The ECCT Act


Empowering Change: The Economic Crime and Corporate Transparency Act Explained

 

The Economic Crime and Corporate Transparency Bill marks a significant stride in the UK’s ongoing efforts to fortify its financial systems, combat economic crime, and enhance transparency in corporate entities. In a world where global business transactions are the norm, the UK, with one of the world’s largest and most open economies, faces the challenge of safeguarding businesses against illicit financial activities. This legislation not only builds upon the Economic Crime (Transparency and Enforcement) 2022 Act but also introduces a range of reforms to address economic crime comprehensively.

The UK’s attractiveness as a global business hub brings with it the risk of bad actors exploiting its openness. The Economic Crime (Transparency and Enforcement) 2022 Act, prompted by Russia’s invasion of Ukraine, was a swift response to curb the influx of dirty money and prevent foreign elites from abusing the UK’s economic openness. This Act empowered the government to impose sanctions more efficiently, established a Register of Overseas Entities to counter money laundering, and reinforced the Unexplained Wealth Order regime.

So, what are the key provisions of the Economic Crime and Corporate Transparency Bill?

  1. Companies House Reforms
  • All registered company directors, People with Significant Control, and document deliverers must undergo identity verification. This aims to enhance data accuracy for better business decisions and law enforcement investigations.
  • The Registrar of Companies House has gained expanded powers to actively oversee company creation and maintain reliable data. This includes the authority to check, remove, or decline information on the companies register.
  • Improvements to financial information on the register to ensure reliability, completeness, and accuracy. This aligns with advancements in digital technology and facilitates informed business decisions.
  • Companies House receives additional investigation and enforcement powers, with improved cross-checking capabilities with other public and private sector bodies. Proactive sharing of information with law enforcement bodies is enabled.
  • Enhanced protection of personal information provided to Companies House, safeguarding individuals from fraud and other harms.
  1. Limited Partnership Reform
  • Stricter registration requirements for limited partnerships.
  • Limited partnerships must maintain a connection to the UK.
  • Enhanced transparency requirements for limited partnerships.
  • The Registrar gains the authority to deregister limited partnerships under specific conditions, including dissolution or cessation of business.
  1. Cryptoassets
  • Law enforcement receives additional powers to swiftly seize and recover cryptoassets associated with crime or illicit activities such as money laundering and fraud. Amendments to criminal confiscation and civil recovery powers enable more effective action against criminal use of cryptoassets.
  1. Strengthening Anti-Money Laundering Powers
  • Businesses can share information more easily in certain situations to prevent, investigate, or detect economic crime, with a disapplication of civil liability for breaches of confidentiality.
  • Removal of the requirement for a pre-existing Suspicious Activity Report (SAR) before an Information Order (IO) can be made, enabling proactive intelligence gathering by law enforcement.
  • Focus on high-value activity to reduce the reporting burden on businesses, expanding the types of cases in which businesses can deal with clients’ property without submitting a Defence Against Money Laundering (DAML) SAR.

Overall, the Economic Crime and Corporate Transparency Bill represents a comprehensive approach to combating economic crime, reinforcing transparency, and strengthening the UK’s standing as a hub for legitimate business. By addressing loopholes and enhancing the powers of regulatory bodies, the bill seeks to create a more secure and accountable business environment, driving illicit finance out of the UK.

In its commitment to safeguarding the nation’s financial integrity, this legislation marks a crucial step forward in the ongoing battle against economic crime.

Get in touch with Ebonstone to see how we can support your organisation’s reporting structure and processes to foster a more transparent and trustworthy result.

 

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