Changes to UK company law expected to aid fraud detection

Big changes to UK company law are on the way this year which are aimed at improving corporate transparency and aiding those carrying out due diligence or investigating fraud.

The Economic Crime and Corporate Transparency Act (ECCTA) could start to be introduced from 4th March depending on legislation being passed in parliament.

The new act gives Companies House more power to disrupt economic crime by cleaning up the companies register and places a responsibility on companies to declare they are trading for a lawful purpose.

Stringent Requirements for Company Registration

The ECCTA imposes stricter requirements on companies regarding their registration details. This includes the requirement for companies to have a registered office and email address that is “appropriate,” effectively eliminating the use of P.O. Boxes as addresses.

Companies will now also required to confirm at incorporation and annually that their activities are lawful. This is aimed at ensuring that all companies on the register operate within legal parameters​​​​.

Identity Verification and Data Sharing

The Act will introduce new requirements under UK company law for identity verification, significantly impacting corporate structures and partnerships.

This includes the verification of identities of directors, persons with significant control (PSCs), and company secretaries.

The Act will also empower the Registrar to share data with other government departments and law enforcement agencies, facilitating the detection and prevention of unlawful activities​​​​.

Impact on Investigators

For investigators like Conflict International, the ECCTA provides several benefits.

The enhanced transparency and accuracy of company information can significantly aid in the due diligence process, making it easier to verify the legitimacy of businesses and their activities.

The requirement for companies to annually confirm their lawful activities can serve as an early indicator of potential illegal operations.

Furthermore, the ability of Companies House to share information with law enforcement agencies could lead to more efficient and effective investigations into economic crimes​​​​.

Corporate Governance and Anti-Fraud Measures

The ECCTA also includes measures aimed at enhancing corporate governance and combating fraud.

Companies are now required to provide more detailed information, including the full names and addresses of directors and PSCs.

The Act also broadens the scope of corporate liability for economic crimes, making it easier to hold companies accountable for the actions of their employees and associates in cases of fraud and other economic crimes​​​​.

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Conflict International specialises in obtaining in-depth due diligence intelligence and background information, enabling our clients to effectively manage risk and understand the people and entities with which they are dealing.

To discuss a particular case or our services, please contact our London head office in confidence by calling +44 (0)20 7917 2939 or email us here.


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