Economic Crime and Corporate Transparency Act Summary

Reforms to Companies House seek to improve transparency, strengthen the UK’s business environment, support national security and combat economic crime, all whilst delivering a more reliable companies register to underpin business activity. 

The reforms include: 

• Introducing identity verification for all new and existing registered company directors, People with Significant Control, and those delivering documents to the Registrar. 
• Broadening the Registrar of Companies House’s powers so that the Registrar can become a more active gatekeeper over company creation and custodian of more reliable data.
• Improving the financial information on the register so that the register is more reliable, complete and accurate. 
• Providing Companies House with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies. Companies House will be able to proactively share information with law enforcement bodies where they have evidence of anomalous filings or suspicious behaviour.
• Enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.
• Broader reforms to clamp down on misuse of corporate entities.

You can read the policy paper on reforms to Companies House here. 

Reforms to limited partnerships seek to tackle their misuse, including Scottish limited partnerships, whilst modernising the law governing them. 

The reforms include:

• Tightening registration requirements.
• Requiring limited partnerships to maintain a connection to the UK.
• Increasing transparency requirements.
• Enabling the Registrar 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. 

You can read the policy paper on limited partnership reforms here. 

The Act will provide law enforcement with additional powers so that they are able to more quickly and easily seize and recover cryptoassets earned from crime or associated with illicit activity such as money laundering, fraud and ransomware attacks. 

The Act will:

• Amend both criminal confiscation powers in certain parts of the Proceeds of Crime Act 2002 (POCA) and civil recovery power in other parts of POCA to enable enforcement agencies to more effectively tackle criminal use of cryptoassets. 

You can read the policy paper on cryptoassets here. 

The Act will strengthen anti-money laundering powers, enabling better information sharing on suspected money laundering, fraud and other economic crimes. 

The reforms include:

• 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. 
• Enabling proactive intelligence gathering by law enforcement and strengthening the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses in relation 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. 
• Focusing private sector and law enforcement resources on high value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resources by expanding the types of case in which businesses can deal with client’s property without having to first submit a Defence Against Money Laundering (DAML) SAR. 

The government has created a new failure to prevent fraud offence. Under the new offence, an organisation will be liable where a specified fraud offence is committed by an employee or agent, for the organisation’s benefits, and the organisation did not have reasonable fraud prevention procedures in place. It does not need to be demonstrated that company bosses ordered or knew about the fraud. This is intended to discourage organisations from ‘turning a blind eye’ to fraud by employees, especially in situations in which it benefits the business. The offence will also encourage more companies to implement or improve prevention procedures, driving a major shift in corporate culture to help reduce fraud. 

Whilst there were pre-existing powers to fine and prosecute organisations and their employees for fraud, the new guidance strengthens these powers and closes any loopholes that previously enabled organisations to avoid prosecution. 

This offence applies to all large bodies corporate, subsidiaries and partnerships and includes large not-for-profits organisations such as charities and incorporated public bodies. The offence will not apply to small and medium enterprises (SMEs) to avoid disproportionate burdens on them and to support economic growth. These proposals are intended to level the playing field for businesses that already take fraud prevention seriously by penalising unscrupulous operators. The offence also takes into consideration that SMEs are often the victim of fraud by other corporations and as such would benefit from greater protection. 

The offence will come into force on 1st September 2025 and if convicted an organisation could receive an unlimited fine.

You can read the policy paper about the new offence here.

The government has reformed corporate criminal liability laws for economic crimes to hold corporations liable in their own right for economic crime. The identification doctrine is the legal test for deciding whether the actions and mind of a natural persona can be regarded as those of a legal person. The current law requires that an offence must be committed by the ‘directing mind and will’ of a corporation to trigger attribution to the corporation itself. If the person(s) identified as the ‘directing mind and will’ of the corporation commits a criminal offence in that capacity, that offence is considered that of the corporation. 

This legal test was established in 1971, however businesses have grown tenfold in the past few decades and their governance and management tactics have become more complex. In the past, senior people in a corporation who have decision making responsibilities over substantial areas of the business were not considered as sufficiently controlling enough to hold the corporation liable, despite having the authority in the corporation to commit large-scale harms. This loophole did not incentivise good governance or establish clear lines of accountability. 

Subsequently, the reform proposes to place the identification doctrine on a statutory footing for economic crimes, providing certainty that senior managers are in scope of attribution to a corporation. The reform replicates the definition of ‘senior manager’ from the Corporate Manslaughter and Corporate Homicide Act 2007 and introduces a model that looks at a senior manager’s roles and responsibilities within an organisation, rather than their job title. It covers instances in which the senior manager is a person who plays a significant role in the decision making of the whole or substantial parts of a corporation. This is intended to provide greater clarity on the parameters of the legal test and to modernise the law to reflect current company structures.  

This reform came into effect in December 2023 and under the new guidance, organisations can be criminally convicted and receive a fine alongside any sentence imposed for individuals who are found guilty of the same offence(s). The maximum fine will depend on the particular offence charge, but for most serious crimes an unlimited fine will apply. 

You can read the policy paper on the identification principle here. 

SLAPPs are legal actions typically brought by corporations or individuals with the intention of harassing, intimidating and financially or psychologically exhausting opponents via improper use of the legal systems. SLAPPs are typically framed as defamation cases brought by wealthy individuals or corporations to evade scrutiny in the public interest. They can occur across a broad range of issues such as data protection, privacy and environmental law. SLAPPs are also used to bring action against investigative journalists, writers and publishers; typically in an attempt to silence any criticism. 

SLAPPs are common worldwide and are often characterised by large numbers of aggressive pre-action letters, targeting a financially weak defendant and simultaneously bringing claims in multiple jurisdictions. The government argues that SLAPPs at their very heart fundamentally undermine freedom of speech and the rule of law. As such, the new reforms seek to tackle the rising problem, protect defendants and balance an individuals’ rights to protect their reputation with the right to free speech and access to justice. 

Included in the new reforms is an early dismissal mechanism. Defendants will be able to use the new early dismissal mechanism where their case falls within the statutory definition of SLAPPs as determined by the courts. The reform also includes a new cost protection regime for defendants. Where a SLAPP case is allowed to proceed, the new cost protection regime will ensure that defendants will not face the risk of excessive cost burdens.  

You can read the policy paper on SLAPPs here. 

The Economic Crime and Corporate Transparency Act was introduced to parliament in 2022 and received Royal Assent on 26th October 2023. However, the act is made up of different parts and reforms which have come into force at different times. 

The timeline for the act is as follows:

September 2022 – Bill introduced to parliament.

October 2023 – Bill received Royal Assent.

December 2023 – Identification Doctrine came into force.

March 2024 – Companies House reforms came into force. Reforms were staggered and came into force throughout 2024 and early 2025. Further reforms to Companies House are set to come into effect throughout 2025 and 2026. 

April 2025 – SLAPPs reforms came into force. September 2025 – Failure to Prevent Fraud offence will come into force.