Economic Crime and Corporate Transparency Act 2023 (ECCTA)
As I have learned a lot from this forum I thought that I should contribute. I have not seen any discussion of it anywhere (apologies if I missed it) so I thought that I would post a summary/edit of what the Act’s salient points are. The text below is my shorthand/edit of what I have read about this Act. This is an ill thought out, knee jerk response piece of legislation that will further erode our right to privacy.The ECCTA is complex piece of legislation and includes for example provisions related to cryptoassets and new intelligence gathering powers for law enforcement. For private companies the most significant reform will be to the role and powers of Companies House (CH)
Most of the provisions of the Act will come to force December 2023 and the Q1 and Q2 in 2024.. Some provisions will need substantial secondary legislation. The Act changes the role of Companies House, it greatly increases substantially their role, well beyond that of a simple registry.
Identity verification
Identity verification will be mandatory for all new and existing company directors, PSC and all those filing documents to the Registrar on behalf of companies. The process is likely to resemble ID verification for bank accounts. There are provisions for 3rd parties to be used to verify identities.
The Act says that if a director has not been ID verified, he can not act as a director (discharge the duties normally associated with a company director) and the company will be committing an offence if this restriction is not complied with.
The same rules will apply to LLPs.
New powers for Companies House
Companies House will have new powers to reject or change information submitted on company's register, as well as powers to query information filed, by requiring additional information. This is a bigger change than it sounds because at the moment CH is limited in how and why they can remove/edit/change/query information from the register. For example, I know someone that has had a company registered at his address and he has tried, unsuccessfully to get CH to amend the register. They asked him for a Tenancy agreement. Below are the new Statutory Objectives for CH.
“These new powers will be underpinned by four new objectives that the Act will give the Registrar:
- ensuring that all information required to be delivered to the Registrar is "properly" delivered
- that all such information is accurate and complete
- that the Registrar's records do not create a false or misleading impression
- preventing companies and others from carrying out themselves (or helping others to carry out) unlawful activities.”
CH will get sweeping new powers to share and receive info from Government Bodies, LE, private companies etc etc. At the moment it is difficult for CH to either request info from LE or to share information with LE if they have suspicions of potentially criminal behavior. The Act also makes it easier for the duty of confidentiality to be breached without being penalized (Regulated professions). Essentially it makes it easier for your accountant/lawyer/estate agent/banker to shop you in to the authorities.
Accounts for small and micro companies
Under the current rules small companies do not have to disclose a lot info in their annual accounts. This is changing. Small companies now will be required to file profit and loss accounts. As those accounts are public, it means a lot more exposure than previously. This means that if your name is on the Register, it will be very hard to obfuscate what your true net worth is.
It also includes reforms on Transparency (Shareholder registers) a ban on Corporate directors,
Failure to prevent fraud offence
This makes it significantly easier to charge and convict senior management of economic crimes. “Senior managers will encompass individuals who have a significant role in deciding how the organisation's activities are managed (similar to the definition used in the Corporate Homicide Act 2007).
Other stuff
The Act also brings changes to :
Cryptoassets – Increases the powers of LE agencies so they are able to seize cryptoassets easily when they suspect that the crypto assests are “the proceeds of crime or associated with illicit activity such as money laundering, fraud and ransomware attacks”
Strengthening anti-money laundering powers – by providing a framework for intelligence sharing about suspected money laundering, fraud and other economic crimes. It effectively means that it will be easier for the LE to access, seize and request info on individuals and businesses.
