The Economic Crime and Corporate Transparency Bill received Royal Assent on 26 October 2023 and became the Economic Crime and Corporate Transparency Act (ECCTA). Most of the Act will be implemented through secondary legislation which has not yet been published.
This legislation is the second phase of significant reforms being introduced by the UK government following the Crime (Transparency and Enforcement) Act, aimed at tackling abuse of corporate structures and cracking down further on criminals and terrorists who are involved in fraud and money laundering.
The Act will introduce a number of changes which will impact those who are responsible for maintaining company’s statutory registers.
The Act will also revoke the option of UK companies to store statutory registers with the Registrar of Companies.
ID verification for anyone registered at Companies House
The ECCTA introduces a mandatory requirement for all new and existing company directors and persons of significant control to be verified.
It will not be permitted for another person to deliver documents to the Registrar of Companies on behalf of someone else, which includes companies, unless they themselves have been verified first by the Registrar of Companies. The procedure and requirements for verifying an individual have yet to be made available, however it is likely that a biometric facial scan to compare a person to their ID will be required.
The verification process can be undertaken individually or by an Authorised Corporate Service Provider (ACSP). To become an ACSP a person or firm must be a ‘relevant person’ under the Money Laundering Regulations, which includes law firms. The role of the ACSP will be to deliver documents to the Registrar and to undertake the mandatory identification verification process and file the relevant supporting ‘verification statement’.
ACSPs must also provide, at the request of the Registrar, relevant information and keep relevant records available for inspection.
Companies House have confirmed that the cost of these additional activities will be factored into their fees for incorporation and annual fees, and non-payment of the annual fee may result in a company being struck off the register.
Registered office and email address
The Act will introduce a new requirement for a company to ensure that its registered office is an appropriate address. This means that any notification to Companies House of a change of address must include a statement confirming that the address is an appropriate one.
An appropriate address in this context means an address where both:
- A document addressed to the company and delivered either by hand or by post would be expected to come to the attention of a person acting on behalf of the company.
- The delivery of documents is capable of being recorded by obtaining acknowledgment of delivery.
If you would like information about our registered office address services, please do not hesitate to contact us.
People with significant control (PSC)
The Act abolishes the obligation for a company to maintain its own PSC statutory register or elect to hold this information on the central register at Companies House. All information relating to PSCs will now only be held on the public register at Companies House.
Companies House reforms
The Companies House reforms represent one of the most significant measures in the ECCTA. The ECCTA broadens the Registrar of Companies House’s powers so that the Registrar can become a more active gatekeeper over the accuracy of information on the register. It will also improve the financial information on the register so that it is more reliable. The changes will be challenging for all but important to implement. Several changes will require additional resource, system development and secondary legislation before they are fully introduced.
Limited partnership reform
The Act will tackle the misuse of limited partnerships by:
- Tightening registration requirements
- Requiring limited partnerships to maintain a connection with 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
The Act will provide additional powers to law enforcement so they are able to quickly and easily seize and recover cryptoassets (proceeds of crime or associated with illicit activity such as money laundering).
Strengthening anti-money laundering powers
The ECCTA will enable businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime. It will also enable proactive intelligence gathering by law enforcement and focus private sector and law enforcement resources on high value activity.
Offences created by the ECCTA
It will now be a criminal offence to for a person to deliver a false, deceptive or misleading filing or statement to the Registrar “without reasonable excuse”. The previous wording in the Companies Act required a person to “knowingly or recklessly” deliver a document or statement that was false, deceptive or misleading.
We will continue to update you as further secondary legislation is published to enact the ECCTA, but in the meantime please do not hesitate to contact us if you have any questions.