Economic Crime and Corporate Transparency Act 2023
The Economic Crime and Corporate Transparency Act 2023 introduces a 'failure to prevent fraud' offence for large organisations and reforms Companies House to improve transparency.
Who is affected: Large organisations, company directors, and accountants across the UK
What Changed
The Act creates a new 'failure to prevent fraud' offence under which a large organisation (broadly, those with more than 250 employees or more than £36 million annual turnover) can be prosecuted if a person associated with it commits a specified fraud offence for the organisation's benefit and the organisation did not have reasonable fraud prevention procedures in place. This mirrors the approach taken in section 7 of the Bribery Act 2010. The Act also significantly reforms Companies House: filing fees increase, identity verification requirements are introduced for all new and existing company directors, and the registrar gains new powers to query and reject suspicious filings. It introduces a new register of overseas entities for properties owned through foreign companies and requires greater transparency over nominee arrangements.
What To Do
Large organisations should conduct a fraud risk assessment and implement or update fraud prevention procedures before the 'failure to prevent fraud' offence commences (expected late 2025; the Secretary of State must publish guidance first). Directors of UK companies should prepare for mandatory identity verification with Companies House and ensure that the company's registered information is accurate. Businesses that use nominee directors or shareholders should review their disclosure obligations under the new transparency regime.