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The Year of Reformations Affecting Small and Medium Enterprises

Corporate Law

01 March 2023


The Economic Crime and Corporate Transparency Bill (the “Bill”) is currently making its way through Parliament and is seeking to bring about much needed reforms to assist with tackling economic crime and money laundering in the UK.

One of the main reforms proposed as part of the Bill is the proposed reform of Companies House, which seeks to improve the overall transparency of UK based companies and other legal entities. The Bill seeks to broaden the powers of the Registrar of Companies House, by enabling the Registrar to play a more active role in the creation of new companies as well as in making sure that existing data on the register is reliable and up to date.

Identity verification will play a big part for Small and Medium Enterprises (“SMEs”) once the Bill is passed. Anyone looking to set up, run, own or control a company within the UK will need to undergo a stricter identity verification process in order to prove that they are who they say they are.

The Bill also plans to address the reported misuse of limited partnerships in the news, such as by increasing requirements for transparency and enabling the Registrar to deregister limited partnerships which are dissolved, no longer carrying on business or where it has been ordered by a court that it is no longer in the public’s interest to carry on their business.

Furthermore, law enforcement agencies will be provided with additional powers to be able to seize and recover cryptoassets, which have been acting as proceeds of crime, or those which have an association with illegal activity such as fraud and money laundering more easily and quickly.

In theory, the passing of this Bill should provide potential clients and others with a sense of reassurance that the SMEs they are considering working with are legitimate, credited to the increased transparency that the Bill aims to implement.

Whilst the new Bill does not cover all areas which would benefit from reforms, the passing of the Bill is a welcome step towards overcoming the problems associated with economic crime and money laundering.

The Bill is currently in its first reading in the House of Lords. We will be providing an update on how the Bill progresses, and when it reaches the final stage of receiving Royal Assent.

Track the progress of the Bill here: