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Economic Crime and Corporate Transparency Bill

05 July 2024

ECCTA 2023: Background, Purpose and Objectives

The Economic Crime and Corporate Transparency Bill received Royal Assent on Thursday 26th October 2023, being enacted as the Economic Crime and Corporate Transparency Act 2023 (‘ECCTA’). The new offences within ECCTA are expected to come into force this year with the provision of highly anticipated secondary legislation.

What is the purpose of ECCTA?

ECCTA follows the Economic Crime (Transparency and Enforcement) Act 2022 (‘ECTEA’), with the combined effect of preventing abuse of UK corporate structures and tackling economic crime.

ECTEA passed rapidly through Parliament due to the Ukraine / Russia war, as a Register of Overseas Entities (the ‘OE Register’) needed to be created to enforce the economic sanctions imposed by the UK government. The OE Register was the first step in developing and extending the authority of Companies House, by requiring overseas entities that own UK property or land to declare their beneficial owners or managing officers. The introduction of the OE Register has, in the view of many commentators, greatly improved transparency, as overseas entities are unable to deal with their land unless they have registered with Companies House.

ECCTA further evolves the role of Companies House, whilst also introducing a range of other measures to tackle the wider aspects of economic crime.

The three key objectives identified in ECCTA are:

  • to prevent organised criminals, terrorists, fraudsters and the like from using companies and other corporate entities to abuse the UK’s open economy;
  • to strengthen the UK's broader response to economic crime, by enhancing law enforcement powers and enabling businesses in the financial sector to share information more effectively, to both prevent and detect economic crime; and
  • to support enterprise by enabling Companies House to deliver a better service to improve the reliability of its data, which will help inform business transactions and lending decisions across the economy.

What’s next?

In summary, significant changes are taking place under ECCTA in relation to filings at Companies House, providing for more corporate transparency in a further effort to combat money laundering and fraud within the UK. No doubt, however, that ECCTA will not be the final step in the UK movement’s attempt to stifle UK economic crime. It is just another step on the legislative road to implement more transparency and compliance requirements on UK companies. Accordingly, directors and the companies they act for need to be ever more vigilant in a changing as well as evolving UK corporate sector.

Sources:

Practical Law, ‘Economic Crime and Corporate Transparency (ECCT) Bill: Overview’, 2023.

https://companieshouse.blog.gov.uk/2023/03/07/register-of-overseas-entities-the-story-so-far/

https://www.parliament.uk/business/news/2023/february-2023/lords-scrutinises-economic-crime-and-corporate-transparency-bill/