The UK’s New Economic Crime and Corporate Transparency Bill

Introduction

The government has been putting great emphasis on tackling money laundering and economic crime within the United Kingdom.  Earlier this year, the Queen’s Speech included an emphasis on the importance of “crack[ing] down on the kleptocrats, criminals and terrorists who abuse our open economy”.  Strengthening the UK’s reputation and reducing its attractiveness to economic criminals has been a top priority for the government.  The Economic Crime (Transparency and Enforcement) Act passed in March, is now being followed by the Economic Crime and Corporate Transparency Bill, which has passed through the second reading in the House of Commons and is currently at the committee stage.

Companies House Reform

One of the most important elements of the new bill, is the reform to the United Kingdom’s registrar of companies, Companies House.   To date, the registrar has a passive role when it comes to registering new companies and maintaining data about companies registered in the UK.  This is set to change, with the Companies House being reformed to be an active gatekeeper for the industry.  Going forward, the registrar will be empowered to check information submitted to it, with the ability to decline new information or remove data that is already on the register.  It would also have the powers to check and share data with other public bodies, private organisations and law enforcement.  Additional processes will also be introduced to verify identities of directors and people with significant control of companies.

The bill also tightens the requirements around the registered office for companies by specifying that this must be an “appropriate address”, with the assurance that any document delivered to the address receives the attention of a person acting on behalf of the company and that delivery to this address can be acknowledged for record keeping purposes.

Limited Partnerships

The government is also tightening legislation and increasing transparency around limited partnerships, which will now be required to maintain a connection to the UK.  The new bill defines the required information about partners that needs to be submitted.  It also imposes the requirement of the limited partnership to be registered at an “appropriate address” that is in the UK and that is either the principal place of business of the limited partnership, or the address of a general partner or authorised corporate service provider that is acting for the limited partnership.

Information Sharing

The new legislation will introduce new provisions to support the sharing of information by businesses operating in the AML regulated sector.  The bill proposes that businesses may provide information to each other about a customer, in response to queries that could assist in detecting or preventing money laundering or other economic crimes.  Civil liability for breaching confidentiality would not be applicable in such cases.

Additional Powers for Law Enforcement and Regulators

Other aspects of the bill deal with increasing the powers of law enforcement to seize cryptoassets, including the power to seize assets during an investigation but prior to making an arrest, enabling law enforcement to move quicker.  The Serious Fraud Office (SFO) will also be given additional powers including the ability to request information/documents at a pre-investigation for any of its cases.

Another proposal is to remove the limit on fines that can be imposed by the Solicitors Regulation Authority (SRA), which regulates solicitors in England and Wales.  The limit was recently increased to £25,000, but the limit may be removed altogether in cases where the SRA deals with members who fail to prevent or detect money laundering activities or other instances of economic crime.

Conclusion

In this article, we have highlighted some of the main points from the proposed new Economic Crime and Corporate Transparency Bill that is currently going through parliament, including details around the Companies House reform, measures aimed at reducing the abuse of limited partnerships, increased confidence in sharing of information by businesses and additional powers for law enforcement and regulators.