ECCTA Incoming.....

The Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) is a major UK legislative initiative aimed at reducing financial crime and improving corporate transparency. Prompted by concerns over money laundering and fraud, ECCTA gives new powers to Companies House and law enforcement to prevent economic crimes. 

We previously wrote about ECCTA in November 2023 shortly after it received Royal Assent on 26 October 2023. Although Companies House has not set a definitive timeline for implementing ECCTA, it anticipates rolling out the new measures through approximately 50 statutory instruments over an 18-month period. Full implementation and transitional activity is expected to continue until 2027 although this is being kept under review.

Key Features of ECCTA:

• Empowerment of Companies House: ECCTA gives Companies House powers to play a more significant role in preventing economic crime, enabling Companies House to challenge suspicious information and remove fraudulent filings.
• Enhanced Transparency: Directors, members of LLPs, persons with significant control and relevant officers of registrable legal entities will be required to verify their identity. Anyone filing documents at Companies House will also be required to verify their identity.
• Improved Information Sharing: ECCTA facilitates cooperation between Companies House, regulators and law enforcement; it strengthens powers to freeze assets and investigate suspicious activity.
• Corporate Liability: ECCTA introduces new offences, making companies and executives more accountable for failing to prevent fraud.

Progress and Remaining Challenges:

ECCTA’s reforms, in particular the identity checks and transparency rules relating to corporate entities, are important steps in deterring the creation of anonymous shell companies and deterring fraud. Increased penalties and better data sharing may also have a deterrent effect on fraudulent activity.

We will consider some of the particular issues the reforms have generated in more detail in due course, however, some of the significant challenges that need to be overcome in order for ECCTA to meet its objectives include:

• Resources: Effective implementation of ECCTA depends on adequate funding, technology and staffing for Companies House and law enforcement. If sufficient funding and appropriate staffing are not available, it is likely the ambitious reforms may fall short.
• Verification Difficulties: Verifying the identities of millions of individuals is complex; determined fraudsters may still find ways to evade checks.
• Enforcement: Historically, corporate fraud prosecutions have been rare due to investigative complexity and legal hurdles.
• Global Nature of Fraud: ECCTA’s reach is limited with cross-border schemes and international cooperation is essential for the implementation to be effective.
• Adaptation by Criminals: Fraudsters will always continue to adapt to challenges and will develop new tactics which will potentially outpace regulatory efforts.

Comment:

Colette Kelly, Partner in our Regulatory and Criminal Group comments:

“The introduction on 1 September 2025 of the new failure to prevent fraud offence under ECCTA will have a significant impact on organisations and their risk exposure.  As the implementation of  this new offence draws closer,  we will be talking our readers through this and other key provisions of ECCTA  in a series of articles in the coming weeks.”