What Is The Economic Crime and Corporate Transparency Bill?
The Economic Crime and Corporate Transparency Bill is a new piece of proposed legislation that is currently working its way through Parliament.
The idea behind it is to make the UK and in particular London less susceptible to being abused as an international financial centre and introduce procedures that may seem to improve the integrity of what is published at Companies House.
Objectives Of The Economic Crime and Corporate Transparency Bill
It is hoped the Economic Crime and Corporate Transparency Bill (“the Bill”) will reduce the attraction of organised criminals to use our structures to further money laundering. Many of the provisions of the Bill seek to make it harder for criminals to operate and abuse Companies House. A few examples have been highlighted below. There are many more in the Bill itself.
Explanatory notes to the Bill highlighted its objectives as at 30 January 2023 as follows:
a.Prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies and other corporate entities to abuse the UK’s open economy. This Bill will reform the powers of the Registrar of Companies and the legal framework for limited partnerships in order to safeguard businesses, consumers and the UK’s national security.
b.Strengthen the UK’s broader response to economic crime, in particular by giving law enforcement new powers to seize cryptoassets and enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
c.Support enterprise by enabling Companies House to deliver a better service for over four million UK companies, and improving the reliability of its data to inform business transactions and lending decisions across the economy.
A debate in the House of Lords on the Bill on Wednesday 8 February 2023 highlighted the problems the noble aims that it now sought to correct.
The Minister for Business and Trade, Lord Johnson of Lainston introduced the debate by saying:
We have already taken unprecedented action to prevent kleptocrats and organised criminals abusing our open economy. We were the first G20 country to establish a public register of domestic company beneficial ownership in 2016.
However, that proposition may sit uneasily alongside the article in the New York Times on 29 December 2019 London Rolls Out the Blood-Red Carpet for Kleptocrats that Lord Clarke of Nottingham seemed to continue to express some concerns about.
The debate risked being overshadowed by a proposed amendment to the Bill for a new corporate offence of Failure To Prevent Fraud.
Stated Aim Of A Company
The Bill gets out of the starting blocks in curious fashion saying that a person forming a company has to declare it is doing so for a lawful purpose.
One lawyer on LinkedIn who explored the purpose of this statement said:
Perhaps it’s to get round the subscribers saying that they didn’t (was going to say honestly but better to use the word really) …
However, the notable issue is that you cannot set up a company for an unlawful purpose. No declaration of intent to act lawfully would appear likely to change the position.
Company Names For Criminal Purposes
The Bill prohibits a company from being set up by a name that due to dishonesty and or deception would have in the view of the Secretary of State criminal purposes.
Appropriate Registered Office
It is now no longer good enough to have a registered office to receive service of papers on a UK Limited liability company.
The registered office must be an appropriate registered office so that it can be shown that the delivery of a document can receive an acknowledgement. This will presumably put a stop to the suggestions of any company Directors who may have asserted in the past that documents did not come to their attention even if it has been asserted that they did not receive the same.
Appropriate Registered Email Address
Companies will now need to have an appropriate registered email address for Companies House to issue documents to it.
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