Home / Does your board of directors know about the Economic Crime and Corporate Transparency Act 2023 (ECCTA) and is your business ready?
3rd May 2024
ECCTA is relevant to all companies and is a new piece of legislation that forms part of the Government’s wider strategy to prevent the use of UK corporate structures for nefarious purposes and to reduce economic crime in the UK.
It consists of 3 main aspects:
1. a new corporate Failure to Prevent Fraud (FTPF) offence that is applicable for ‘large companies’ (as defined in the legislation);
2. an overhaul of Companies House such as the way in which documents are filed and identity verification requirements for directors and persons of significant control as well as new wide ranging powers Companies House have (including to ensure the information filed at Companies House is correct, to require additional information, report discrepancies, disclose information and impose fines and criminal sanctions); and
3. changes to the law on corporate criminal liability for economic crimes (notably a broadening of the identification doctrine).
ECCTA received Royal assent in October 2023 and is coming into force over time. Some provisions are already in force (such as some of the changes to Companies House filing requirements and the changes to the identification doctrine). It is not entirely clear when other changes will come into force as many depend on further legislation being passed, Companies House having the necessary IT systems in place or in the case of the FTPF offence the Government publishing statutory guidance relating to the offence. It is expected that many of the changes will be implemented in 2024.
It is crucial that companies are ready for each stage of implementation of ECCTA. For example, failure to comply in many cases will be criminal offences committed by companies and officers and notably directors will be prohibited from acting as such unless their identity has been verified. Companies making sure that their board and relevant managers are aware of ECCTA and keeping them up to date in relation to the requirements of ECCTA and the implementation timetable of the new obligations is vitally important.
Whilst various details of ECCTA are yet to be confirmed there are some provisions that are already in force and companies need to ensure they are compliant with these. There are also many steps that can be taken by companies now to ensure that they are in the best position to hit the ground running as and when the various further requirements are implemented.
Thinking about what will be required for your business, dealing with aspects that can be dealt with now and putting a plan in place for keeping apprised of and dealing with the matters that are yet to be clarified will reduce future disruption and make it easier to comply when the time comes.
ECCTA is wide ranging, bringing in a number of disparate changes over an extended period of time and in a piecemeal manner. Many of the changes are not yet fully understood as further legislation is required to clarify them. It is therefore understandably difficult for business owners and managers to keep on top of the status of the changes and the obligations on them and their companies. We can make understanding ECCTA and navigating your way through the requirements much easier.
We can provide you with a briefing note that you can provide to your board of directors that will pull everything together:
We can also work with you starting now and throughout the process of implementation of ECCTA and beyond on a basis tailored to your business needs to implement the actions required from a legal point of view.
By way of example of just some of the things we will be able to help you with, we can review your company’s historic filing history at Companies House to identify and tidy up inconsistencies and discrepancies that could lead to challenge by Companies House and we will be able to assist you to put in place policies and procedures required to minimise your exposure under the FTPF offence.
To find out more about how we can help you and your business, please contact info@kuits.com