How to prepare for the UK’s new Economic Crime and Corporate Transparency (ECCT) Act
For UK companies, March brings official enforcement of the UK Economic Crime and Corporate Transparency (ECCT) Act.
While penalties for noncompliance are high, the right governance systems and practices can provide invaluable help and peace of mind. They can also make it easier to add this new regulation to an ever-growing governance roster.
Read on to discover what company secretaries need to know and do to be ECCT Act-ready.
What is the ECCT Act?
Along with tremendous prosperity, the UK’s open economy has also fostered a dark side rife with fraud, money laundering and corruption. To get a handle on these growing risks, the UK government has reformed the role of Companies House, the official registrar of UK companies and entities.
In an effort to improve transparency, Companies House now requires identity verification for company directors, People with Significant Control and document deliverers. Another provision addresses the misuse of limited partnerships, including Scottish limited partnerships, by mandating a connection to the UK. This involves tighter requirements for entity registration and increased expectations for transparency.
These new rules aim to improve the quality and quantity of data collected in entity registrations. The end goal: speeding up and strengthening sanctions, identifying overseas entities using UK property to launder money, and supporting law enforcement investigations.
Other provisions grant additional law enforcement powers to seize and recover cryptoassets acquired through illegal routes, such as money laundering, fraud and ransomware attacks.
Repercussions for noncompliance can be harsh. For example, the Act’s new failure to prevent fraud offence holds an organisation liable when an employee or agent commits a specified fraud offence if no reasonable fraud prevention procedures were in place.
What are company secretaries’ responsibilities in regards to the ECCT Act?
Because company secretaries sit at the nexus of governance and compliance, they play a pivotal role in ECCT Act compliance.
For starters, it’s more important than ever to make sure company records contain current, accurate information about limited partnerships, directors and People with Significant Control, including requirements for such a designation.
Typically, People with Significant Control are those with more than 25% of shares in the company, more than 25% of voting rights in the company, and/or the right to appoint or remove the majority of the board of directors — but it’s important to double-check this against the company’s register.
What’s more, companies (and company secretaries) will need to verify the identity of these individuals to a level of accuracy and completeness that meets the new Companies House requirements. And a rubber stamp of approval will not be automatic: Under the ECCT Act, Companies House will have new powers to check, remove or decline any information from a company’s register or submissions.
This brings up another task for a company secretary’s growing compliance to-do list: ECCT Act submissions.
How Diligent can help you comply with the ECCT Act
As a close Companies House partner with an established technology solution and over 20 years of experience, Diligent Entities is your one-stop resource for ECCT Act compliance.
Achieve seamless compliance and peace of mind by e-filing pre-loaded forms directly to Companies House, including the AD01, CS01 and IN01 needed for ECCT Act compliance.
With self-service features for group structure charting, risk intelligence data and review management, company secretaries can strengthen entity management year-round while keeping their organisation’s activities aligned with the ECCT Act’s broader charter against money laundering, fraud and other economic crimes.
To learn more about how Diligent Entities can help you stay ECCT-compliant, schedule a demo today.
