The Economic Crime and Transparency Bill is entering the final stages in the law-making process. The intention of the legislation is to tackle money laundering and reform Companies House.
The legislation is expected to receive Royal Assent in the coming weeks at which time it will become law although all the provisions of it will not come into force immediately.
The Bill followed the Economic Crime (Transparency and Enforcement) Act 2022 in March 2022. These two Acts together combine to introduce more robust powers in the combat against corporate fraud and money laundering, as well major reforms to Companies House.
What are the main changes the Economic Crime and Corporate Transparency Bill will introduce?
Accounts
One of the major changes for smaller companies is that they will no longer have the option to prepare and file just a simple balance sheet with Companies House. Micro companies will be required to file their profit and loss account. In addition, small companies will also need to file a directors’ report, meaning more information will be in the public domain.
Identity verification
All new and existing directors, individuals with significant control, LLP partners and those delivering documents to Companies House will need to verify their identity.
More Power
Companies House will be given more power to become a proactive gatekeeper by being able to signpost any suspicious activity or erroneous data. There will also be greater powers for Companies House to reject documents filed which are not consistent with information held. The Bill gives the Registrar the power to mandate how documents are delivered to Companies House which could mean electronic delivery of digitally tagged accounts may become mandatory at some point.
Company registers
All UK companies will be required to maintain their own register of members and report any changes to Companies House.
Modernising LLPs
The Bill enhances the registration requirements for Limited Liability Partnerships. A connection to the UK will be required, the dissolution procedure will be streamlined and enforcement powers will be enhanced.
Cryptoassets
The bill will allow cryptoassets linked to unlawful activities to be seized and recovered, which is believed will tackle money laundering, fraud and ransomware attacks.
Audit exemption
Entities eligible for audit exemption (including dormant ones) will need to identify the exemption taken and confirm they qualify for it.
Closing thoughts
Once the Bill received Royal Assent it may take some time before all the provisions are implemented giving us a period of grace. This time will be well spent familiarising yourself with the new procedures.