New rules to combat economic crime: what’s the impact on UK companies?
The Economic Crime and Corporate Transparency Act 2023 has been passed. The Act introduces a new corporate offence of failure to prevent fraud, and reforms to the test for corporate criminal liability which will make it easier to prosecute companies for economic crime offences. It will also amend the Companies Act to make administrative reforms including requirements for director identity verification and greater powers for Companies House.
A lot of the detail will be in guidance and statutory instruments which will follow over the coming months. Companies will only be able to begin their preparations in earnest once that detail becomes available. In particular the exact dates the various provisions will come into force will only be known when the relevant statutory instruments are made. For now, companies just need to watch this space and keep an eye out for developments on the Linklaters Economic Crime and Corporate Transparency Hub.
| Topic | Action |
| Corporate offence of failure to prevent fraud | Companies will need to develop and implement internal policies and training to demonstrate reasonable prevention procedures are in place. Guidance on those reasonable procedures will be published before the new offence comes into force.
More information in the factsheet here. |
| Changes to corporate criminal liability | Companies will need to identify senior managers who may now be in scope under the reframed identification principle and consider whether training is required to ensure they are fully aware of any increased responsibilities.
More information in the factsheet here. |
| Identity verification of directors and persons with significant control (PSCs) | Companies will need to make arrangements for all directors (including of UK subsidiaries) and PSCs to follow identity verification procedures. This can be done directly on a new Companies House portal or via an “authorised corporate services provider”. Companies House first needs to build the relevant infrastructure, and it is only once this is ready and details are known that companies will be able to make a plan.
More information in the factsheet here. |
| More information on shareholders and PSCs | Companies will need to record full names of shareholders, and provide a one-off list of all shareholders (or those owning over 5% in the case of listed companies) and PSCs to improve transparency of corporate ownership.
More information in the factsheet here. |
| Greater powers for Companies House | Companies House will have greater powers, including to challenge filings. Companies should expect more scrutiny and be prepared to answer questions that may be raised.
More information in the factsheet here. |
| Ban on corporate directors | Corporate directors will only be permitted if the corporate director itself only has individual directors whose identity has been verified. Groups should identify existing UK companies which have corporate directors and be ready to replace them with individuals as and when required. Companies will have at least 12 months to prepare for this change.
More information in the factsheet here. |
| Identity verification of shareholders | Identity verification of shareholders other than PSCs will not be required (it was previously proposed but dropped). More information in the factsheet here. |
The Act is available here and a series of helpful Government factsheets here. A Companies House blogpost here also gives more detail on which changes will be introduced first.
