The Economic Crime and Corporate Transparency Act (ECCTA) is a piece of legislation in the United Kingdom passed in October 2023. It includes amendments to the Companies Act 2006 in the UK. The new Act aims to tackle economic crime, such as fraud and corruption, and improve transparency over corporate entities.
Why was ECCTA necessary
In recent years, economic crime has been a growing problem in the UK, and the country's open and transparent financial system has made it a prime target for criminals.
The ECCTA was created to make it more difficult for criminals to operate in the UK and to protect businesses and the public from fraud.
It is also likely to have implications for businesses operating in the UK, which must comply with the new requirements.
The provisions of the ECCTA
The ECCTA gives Here are some of the key provisions of the ECCTA:
Companies House reforms: The ECCTA will give Companies House more powers to verify the identity of company directors and other officers and to de-register companies that are suspected of being fraudulent.
Cryptoasset seizure powers: The ECCTA will give law enforcement agencies more powers to seize and recover crypto assets suspected of being linked to crime.
Failure to prevent fraud offense: The ECCTA will introduce a new 'failure to prevent fraud' offense for companies and other legal entities that fail to prevent fraud committed by their employees.
The “identification doctrine”: businesses can be held criminally liable for the actions of their senior managers who commit an economic crime.
New powers to judges: Measures to address strategic lawsuits against public participation (SLAPPs), involving economic crime.
The ECCTA is a complex piece of legislation, and it is important for businesses to understand their obligations under the new law. Businesses should seek legal advice to ensure that they are compliant with the ECCTA and to avoid the risk of criminal liability.
Some measures in the act will not be introduced immediately however, some other measures will come into force in 2024. These early measures include:
Greater powers for Companies House to query and reject information submitted by companies
Stronger checks on company names.
New rules for registered office addresses, which will mean that all companies must have a real address and cannot use a PO Box.
A requirement for all companies to supply a registered email address.
A requirement for all companies to confirm that they are forming the company for a lawful purpose when they incorporate and to confirm every year that their future activities will be legal.
Annotations on the register to let users know about potential issues with the information that has been supplied.
Steps to clean up the register, using data matching to identify and remove inaccurate information.
Sharing data with other government departments and law enforcement agencies.
Additionally, the Company’s House will increase some of its fees from early 2024, which will cover the cost of the services it delivers.