Valentina Golubovic

Valentina Golubovic


June 20, 2023

How the new Economic Crime and Corporate Transparency bill will affect UK businesses?

Find out more about the proposed ECCT bill, how it will impact businesses and what you can do to protect your business from economic crime.

How the new Economic Crime and Corporate Transparency bill will affect UK businesses?

The UK has long been working towards establishing itself as a global business hub, and one of the ways it has sought to do so is by offering one of the lowest tax rates in the G7. This strategy has brought the nation a sizeable quantity of investment and new business. But this surge in activity also raises the possibility of fraud, and money laundering and other forms of organised crime. The UK government has put in place a number of measures to address these problems and fight these kinds of crimes.

What is the Economic Crime and Corporate Transparency bill?

The bill followed the Economic Crime (Transparency and Enforcement) Act introduced in 2022 following the outbreak of the Russia and Ukraine war which allowed the government to move faster when imposing sanctions, target foreign criminals and reform the UK’s unexplained wealth order.

The Economic Crime and Corporate Transparency ECCT bill continues to address corporate crime through implementing changes to Companies House and preventing the exploitation of limited partnerships. It also provides powers to seize and recover when it comes to potential criminal cryptocurrency assets. 

Furthermore, the bill seeks to deliver reforms to incentivise businesses to share information with the aim of tackling economic crime and money laundering as well as establish new powers for law enforcement to gather intelligence and reduce the regulatory burden on businesses.

Implementing changes to the Companies House Registrar 

The UK government reported that in 2020–2021, over 800,000 businesses were incorporated and 99% of these applications were processed in less than 24 hours. While the UK wants to maintain a lack of barriers to entry for new businesses, the new bill will reform the current laxed approach and make the Companies House Registrar a more active gatekeeper over company creation processes. The Bill also introduces identity verification measures for all registered company directors, People with Significant Control, and those delivering documents to the Registrar.

Reduce exploitation of limited partnership 

14% of LLP’s incorporated in the UK show signs of money laundering, reports Transparency International UK. The proposed bill combats this by requiring more information about the partners, a stronger connection to the UK region in which they are registered and allowing the Registrar to enforce sanction for breach and deregister any partnerships no longer active.

Facilitating sharing of information

The bill aims to facilitate the sharing of customer information between businesses directly or through a third party without the civil liability for breach of confidentiality. The sharing of information will have to adhere to the Data Protection Act and UK GDPR and must be facilitated only to prevent economic crime like money laundering, sanction evasion, fraud and others.  

How will this affect businesses?

If the ECCT bill is introduced this could result in longer processing times and potentially higher costs as well as an additional administrative burden on businesses. Information sharing between businesses can help reduce economic crime but it could raise concerns around privacy and confidentiality. Businesses will need to make sure they adhere to GDPR to avoid civil liability. 

How can you protect your business from economic crime?

Economic crime can be carried out by an employee, director, supplier, customers or other stakeholders. A few tips to prevent your business falling victim to fraud, money laundering, tax evasion, terrorist financing, and market abuse are:

  • Conduct thorough due diligence 
  • Implement risk management processes
  • Implement financial controls and audit compliance
  • Implement an Anti-corruption and Bribery Policy

How an Anti-corruption and Bribery Policy can help your business?

By implementing an Anti-corruption and Bribery Policy, businesses can demonstrate their commitment to preventing economic crime and complying with the new legislation. This can help to protect the reputation of the company, reduce the risk of financial loss, and ensure that employees are aware of their responsibilities when it comes to preventing bribery and corruption.

About Legislate 

Legislate is a contract management platform that empowers businesses to take control of their legal agreements. Our platform allows you to create bespoke contracts tailored to your specific needs, all without breaking the bank. With Legislate, you can also sign, and manage contracts electronically, making the process more efficient and allowing you to make informed decisions faster. Book a demo or sign up today to put the confidence back into contracting.

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.

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