Economic Crime And Corporate Transparency Act 2023

Overview of the Act

1. The Economic Crime and Corporate Transparency Act is effectively the second part of a legislative package to prevent the abuse of United Kingdom (UK) corporate structures and tackle economic crime. It follows on from the Economic Crime (Transparency and Enforcement) Act 2022, which received Royal Assent on 15 March 2022.
2. The Act has three key objectives:
   1. Prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies and other corporate entities to abuse the UK’s open economy. This Act reforms the powers of the Registrar of Companies and the legal framework for limited partnerships in order to safeguard businesses, consumers and the UK’s national security.
   2. Strengthen the UK’s broader response to economic crime, in particular by giving law enforcement new powers to seize cryptoassets and enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
   3. Support enterprise by enabling Companies House to deliver a better service for over four million UK companies, and improving the reliability of its data to inform business transactions and lending decisions across the economy.
3. The main elements of the Act are:
   1. Broadening the Registrar’s powers so that the Registrar becomes a more active gatekeeper over company creation and custodian of more reliable data concerning companies and other UK registered entities such as LLPs and LPs – including new powers to check, remove or decline information submitted to, or already on, the register.
   2. Introducing identity verification requirements for all new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar. This will improve the reliability of the Registrar’s data, to support business decisions and law enforcement investigations.
   3. Providing the Registrar with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies.
   4. Tackling the abuse of limited partnerships (including Scottish limited partnerships), by strengthening transparency requirements and enabling them to be deregistered.
   5. Amending the Register of Overseas Entities to maintain consistency with change to the Companies Act 2006, and to make the Register more effective.
   6. Creating powers to quickly and more easily seize and recover cryptoassets, which are the principal medium used for ransomware. The creation of a civil forfeiture power will mitigate the risk posed by those who cannot be criminally prosecuted but use their funds to further their criminality, or for use for terrorist purposes.
   7. Creating new exemptions from the principal money laundering offences to reduce unnecessary reporting by businesses carrying out transactions on behalf of their customers and giving new powers for law enforcement to obtain information to tackle money laundering and terrorist financing.
   8. Removing the need for a Statutory Instrument to be laid in order to update the UK’s high risk third country list.
   9. Enabling businesses in certain sectors to share information more effectively to prevent and detect economic crime.
   10. A measure removing the statutory fining limit to allow the Solicitors Regulation Authority (SRA) to set its own limits on financial penalties imposed for economic crime disciplinary matters and a measure removing the fining cap for the Scottish Solicitors’ Disciplinary Tribunal.
   11. Adding a regulatory objective to the Legal Services Act 2007 to affirm the duties of regulators and the regulated communities to uphold the economic crime agenda.
   12. A measure which allows the SRA to proactively request information to monitor compliance with economic crime rules and legislation.
   13. Allowing the SFO to use its powers under section 2 of the Criminal Justice Act 1987 at the ‘pre-investigation’ stage in any SFO case.