New Measures Under the Economic Crime and Corporate Transparency Act 2023
New Measures Under the Economic Crime and Corporate Transparency Act 2023: What You Need to Know
On Monday, 4 March 2024, the first measures under the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) officially came into force. These changes mark a significant step in the UK government’s efforts to combat economic crime, fraud, and money laundering, while also increasing corporate transparency. As part of these new regulations, Companies House has been granted enhanced powers to ensure the accuracy and legitimacy of the information on its register, which is vital for maintaining trust in the UK’s business environment.
Key Changes Introduced
The measures that came into effect today include several critical changes that will impact companies across the UK. Here’s a summary of what you need to know:
Greater Powers to Query Information Companies House now has increased authority to scrutinise the information submitted by companies. This includes the ability to request supporting evidence to verify the accuracy of the data provided. These powers are designed to prevent fraudulent information from being recorded on the register and to ensure that only legitimate businesses are listed.
Stronger Checks on Company Names Stricter checks on company names have been introduced to prevent the use of misleading or inappropriate names. This measure aims to reduce the potential for fraud and confusion in the marketplace.
New Rules for Registered Office Addresses All companies are now required to maintain an appropriate registered office address at all times. PO Boxes are no longer acceptable as a registered office address, ensuring that companies have a legitimate, traceable location.
Registered Email Address Requirement Companies must now provide a registered email address as part of their official contact details. This will facilitate more efficient communication between Companies House and businesses, and help ensure that important updates and notifications are received promptly.
Confirmation of Lawful Purpose When forming a company, subscribers must now confirm that the company is being formed for a lawful purpose. Additionally, companies are required to confirm that their intended future activities will be lawful when submitting their confirmation statement. This measure is designed to deter the formation of companies for illicit activities.
Enhanced Powers to Remove Inaccurate Information Companies House now has stronger powers to tackle and remove factually inaccurate information from the register. This will help to ensure that the public record remains reliable and free from misleading data.
Data Sharing with Government and Law Enforcement The ECCT Act enables Companies House to share data with other government departments and law enforcement agencies. This collaboration is crucial in the fight against economic crime, as it allows for more effective identification and prosecution of offenders.
New Offences and Penalties
To complement these measures, new criminal offences and civil penalties have been introduced. These are aimed at deterring fraudulent activities and ensuring compliance with the new regulations. Companies that fail to adhere to these requirements could face significant penalties, including fines and legal action.
Focus on Cleansing the Register
One of the primary goals of the new measures is to cleanse the Companies House register by removing details of those appointed without consent. Companies House CEO, Louise Smyth, highlighted the importance of this initiative, stating:
"These new and enhanced powers are the most significant change for Companies House in our 180-year history. We’ve known for some time that criminals have misused UK companies to commit fraud, money laundering, and other forms of economic crime. As we start to crack down on abuse of the register, we are prioritising cases where people’s names and addresses have been used without their consent. It will now be much quicker and easier to report and remove personal information that has been misused. This will make a real difference to individuals."
Business Minister's Statement
Business Minister Kevin Hollinrake also emphasised the impact of these reforms, stating:
"Companies House now has the tools to take a much harder line on criminals who take advantage of the UK’s open economy and can now ensure the reputation of our businesses is not tarnished by the UK playing host to the world’s scammers. The new reforms, which come into effect today, provide further protection to the public from companies fraudulently using their address and will begin to remove the smoke and mirrors around companies hiding behind false information. This will enhance the UK’s reputation as a great and safe place to do business."
What’s Next?
The changes introduced today are part of a phased rollout, with further measures set to be implemented in the coming months. As these new powers and requirements are integrated into existing processes, Companies House will keep businesses informed through various communication channels.
For those affected by these changes, it is crucial to stay informed and compliant. Companies should review their registration details and ensure that all information is accurate and up-to-date. The new requirements will be incorporated into routine reporting cycles, such as the confirmation statement, so it’s important to remain vigilant and proactive.
Conclusion
The Economic Crime and Corporate Transparency Act 2023 represents a landmark in the fight against economic crime in the UK. The measures introduced today strengthen the integrity of the Companies House register and provide greater protection against fraud and misuse. As the reforms continue to roll out, companies should prepare for these changes and ensure they remain compliant with the new regulations.
For more detailed information on the ECCT Act and its implications, visit the Companies House website or consult with a professional advisor to ensure your business is prepared for the new requirements.
