Economic Crime and Corporate Transparency Bill

The government has released its Economic Crime and Corporate Transparency Bill.

The bill follows the Economic Crimes (Transparency and Enforcement) Act, which was passed earlier this year. The first act:

The government has pledged to introduce this latest bill to implement reforms to tackle economic crime and improve corporate transparency.

Provisions

The Economic Crime and Corporate Transparency Bill will aim to:

  • Companies House reforms
  • reforms to prevent the abuse of limited partnerships
  • additional powers to seize and recover suspected criminal crypto-assets
  • reforms to give businesses more confidence to share information to combat money laundering and other economic crimes
  • new intelligence-gathering powers for law enforcement and the removal of charges on businesses

The bill aims to make Companies House a more reliable repository of data relating to companies and other entities registered in the UK such as limited liability companies (LLPs) and limited partnerships (LPs).

The bill will broaden the powers of Companies House to make it a more active guardian of business creation. This would include new powers to verify, delete or refuse information submitted or already on the register.

The Foreign Entity Register will be amended to maintain consistency with amendments to the Companies Act 2006.

New exemptions to core money laundering offenses will be created to reduce unnecessary reporting by businesses transacting on behalf of their clients.

Law enforcement would also be given new powers to obtain information to combat money laundering and terrorist financing.

Companies in certain sectors would be able to share information more effectively in order to prevent and detect economic crime.

The statutory fine cap for the Solicitors Regulation Authority (SRA) will be removed, allowing the SRA to set its own limits on financial penalties imposed for disciplinary cases relating to economic crime.

The bill would add a regulatory purpose to the Legal Services Act 2007 to affirm the duties of regulators and regulated communities to uphold the economic crime agenda.

Our point of view

We are pleased that the UK government is introducing a second Economic Crimes Bill, with the express provision to stop money laundering in the UK.

Reforms that tackle economic crime, such as exemptions from core money laundering offences, will reduce unnecessary reporting by companies to share information, while ensuring that professional secrecy of the law is maintained.

The Companies House reforms will aim to improve transparency about UK businesses to strengthen our business environment.

We worked closely with Companies House and the Department for Business, Energy and Industrial Strategy on the first Economic Crime Act.

We have long supported changes that will improve the quality of information on the public registry. We look forward to continued close dialogue on the delivery of this new bill.

However, we are extremely concerned about the government’s proposal to allow the SRA to impose financial penalties for economic crime disciplinary cases.

The SRA’s fine powers have just been significantly increased over businesses and traditional individuals, from £2,000 to £25,000.

We are concerned about what the proposed additional powers might mean for our members and how effective they will be in fighting economic crime.

We urge the government to carefully consider the proportionality of any new regulations, given that there has been little evidence of whether or not the most recent changes to the SRA’s fine powers are effective.

The proposed unlimited powers would potentially include many more serious or important cases that are currently before the Solicitors Disciplinary Tribunal (SDT).

Next steps

The second reading of the bill is scheduled for October 13, 2022.

We will inform members of our priorities for the bill in advance.

Read the Economic Crime and Corporate Transparency Bill