Economic Crime and Corporate Transparency Act 2023: A brief overview of the reforms
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) is aimed at fighting illicit financing and money-laundering through a range of reforms.
The new responsibilities will affect all new and existing company directors, people with significant control of a company (PSCs) and anyone who files on behalf of a company.
The first tranche containing some of the changes by Companies House is expected to be introduced under the ECCTA after the 4 March. The exact timescales of the changes are still to be determined.
Remember to ensure that your business complies with the new changes. The first step is to be aware of the scope of the reforms.
- Ensuring Reliability of the Information
The role of the registrar changes from a record keeper to a gatekeeper. The registrar of companies will have broad powers to check, reject or remove information that is inaccurate, incomplete or misleading.
- Information sharing
The registrar can also share and receive information from other authorities, such as the police, tax agencies or regulators, without breaching confidentiality obligations, but subject to data privacy laws. The information sharing aims to facilitate customer due diligence (CDD) and prevent and detect criminal activity.
- Identity Verification
It will now be necessary for anyone setting up, running, or controlling a company in the UK to verify their identity. It is expected that the exact process for ID verification will be put in place by Companies House, with those needing ID checks being required to send in ID documents, such as a passport or drivers’ license.
- Company names
The registrar can also query the names of companies, where the name might be used to facilitate a crime, such as impersonating another entity or misleading customers.
- New rules for Registered Office Addresses
The new rules also require companies to have an appropriate registered address, meaning that if post is sent someone at the address should be able to respond and/or sign for receipt.
- Registered Email address
There is also a requirement for an appropriate registered email address which again means that someone must be able to respond to any emails received.
- Lawful purpose Statements
One of the proposed reforms to the UK company law is to introduce a requirement for all companies to confirm they’re forming the company for a lawful purpose when they incorporate, and to confirm its intended future activities will be lawful on their confirmation statement. This would help to prevent the misuse of companies for criminal purposes and enhance the transparency and accountability of the corporate sector.
- Filing Accounts
Companies House will be moving to software-only accounts filing. This is intended to make filings more efficient and secure, and to improve the quality of data on the register. This will pave the way for Companies House to then have a formal requirement to for companies to file accounts digitally, so we recommend that you start the process of finding suitable software for doing so early on.
- Confirmation Statement Changes
All dormant and non-trading companies will have to confirm within confirmation statement that any intended future activities of the business will be lawful (this will come into force from 4 March 2024).The new changes will allow companies to annotate their registers when information appears confusing or misleading.
- Increase in Fees
Due to the costs of enforcing the new powers brought into force by the Economic Crime and Corporate Transparency Act, Companies House will be increasing their fees. The exact increases are not yet published.
- Personal Information protection
Individuals under the new ECCTA will be permitted to apply for the exclusion of certain information from public historical documents, these will include:
- residential addresses in most instances when shown elsewhere on the register (for example, when used as a registered office address);
- day of birth for documents registered before 10 October 2015 (only the month and year of birth have been publicly displayed since 10 October 2015);
- signatures; and
- business occupation.If the inclusion of personal information at Companies House places an individual at risk of physical harm or violence – they can apply to have this information removed in its entirety from public view.
If the inclusion of personal information at Companies House places an individual at risk of physical harm or violence – they can apply to have this information removed in its entirety from public view.
The information available to remove includes:
- Name (or previous names).
- Sensitive addresses where public disclosure puts its residents at risk.
- Service addresses and partial dates of birth.
These measures will not come into force until there has been secondary legislation passed.
Do you need a help with legal compliance? Please get in touch with our Corporate & Commercial team for assistance.
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