Compliance with confidence: navigating the Economic Crime & Corporate Transparency Act

The Economic Crime and Corporate Transparency Act 2023 (ECCTA), which aims to enhance corporate transparency and combat economic crime, marked a transformative shift in the way that Companies House operates – from that of a largely passive recipient of information to a more active gatekeeper over company creation and the custodian of more reliable data.

The objectives of the ECCTA are to empower Companies House to:

• Ensure that any person who is required to deliver a document to the registrar does so.
• Ensure that information contained in the register is accurate and that the register contains everything it ought to contain.
• Ensure that records kept by the registrar do not create a false or misleading impression to members of the public.
• Prevent companies and others from carrying out unlawful activities or facilitating the carrying out of unlawful activities by others.

As a result, Companies House now actively maintains the integrity of corporate records. Since March 2024, it has been able to improve the quality of information on the register by:

• Querying and rejecting new information received in customer filings which it suspects to be wrong or fraudulent.
• Removing more inaccurate information from the register, including removing names and addresses of citizens that have been used without consent.
• Querying and rejecting company names that have been chosen to mislead customers, facilitate fraud, or give the false impression that the company is connected to a foreign government.
• Improving the accuracy and reliability of registered office addresses by introducing a new definition for an appropriate address, which excludes the use of PO Box or equivalent services. It is also able to commence strike off measures against companies that do not provide an appropriate address within a specified period.

It has also had new obligations and powers in relation to analysing and sharing data with law enforcement agencies and other government departments.

What does this mean for your business?

For businesses, these changes bring stricter oversight and an urgent need to comply with heightened regulatory standards. As the central register will be the only means of public scrutiny, timely and accurate filing will become of critical importance.

There are nearly 100 sections in the ECCTA that create separate offences, ranging from serious offences, such as fraudulent trading, to administrative oversights such as failure to keep various registers, or failure to notify the Registrar of changes.

Most of these offences can be committed not only by the company itself but also by its directors and officers. Non-compliance can result in fines or prosecutions, as well as reputational damage.

To remain in compliance with the new regulatory regime, companies must:

• Regularly review and update filings to ensure accuracy.
• Address any discrepancies in their corporate records.
• Register Overseas Entities (OEs) correctly to avoid enforcement action.

Key milestones in the ECCTA implementation

The timeline for implementing the ECCTA is now clearer, with major changes coming in phases:

• By Spring 2025: Businesses can register as Approved Corporate Service Providers (ACSPs), ensuring compliance with regulations while offering corporate services.
• By summer 2025: Companies House should be able to allow access on request to certain trust information on the Register of Overseas Entities.
• By Autumn 2025: Companies House should be able to make identity verification a compulsory part of incorporation and new appointments for new directors and PSCs, as well as begin the 12-month transition phase to require more than 7 million existing directors and PSCs to verify their identity – the identity verification will happen as part of the annual confirmation statement filing.
• By spring 2026: Companies House should be able to make identity verification of the presenters a compulsory part of filing any document and require third party agents filing on behalf of companies to be registered as an ACSP. It will also be able to reject documents delivered by disqualified directors as they will be prohibited from doing so, unless they are delivered by an ACSP for specified filings permitted by law.
• By the end of 2026: Companies House should be able to require all limited partnerships to submit more information, providing greater transparency for users of the register and complete the transition period for all individuals on the register requiring identity verification, and start compliance activity against those who have failed to verify their identity. It will also be able to facilitate greater cross-checking of information and data between Companies House and other public and private sector bodies.
• Following the implementation of restrictions on corporate directors:
  • Any corporate directors of companies will be restricted so that any corporate director of a company must have an all-natural person board.
  • All the directors of the corporate director will be required to verify their identity in order for the corporate director to be registered.
  • Only UK corporate entities with legal personality will be capable of acting as a corporate director. Companies House will prohibit the use of overseas companies from acting as corporate directors in the UK.

How SCATS can help

Sovereign Corporate & Trustee Services Ltd (SCATS) is committed to helping businesses navigate these changes with confidence. As a company supervised by HMRC for anti-money laundering (AML) compliance and an Assured Agent of Companies House, we are uniquely positioned to assist with:

• Identity verification and compliance checks.
• Supporting clients through the transition to new disclosure requirements.
• Registering as an ACSP when legislation permits, which will enable us to submit documents directly to the Registrar on behalf of clients.

“The ECCTA not only strengthens Companies House as a reliable source of accurate UK company records but also enhances its compliance capabilities,” said Josephine Rocca, Director of SCATS. “While the verification process and other functions introduced by the Act are yet to be implemented, businesses must stay informed and prepare for these changes. SCATS is ready to guide clients every step of the way.”

Preparing for a Transparent Future

The ECCTA is a significant step toward improving corporate governance in the UK. SCATS is here to ensure your business is fully compliant and prepared to adapt to these new requirements, protecting both your operations and reputation.

If you have questions or need assistance with compliance, identity verification, or registering an Overseas Entity, contact Josephine Rocca below.

Together, we can navigate these changes and safeguard your business in a rapidly evolving regulatory environment.