maintain consistency with the Companies Act 2006; creating powers to quickly and more easily seize and recover cryptoassets; and amending money laundering legislation.
A relevant body would face criminal prosecution if someone associated with it commits fraud to benefit the body where there were not reasonable procedures to prevent the fraud. However, this will apply only to "large organisations", which are those with a turnover of more than GBP 36 million, total assets of more than GBP 18 million and more than 250 employees. At present, small and medium-sized businesses are exempt, although the corporate requirements may be modified or removed in future. By comparison, the Act introduces a new test for corporate liability which is not limited to large organisations. This will apply to senior managers involved in specific economic crimes.
The UK's Registrar of Companies welcomed the introduction of the Act as a significant moment giving new and enhanced powers to Companies House, changing it from a recipient of information to undertaking a more active role. While many of the measures will require system changes before introduction, it is expected that other measures – such as greater powers to query information, stronger checks on company names, new rules for registered office and email addresses – will come into force in early 2024.