Economic Crime and Corporate Transparency & Companies House: Update 2023

What is the Economic Crime and Corporate Transparency Bill? What new reforms will apply to Companies House and Partnerships? What data needs to be supplied to Companies House in respect of accountant's clients?

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The Economic Crime and Corporate Transparency Bill follows the Economic Crime (Transparency and Enforcement) Act 2022 and builds on the government's March 2022 proposals for Companies House reform.
These measures aim to drive 'dirty money' out of the UK and bear down further on kleptocrats, criminals, terrorists and anyone who abuses the UK's financial system.
Accountants and lawyers are required to be aware of the new measures and in particular, consider how they affect a firm's Anti-Money Laundering (AML) check procedures and the type of disclosure that is required at Companies House.
Links to policy papers for each area included in the Economic Crime and Corporate Transparency Bill are listed below.

What's new?

Finance Act 2022 established an Economic Crime (Anti-Money Laundering) Levy payable as a fixed fee by entities subject to the Money Laundering Regulations.
In March 2023 draft amendments were published in The Economic Crime (Anti-Money Laundering) Levy (Amendment) Regulations 2023 which provide further detail on how the levy will be managed by HMRC and the other collection authorities, including penalties for late filing and payment.

The Economic Crime and Corporate Transparency Bill

This bill aims to:

Provide additional powers to seize and recover suspected criminal cryptoassets, including:
- Powers for law enforcement to facilitate the seizure and recover cryptoassets which are the proceeds of crime or associated with illicit activity such as money laundering, fraud and ransomware attacks.
- Amendments to both criminal confiscation powers in Parts 2, 3 and 4 of the Proceeds of Crime Act 2002 (POCA) and civil recovery powers in Part 5 of POCA enable enforcement agencies to more effectively tackle criminal use of cryptoassets.
Make reforms to Companies House, adding:
- A new power to require those forming or running companies to supply additional information in relation to material they file with Companies House.
- New identity verification for all new and existing registered company directors and beneficial owners.
- New powers to check, remove or decline information submitted to, or already on, the companies register.
- More effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies.
- Reforms to protect the misuse of personal information.
- Broader reforms to clamp down on misuse of corporate entities.
- Building on proposals included in its March 2022 whitepaper (see below) of changes to filing requirements for smaller companies which include:
  - Making filing obligations for micro-entities and small companies clearer.
  - Requiring small companies to file a profit and loss account and a directors’ report.
  - Requiring micro-entities to file a profit and loss account.
  - Removing the option to file abridged accounts.
  - Requiring an eligibility statement for companies claiming an audit exemption.
  - Requiring documents to be delivered together, in cases where more than one document is filed, including for the filing of accounts.
Reforms to prevent the abuse of limited partnerships, including Scottish limited partnerships, while modernising the law governing them. The bill will:
- Tighten registration requirements.
- Require limited partnerships to maintain a connection to the UK.
- Increase transparency requirements.
- Enable the Registrar of Companies to deregister limited partnerships which are dissolved, no longer carrying on business or where a court orders that it is in the public interest to do so.
Strengthen anti-money laundering powers, enabling better information sharing on suspected money laundering, fraud and other economic crimes, by:
- Enabling businesses in certain situations to share information more easily for the purposes of preventing, investigating or detecting economic crime by disapplying civil liability for breaches of confidentiality for firms who share information to combat economic crime.
- Enable proactive intelligence gathering by law enforcement and strengthen the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses relating to money laundering and terrorist financing by removing the requirement for a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order (IO) can be made.
- Focus private sector and law enforcement resources on high-value activity, reducing the reporting burden on businesses and enabling a greater prioritisation of law enforcement resources by expanding the types of cases in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering (DAML) SAR.

The Economic Crime (Transparency and Enforcement) Act 2022

This act strengthens measures to assist the UK in fighting economic crime it:

Creates a Register of Overseas Entities (ROE)
- A beneficial ownership register has been set up from 1 August 2022 for overseas entities holding UK real estate.
- An overseas entity that owns or wishes to own property in the UK must identify its beneficial owner(s) and register them with Companies House.
- Information supplied to the register will be verified and the entity will need to update its information annually.
Strengthens powers to make Unexplained Wealth Orders (UWOs).
- The person who manages properties within complicated offshore arrangements may be investigated, even if they're not a beneficial owner of the property.
Makes important changes to the enforcement of Sanctions.
- These allow the government to move faster and harder when imposing sanctions.
- The introduction of a 'strict civil liability' test for monetary penalties.
- Businesses may face liability even where they have no knowledge or reasonable cause to suspect that a transaction to which they are party is in breach of sanctions.

Reform of Companies House

A white paper published in March 2022 set out the government's plans to Reform Companies House.

The 'Corporate Transparency & Register Reform White Paper' sets out the next stages in its plans for wide-ranging reforms to the powers and role of Companies House. It aims to achieve the following:

Improve the quality and value of financial information held on the Register.
Increase the powers of the Registrar in order to protect the integrity of the Register to promote enterprise and reduce economic crime.
Increase transparency by restricting corporate directorships.

The exact timescale for the introduction of these provisions is unclear, with certain measures coming into force in 2023 as part of the Companies House's five-year strategy.

Useful guides on this topic

Companies House: What's New 2022?
A review of reforms proposed in the Government's March 2022 'Corporate Transparency & Register Reform White Paper'

AML Zone
Anti-Money Laundering Zone: resources for accountants

External links

Policy paper: The Economic Crime and Corporate Transparency Bill

Fact sheet: Economic Crime and Corporate Transparency Bill overarching

Fact sheet: the role and powers of the Registrar of Companies

Fact sheet: company names

Fact sheet: identity verification and authorised corporate service providers

Fact sheet: preventing abuse of personal information on the Register

Fact sheet: improving transparency of company ownership

Fact sheet: Companies House fees