Following our blog post last month, the enabling legislation to increased powers at Companies House, the Economic Crime and Corporate Transparency Bill, has now received Royal Assent on 26 October 2023.
Practitioners will be divided on this change in regulation as it will nndoubtably add to red tape as well as deterring criminal activity.
- Aside from changes to accounts information to be reported, other changes will include:
The National Crime Agency (NCA) will additionally gain greater powers which compel businesses to hand over information which is suspected to be used for money laundering or terrorist financing.
- Unnecessary reporting by businesses will also be reduced, enabling the private sector and law enforcement to focus their existing resources on tackling high value and priority activity.
- New powers will additionally allow law enforcement to target illicit cryptoassets. The NCA’s National Assessment Centre estimates that over £1 billion of illicit cash was transferred overseas using cryptoassets in 2021.
- The act has introduced provisions for police and the NCA to seize cryptoassets more easily and convert them into money before a forfeiture hearing has taken place. In exceptional circumstances, there will also be a power to destroy seized cryptocurrency.
- The act will give judges new powers to deal with strategic lawsuits against public protection, known as SLAPPS, involving economic crime. These are court cases used by the powerful individuals to intimidate opponents. Russian oligarchs seeking to prevent public interest journalism are prominent users of such suits.
- Major reforms to corporate criminal liability will also provide prosecutors with game changing powers to hold companies criminally liable for malpractice.
- The creation of a criminal offence, called ‘failure to prevent fraud’, will hold a large organisation criminally liable if it benefits from a fraud that is committed by a member of staff.
- An update to a legal principle known as the ‘identification doctrine’ will also ensure businesses can be held criminally liable for the actions of their senior managers who commit an economic crime.
- Both of these changes remove the ability for a large company to hide behind complex management structures to evade scrutiny. This ensures a level playing field for all businesses and will help remove criminal money from the economy.
Software companies will be eyeing the legislation with some trepidation as the filing changes will mean updates to their products. As our world becomes embroiled in the integration of Artificial Intelligence, we will need to be prepared for equivalent changes in compliance legislation. One thing is clear, legislators will generally be reactive to exploitation of their regulations, and we can expect increasing tightening of our commercial legal frameworks in the coming years.