UK adopts The Economic Crime and Corporate Transparency Act to Safeguard Financial Integrity

October 30, 2023

The UK government has enacted laws to counter fraud, address corruption, and reinforce legitimate business practices. The Economic Crime and Corporate Transparency Act received Royal Assent on Thursday 26 October as reported by GOV.UK. The Act will come into force within the course of 2024.

With the implementation of the Act, the UK authorities will be equipped with powers to combat organized criminals and others aiming to exploit the UK’s open economy.

The reforms will ensure a fair business environment for all firms, securing the UK’s position as a top-notch destination for business growth and success.

Nearly £88 billion is laundered through the UK every year, reportedly. The most prevalent sources of criminal proceeds in the UK include fraud, tax evasion, corruption, cybercrime, illicit drug trade, and human trafficking.

Suella Braverman, Home Secretary of the UK, stated “I am committed to ensuring criminals do not profit from their offending and this landmark act will help law enforcement clampdown on the tactics they use”.

Moreover, she said, “It will have a big impact on our ability to fight organised crime, including terrorist funding, fraud and money laundering, and that will ultimately help keep us all safe”.

Empowering Companies House marks the most substantial transformation the service has seen in its 180-year journey.

The regulations of the Act will target implementing the following measures;

Company House Reforms: Enhanced measures at Companies House will empower the validation of the company director’s identity, eradicating deceitful entities from the company registry, and cooperation in information exchange with criminal investigation agencies.

Law Enforcement Agencies Powers: Law enforcement agencies will gain increased authority to seize, freeze, and retrieve crypto assets, alongside revolutionary legal reforms that will empower the judiciary to reject baseless lawsuits to suppress freedom of speech.

Public Beneficial Ownership Registers: Refinements to the public beneficial ownership registers will further tighten regulations that will prevent corrupt entities from exploiting obscure companies to facilitate money laundering.

Also Read: Challenges and Solutions in Compliance for Ultimate Beneficial Ownership 

SLAAPS: The act will grant judges increased authority to address strategic lawsuits against public safety, commonly as SLAAPS, pertaining to economic crime. The lawsuits are often employed by Russian oligarchs to stifle journalism serving the public interest.

Reforms to Corporate Criminal Liability: Moreover, enhancements in the prosecutor’s capabilities will enforce an oversight of corporate misconduct.

The establishment of a criminal offense commonly referred to as ‘failure to prevent fraud’ will render a major corporation criminally accountable if it gains profit from fruad perpetrated by an employee.

Revision in Identification Doctrine: An amendment to the legal principle referred to as the ‘Identification Doctrine’ will ensure the prosecution of businesses for unlawful acts in economic crimes conducted by their senior officers.

Great Powers for NCA: The National Crime Agency (NCA) will be empowered to compel businesses to provide information suspected of being linked to money laundering or terrorist financing.

This Act has incorporated provisions for police and the NCA to confiscate cryptocurrency assets and convert them into cash without waiting for a forfeiture hearing.

With the implementation of this Act, the UK government will be able to prevent acts of money laundering and terrorist financing in order to ensure financial integrity.

In the United Kingdom, fraud is considered the most prevalent issue, constituting more than 40% of criminal activities. Reportedly, criminals managed to launder over £500 million in just the first half year of 2023.