The Economic Crime and Corporate Transparency Act (ECCTA) 2023 tackles financial crime and increases corporate transparency in the UK. The Act introduces stricter regulations on businesses to prevent economic crimes such as fraud and money laundering.
The Act received Royal Assent on 26th October 2023, marking a milestone in the UK’s efforts to combat financial crime. These measures will continue to help legitimate businesses thrive while keeping bad actors out of the UK economy.
Introduction of the Economic Crime and Corporate Transparency Act
The UK is one of the world’s most open economies, attracting global businesses. However, this openness has also made it a target for fraudsters, money launderers and the corrupt. Criminal activities such as money laundering fund serious crimes, while harming legitimate businesses and eroding trust in the economy.
With what started as the Economic Crime (Transparency and Enforcement) Act 2022, the Economic Crime and Corporate Transparency Act 2023 goes even further. The Act introduces wider reforms to tighten corporate regulations, therefore fighting financial crime more effectively.
Key Changes Under the Act
The Economic Crime and Corporate Transparency Act makes major changes to company regulations; targeting fraud, transparency and accountability. Below are the key areas, although not all are live yet:
1. Companies House Reforms
Companies House now has greater powers to regulate UK businesses and ensure accurate company data. The changes include:
- Identity Verification – All company directors, significant shareholders and those filing documents must verify their identity.
- Stronger Powers – Companies House can now reject, remove or amend incorrect information on the company register.
- Better Data Accuracy – New rules ensure financial information on the register is complete, up-to-date and digital advanced.
- Increased Data Sharing – Companies House now shares information with authorities when it detects suspicious activity.
These measures prevent the creation of fraudulent companies and improve the reliability of business information.
2. Stricter Rules for Limited Partnerships
Fraudsters have exploited limited partnerships, including Scottish limited partnerships, for money laundering and other crimes. The Act introduces stricter regulations:
- Stronger Registration Requirements – Limited partnerships must provide more information and maintain a UK connection.
- Greater Transparency – New rules require more details about the individuals behind these partnerships.
- Stronger Enforcement – Companies House can deregister partnerships that are inactive or suspected of illegal activity.
3. Cracking Down on Crypto-Asset Crime
The Act strengthens the authorities’ ability to seize and recover crypto-assets linked to crime, such as fraud, money laundering and ransomware attacks. It updates the Proceeds of Crime Act 2002 to:
- Expanded Confiscation Powers – Authorities can now seize crypto-assets used in criminal activity more easily.
- Closed Loopholes – The law ensures criminals cannot hide behind digital currencies to escape justice.
4. Tougher Anti-Fraud Measures
The Act introduces stricter rules to prevent fraud and hold businesses accountable for economic crimes:
- Failure to Prevent Fraud Offence – Companies are now responsible if employees commit fraud for their benefit and the company fails to implement proper fraud prevention measures.
- Improved Corporate Liability Rules – Large companies with complex structures are now accountable for economic crimes committed by their senior managers.
- Protection Against Legal Threats (SLAPPs) – Businesses and individuals facing strategic lawsuits designed to silence them, now have greater legal protection.
5. New Business Compliance Requirements
The Act introduces new obligations for businesses:
- Registered Office Address Requirements – Companies must have a valid UK address where they can receive documents. Moreover, businesses can no longer use PO Boxes as their registered office address.
- Annual Confirmation Statement Updates – Companies must confirm that their business activities are lawful each year.
- Registered Email Addresses – Every company must provide an official email address for communication with Companies House.
6. Increased Penalties and Enforcement Powers
The Act comes with stricter penalties for businesses that fail to comply:
- Fines and Prosecutions – Companies that ignore new regulations could face financial penalties or removal from the register.
- Stronger Investigations – Companies House and the authorities now have greater permissions to investigate suspicious business activities.
- Higher Fees – Companies House fees increased in May 2024 to fund these additional enforcement measures.
What This Means for UK Businesses
The Economic Crime and Corporate Transparency Act brings change that business must prepare for. Directors and owners also need to ensure they comply with the new rules to avoid penalties and maintain trust in their businesses. Some key actions include:
- Verifying director identifies before submitting filings to Companies House
- Reviewing business structures to ensure transparency and compliance with new anti-fraud laws
- Updating registered office addresses to meet the new requirements
- Enhancing due diligence on business partners and transactions to prevent fraud and money laundering
Contact Us
We are not just accountants; we are Chartered Accountants with one of the most reputable and premium accounting bodies. We are registered and regulated by ACCA; so you can rest assured that you are in good hands. Knowing this, don’t hesitate to get in touch with us if you require assistance: Pi Accountancy | Contact Us
This article is for general informational purposes only and does not constitute legal or financial advice. While we aim to keep our content up to date and accurate, UK tax laws and regulations are subject to change. Please speak to an accountant or tax professional for advice tailored to your individual circumstances. Pi Accountancy accepts no responsibility for any issues arising from reliance on the information provided.