New Economic Crime Act to tackle UK fraud, money laundering

Published on Tue, 01/11/2022 - 13:39

A new UK Government bill aimed at reducing fraud and money laundering includes measures to reform Companies House and increase corporate transparency.

New legislation in the UK aims to combat corporate crime through enhanced transparency.

The Economic Crime (Transparency and Enforcement) 2022 Act (ECTE) includes reform to Companies House and extends authorities’ anti-money laundering powers.

Measures to target “foreign elites” and other bad actors mean making the ownership of limited companies and partnerships more transparent.

The new ECTE legislation is currently at policy paper level.

The UK Government said: “These provisions will bear down further on kleptocrats, criminals and terrorists who abuse our financial system, strengthening the UK’s reputation as a place where legitimate business can thrive, whilst driving dirty money out of the UK.”

Companies House changes include identity verification of new and existing registered company directors and those with significant control over businesses, designed to increase data quality.

The powers of the Companies House Registrar are also being boosted to check, remove or decline information being submitted. Financial information stored on the register will also be expanded.

The legislation also provides Companies House with new investigation and enforcement powers. Information will be cross-referenced with other public and private sector databases, as well as shared more proactively with law enforcement agencies.

Limited partnerships are also being reformed, including under Scottish law, to tackle misuse.

The ECTE aims to tighten registration requirements, increase their transparency and require a connection to the UK to be maintained, as well as making it easy for Companies House’s registrar to terminate limited partnerships.

Crypto-assets are another priority of the ECTE. There are new powers for law enforcement to more quickly seize and recover crypto-assets linked to crime, including money laundering and ransomware cyber-attacks.

The ECTE amends 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 to enable enforcement agencies to more effectively tackle criminal use of crypto-assets.

Anti-money laundering (AML) efforts are another focus of the ECTE, particularly related to information sharing.

The reforms enable businesses to share information more easily in some situations by disapplying civil liability for breaches of confidentiality for firms sharing information to combat economic crime.

ECTE also enables proactive intelligence gathering by law enforcement and strengthens the National Crime Agency’s Financial Intelligence Unit’s (FIU) ability to obtain information from businesses.

It does this by removing the requirement for a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order (IO) can be made by the FIU.

Lastly, it aims to refocus resources on high-value activity, reducing the reporting burden on businesses and enabling greater prioritisation of law enforcement resource by expanding the types of case in which businesses can deal with clients’ property without having to first submit a Defence Against Money Laundering SAR.