ECCTA Incoming...The Round Up

Over the past few weeks we have published a series of articles which delve deeper into the Economic Crime and Corporate Transparency Act 2023 (“ECCTA”) highlighting its significant impact on corporate governance and financial crime prevention in the UK.

Empowerment of Companies House One of the key features of ECCTA is the enhanced powers granted to Companies House. The Act enables Companies House to play a more proactive role in preventing economic crime by challenging suspicious information and removing fraudulent filings. This empowerment is expected to significantly improve corporate transparency and accountability.

Identity Verification Requirements ECCTA introduces mandatory identity verification for directors, members of LLPs, persons with significant control, and relevant officers of relevant legal entities. This measure aims to prevent the creation of anonymous shell companies and deter fraud. The mandatory ID verification regime is set to take effect from 18 November 2025, and companies are advised to start preparing for these changes now.

New Corporate Offences ECCTA introduces new corporate offences, including the failure to prevent fraud. From 1 September 2025, large organisations will be liable if an employee or agent commits a specified fraud offence for the organisation's benefit and the organisation did not have reasonable fraud prevention procedures in place. This new offence underscores the importance of implementing robust fraud prevention measures.

Enhanced Information Sharing and Cooperation ECCTA facilitates improved cooperation between Companies House, regulators, and law enforcement agencies. It strengthens powers to freeze assets and investigate suspicious activities, thereby enhancing the overall effectiveness of economic crime prevention.

Impact on the Legal Profession ECCTA also has significant implications for the legal profession. Law firms are expected to bolster their anti-money laundering (AML) procedures and internal compliance systems to meet the enhanced transparency and due diligence requirements introduced by ECCTA. Failure to comply with these duties may result in heightened regulatory scrutiny and potential disciplinary action.

Seizing and Recovering Cryptoassets ECCTA recognises the growing importance of cryptoassets in financial crime. ECCTA introduces new powers for law enforcement agencies to seize and recover criminal cryptoassets, addressing the challenges posed by emerging technologies.

Impact on Strategic Litigation Against Public Participation (“SLAPPs”) Despite not introducing specific procedural safeguards or dedicated anti-SLAPP legislation, by seeking to advance corporate transparency and accountability, the implementation of ECCTA has an indirect ramification for legal manoeuvring, including the deployment of SLAPPs, as it alters the environment in which SLAPPs are initiated and contested by making several changes to corporate and financial transparency. 

Remaining Challenges Despite the positive steps taken by ECCTA, several challenges remain. Effective implementation of ECCTA depends on adequate funding, technology, and staffing for Companies House and law enforcement agencies. Additionally, verifying the identities of millions of individuals is complex, and determined fraudsters may still find ways to evade checks.

Comment

Daniel Bastide, Partner in our Corporate Team, comments:

“ECCTA marks a major shift in UK corporate regulation, introducing sweeping reforms aimed at combating economic crime and enhancing transparency. Companies must prepare for mandatory identity verification for directors, persons with significant control (“PSCs”), and those filing with Companies House, alongside stricter rules on registered office addresses and registered email addresses. These changes are designed to improve the integrity of the company register and will require updates to internal governance and compliance processes.

“ECCTA modernises Companies House operations, giving it enhanced powers to reject and query filings, and mandates that all accounts filings made on or after 1 April 2027 are filed using commercial software. 

“These reforms signal a shift toward greater accountability and data accuracy, and clients should ensure their systems and advisors are ready to meet the new standards.”

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

“ECCTA represents a significant development in the fight against economic crime and corporate fraud, and its successful implementation will require concerted efforts from all stakeholders involved.

“Organisations must establish and maintain comprehensive fraud prevention measures. This includes conducting regular risk assessments, implementing internal controls, and providing training to employees on identifying and preventing fraud.

“Organisations must be aware of the new corporate offences introduced by ECCTA, such as the failure to prevent fraud. It is imperative organisations ensure that they have reasonable fraud prevention procedures in place to avoid liability if an employee or agent commits a specified fraud offence for the organisation's benefit.

“Above all, organisations must keep abreast of any updates or changes to ECCTA. They should regularly review and update their compliance policies and procedures to ensure they remain effective and aligned with current legal requirements.

“By taking these proactive steps, organisations can significantly reduce the risk of falling foul of ECCTA and ensure they are well-prepared to meet the incoming requirements.

“If you need further assistance or specific advice tailored to your organisation, consulting with legal experts or compliance professionals is highly recommended.”