The Economic Crime and Corporate Transparency Act received royal assent. The law enables crypto seizures and introduces a ‘failure to prevent fraud’ offence.
King Charles has given royal assent to the UK’s new Economic Crime and Corporate Transparency Act, which empowers enforcement agencies and regulators with enhanced powers to target organised crime.
First introduced to parliament in September 2022 and approved by the House of Lords in July, the Economic Crime and Corporate Transparency Act 2023 grants Companies House new powers to check, challenge and decline incorrect or fraudulent information, making it a “more active gatekeeper” over company creation.
It also empowers law enforcement agencies with powers to seize, freeze and recover crypto assets if used for illicit activities such as cybercrime, scams and drug trafficking; and introduces the ‘failure to prevent fraud‘ as a criminal offence.
A government announcement on Thursday (26 October) said “robust laws to fight fraud, counter corruption and bolster legitimate business” received royal assent. “The Economic Crime and Corporate Transparency Act introduces world-leading powers which will allow UK authorities to proactively target organised criminals and others seeking to abuse the UK’s open economy.”
Under the new legislation, Companies House will receive enhanced abilities to verify the identities of company directors, remove fraudulent organisations from the company register and share information with criminal investigation agencies. It will also benefit enforcement agencies with “greater powers” to seize, freeze and recover crypto assets, as well as allow the courts to dismiss “spurious lawsuits” which seek to stifle freedom of speech.
Prosecutors will be better able to hold large corporations accountable for malpractice, the announcement said. “These changes will level the playing field for all businesses, ensuring the UK’s open economy remains a world class centre for businesses to grow and prosper.”
Home Secretary Suella Braverman noted that the new act will have a big impact on the UK’s ability to fight organised crime, including terrorist funding, fraud and money laundering, and that will “ultimately help keep us all safe.”
Biggest shakeup
The powers given to Companies House mark the biggest shakeup to the service in its 180-year history. Once the powers come into force, the agency will take immediate steps to improve the quality of information on the company register. Invalid registered office addresses, such as those used fraudulently to set up companies, will be removed.
Verification checks will assess the identities of people setting up and managing companies, stopping criminals hiding behind false names or registering companies with fictional characters. This will help prevent fraudulent appointments and avoid people involved in money laundering hiding behind false names.
Changes to public beneficial ownership registers will also close loopholes that allow corrupt actors to use opaque companies to move and hide money. The law will additionally provide businesses with greater clarity on who they are working with, while allowing civil society organisations to expose corrupt actors, and for the public to “increase their trust in governments”.
“Tackling illicit finance is a global issue with 30 other countries, including Nigeria and France, having public registers of beneficial ownership. Canada, Australia, and New Zealand are also implementing their own commitments,” the announcement added.
Business minister Kevin Hollinrake said the new legislative reforms will remove the “smoke and mirrors” around companies hiding behind false identities, provide further protection to the public from companies fraudulently using their addresses, and deliver better data to support business and lending decisions across the economy, enhancing the UK’s reputation as a great and safe place to do business.
Illicit crypto assets
New powers will allow law enforcement to target illicit crypto assets. The NCA’s (National Crime Agency) National Assessment Centre estimates that over GBP 1 billion (USD 1.2 billion) of illicit cash was transferred overseas using crypto assets in 2021.
The new act introduces provisions for police and the NCA to seize crypto assets more easily and convert them into money before a forfeiture hearing has taken place. In exceptional circumstances, there will also be a power to destroy seized cryptocurrency.
NCA director general Graeme Biggar noted that the act is long awaited and welcome. “For too long criminals and corrupt elites have abused UK company structures to launder their illicit wealth; the new powers given to Companies House will help us tackle those who abuse our economy.”
Biggar stressed that the act also gives the NCA and police greater powers to seize and recover cryptocurrencies, and welcomed the “creation of a criminal offence which holds organisations criminally liable if they fail to prevent fraud by their employees.”
‘Failure to prevent fraud’
The new act gives judges new powers to deal with strategic lawsuits against public protection, known as SLAPPS, involving economic crime.
“These are court cases used by the powerful individuals to intimidate opponents. Russian oligarchs seeking to prevent public interest journalism are prominent users of such suits. Major reforms to corporate criminal liability will also provide prosecutors with game changing powers to hold companies criminally liable for malpractice,” the announcement said.
The creation of a criminal offence, called ‘failure to prevent fraud’, will hold a large organisation criminally liable if it benefits from a fraud that is committed by a member of their staff.
In addition, an update to a legal principle known as the ‘identification doctrine’ will ensure businesses can be held criminally liable for the actions of their senior managers who commit an economic crime.
A government announcement said both changes remove the ability for a large company to hide behind complex management structures to evade scrutiny. “This ensures a level playing field for all businesses and will help remove criminal money from the economy.”
King Charles has given royal assent to the UK’s new Economic Crime and Corporate Transparency Act, which empowers enforcement agencies and regulators with enhanced powers to target organised crime.
First introduced to parliament in September 2022 and approved by the House of Lords in July, the Economic Crime and Corporate Transparency Act 2023 grants Companies House new powers to check, challenge and decline incorrect or fraudulent information, making it a “more active gatekeeper” over company creation.
It also empowers law enforcement agencies with powers to seize, freeze and recover crypto assets if used for illicit activities such as cybercrime, scams and drug trafficking; and introduces the ‘failure to prevent fraud‘ as a criminal offence.
A government announcement on Thursday (26 October) said “robust laws to fight fraud, counter corruption and bolster legitimate business” received royal assent. “The Economic Crime and Corporate Transparency Act introduces world-leading powers which will allow UK authorities to proactively target organised criminals and others seeking to abuse the UK’s open economy.”
Under the new legislation, Companies House will receive enhanced abilities to verify the identities of company directors, remove fraudulent organisations from the company register and share information with criminal investigation agencies. It will also benefit enforcement agencies with “greater powers” to seize, freeze and recover crypto assets, as well as allow the courts to dismiss “spurious lawsuits” which seek to stifle freedom of speech.
Prosecutors will be better able to hold large corporations accountable for malpractice, the announcement said. “These changes will level the playing field for all businesses, ensuring the UK’s open economy remains a world class centre for businesses to grow and prosper.”
Home Secretary Suella Braverman noted that the new act will have a big impact on the UK’s ability to fight organised crime, including terrorist funding, fraud and money laundering, and that will “ultimately help keep us all safe.”
Biggest shakeup
The powers given to Companies House mark the biggest shakeup to the service in its 180-year history. Once the powers come into force, the agency will take immediate steps to improve the quality of information on the company register. Invalid registered office addresses, such as those used fraudulently to set up companies, will be removed.
Verification checks will assess the identities of people setting up and managing companies, stopping criminals hiding behind false names or registering companies with fictional characters. This will help prevent fraudulent appointments and avoid people involved in money laundering hiding behind false names.
Changes to public beneficial ownership registers will also close loopholes that allow corrupt actors to use opaque companies to move and hide money. The law will additionally provide businesses with greater clarity on who they are working with, while allowing civil society organisations to expose corrupt actors, and for the public to “increase their trust in governments”.
“Tackling illicit finance is a global issue with 30 other countries, including Nigeria and France, having public registers of beneficial ownership. Canada, Australia, and New Zealand are also implementing their own commitments,” the announcement added.
Business minister Kevin Hollinrake said the new legislative reforms will remove the “smoke and mirrors” around companies hiding behind false identities, provide further protection to the public from companies fraudulently using their addresses, and deliver better data to support business and lending decisions across the economy, enhancing the UK’s reputation as a great and safe place to do business.
Illicit crypto assets
New powers will allow law enforcement to target illicit crypto assets. The NCA’s (National Crime Agency) National Assessment Centre estimates that over GBP 1 billion (USD 1.2 billion) of illicit cash was transferred overseas using crypto assets in 2021.
The new act introduces provisions for police and the NCA to seize crypto assets more easily and convert them into money before a forfeiture hearing has taken place. In exceptional circumstances, there will also be a power to destroy seized cryptocurrency.
NCA director general Graeme Biggar noted that the act is long awaited and welcome. “For too long criminals and corrupt elites have abused UK company structures to launder their illicit wealth; the new powers given to Companies House will help us tackle those who abuse our economy.”
Biggar stressed that the act also gives the NCA and police greater powers to seize and recover cryptocurrencies, and welcomed the “creation of a criminal offence which holds organisations criminally liable if they fail to prevent fraud by their employees.”
‘Failure to prevent fraud’
The new act gives judges new powers to deal with strategic lawsuits against public protection, known as SLAPPS, involving economic crime.
“These are court cases used by the powerful individuals to intimidate opponents. Russian oligarchs seeking to prevent public interest journalism are prominent users of such suits. Major reforms to corporate criminal liability will also provide prosecutors with game changing powers to hold companies criminally liable for malpractice,” the announcement said.
The creation of a criminal offence, called ‘failure to prevent fraud’, will hold a large organisation criminally liable if it benefits from a fraud that is committed by a member of their staff.
In addition, an update to a legal principle known as the ‘identification doctrine’ will ensure businesses can be held criminally liable for the actions of their senior managers who commit an economic crime.
A government announcement said both changes remove the ability for a large company to hide behind complex management structures to evade scrutiny. “This ensures a level playing field for all businesses and will help remove criminal money from the economy.”
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