Regulation Update: Economic Crime & Corporate Transparency

Apr 12, 2023

Following its passage through the House of Commons, the Economic Crime and Corporate Transparency Bill is now at committee stage in the House of Lords.

The Bill follows on from the Economic Crime (Transparency and Enforcement) Act, passed in March 2022 in response to the Russia/Ukraine conflict. This legislation served to significantly simplify the process for imposing sanctions, identifying, and tracing illicit wealth, and preventing ‘oligarchs’ from seeking damages.  

The proposed legislation takes this a step further, aiming to strengthen the UK’s efforts to combat economic crime and mitigate the risk of bad actors taking advantage of the openness of the UK economy to perpetrate fraud, money laundering, corruption, and other forms of organised crime. The government is committed to bringing this latest bill forward to deliver a wider-ranging suite of reforms on tackling economic crime and improving the transparency of corporate entities.

What will the Bill deliver?

The ECCTB includes several changes to current legislation designed to improve transparency and accountability in the corporate sector, in order to deliver a level playing field and ensure companies operate in an ethical and responsible manner. Reforms include:

  • Strengthening the powers of Companies House – enhancing its powers to scrutinise information provided by companies and their directors, new requirements for companies to provide detailed information about their ownership structure, new checks and balances to prevent misuse of company information, and penalties for companies who fail to provide accurate and up-to-date or deliberately false information.
  • The prevention of limited partnerships abuse
  • A levy to be paid by financial service firms which will fund law enforcement efforts
  • A register of beneficial owners of overseas entities who own property in the UK
  • Additional powers for law enforcement to freeze, seize and recover the proceeds of economic crime (including crypto assets)
  • New offences for directors and senior managers who fail to prevent economic crime
  • Giving businesses more confidence to share information to tackle money laundering and other economic crime
  • New intelligence-gathering powers for law enforcement.

What stage are we at?

On 27th March the House of Lords committee approved amendments to the Sanctions and Money Laundering Act 2018 which would enable new regulations under the new ECCTB for imposing director disqualification sanctions on designated persons. This will also be complemented by approved amendments to the Directors Disqualification Act 1986, making it an offence under ECCTB for a person subject to sanctions to act as a company director.

In addition, the committee adopted amendments regarding the provision of requisite information to be provided by subscribers of registration of a company, and the delivery of documents to the registrar of companies – Companies House.

The next scheduled committee day is 18th April 2023, so watch this space for more information on how the new ECCTB will impact your business.

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