What does the Economic Crime and Corporate Transparency Act mean for businesses?

The Economic Crime and Corporate Transparency Act, which took effect on 4 March 2024, is changing the way company annual returns are filed.

What is the purpose of the Economic Crime and Corporate Transparency Act?

One of the primary aims of the Economic Crime and Corporate Transparency Act is to introduce greater transparency in company reporting to better tackle economic crime and money laundering. It will also give Companies House enhanced powers to improve the quality and reliability of the data it demands from businesses and to streamline the delivery of financial information.

How will the legislation be introduced and what does it require businesses to do?

The legislation will not be introduced all at once but rather in phases throughout 2024.

The first phase, which took effect from 4 March 2024, will require all businesses to:

• Provide a registered email address.
• Provide a registered office address, meaning PO Box addresses will no longer be valid.
• All new company incorporation will need to include a Lawful Purpose Statement confirming the activities of the company will be lawful.
• Existing companies will need to make a Lawful Purpose Statement when filing the next Confirmation Statement from 5 March 2024.

The legislation in later phases will:

• Require identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies.
• Broaden Companies House powers to become a more active gatekeeper over company creation and a custodian of more reliable data.
• Improve financial information on the register so it is more reliable and accurate and reflects the latest advancements in digital technology to enable better business decisions.
• Provide Companies House with more effective investigation and enforcement powers, and increasing its ability to share relevant information with partners.
• Enhance the protection of personal information to protect individuals from fraud and other harms.

As yet, dates to introduce the next phase of change have yet to be announced, but if you would like to discuss this topic and its potential implications for you and your business, please contact us today.