Call for written evidence: Economic Crime and Corporate Transparency Bill

Aims of the Bill

The Bill follows on from an earlier economic crime bill, the Economic Crime (Transparency and Enforcement) Act 2022, which was fast-tracked through Parliament in March 2022 in response to the Russian invasion of Ukraine.

During the passage of this earlier Bill the Government committed to introducing a second economic crime bill early in the 2022-23 session of Parliament. The Bill then featured in the May 2022 Queen’s Speech.

Its three stated objectives are to:

• Prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies and other corporate entities to abuse the UK’s open economy;
• Strengthen the UK’s broader response to economic crime; and
• Support enterprise by enabling Companies House to deliver a better service for over four million UK companies, and improving the reliability of its data to inform business transactions and lending decisions across the economy.

The Bill has 162 clauses and eight Schedules, divided into five substantive Parts.

Part 1: Companies House Reform (clauses 1 to 98)

Part 1 of the Bill (clauses 1 to 98) would seek to deliver the “biggest upgrade to Companies House” since the UK first introduced a register of companies in 1844. Some of the key changes are:

• Requiring companies to have their registered office at a place where it can acknowledge and receive documents (clause 28);
• Requiring all directors, People with Significant Control (beneficial owners), and those delivering documents to have their identities verified (clauses 39, 61 and 69);
• Abolishing the requirement for companies to maintain their own registers of directors, directors’ residential addresses, secretaries and People with Significant Control, providing instead that such information is only held centrally (clause 50 and Schedule 2);
• Requiring all companies to file a profit and loss account, showing their turnover and profit. Currently, most companies are exempt from this requirement by virtue of being classified as “small” (clauses 52 and 53);
• Giving the registrar greater powers to share information and reject documents with inaccuracies (clauses 76 and 90); and
• Giving the registrar power to remove information about dissolved companies from public inspection after twenty years (clause 79).

Part 2: Limited partnerships (clauses 99 to 134)

The changes proposed in Part 2 (clauses 99 to 134) would, in summary:

• seek more information about partners at the point of registration, and require this to be submitted by authorised corporate service providers, who are supervised for anti-money laundering purposes (clauses 100 to 102, and 128);
• require limited partnerships to maintain a firmer connection to the part of the UK where they were registered by maintaining a registered office there (clauses 103 and 104);
• require all limited partnerships to update the Registrar of changes and submit annual statements confirming that information held about them is correct (clauses 107 to 117);
• enable the Registrar to deregister limited partnerships that are dissolved or no longer carrying on business (clauses 119 and 120, and 125 to 127); and
• enforce sanctions for various breaches of the above requirements against partners (clause 129).

In addition, many of the reporting arrangements would bring requirements for limited partnerships into alignment with those for registered companies. So various changes in other parts of the Bill would also be relevant to limited partnerships across the UK. Clauses 131 to 133 would make provision to facilitate future alignment of such regulations through secondary legislation.

Part 3: Register of Overseas Entities (clauses 135 to 140)

Part 3 of the Bill (clauses 135 to 140) would amend the Economic Crime (Transparency and Enforcement) Act to (i) maintain consistency with changes to the Companies Act 2006 made by Part 1 of the Bill; and (ii) make minor and technical changes.

Part 4: Cyptoassets (clauses 141 and 142)

Part 4 would amend the Proceeds of Crime Act 2002 to explicitly apply criminal and civil asset recovery powers to cryptoassets.  

Among other things, in relation to criminal recovery Part 4 would:

• remove the requirement in certain circumstances that a person must have been arrested before assets can be seized;
• make changes to the search, seizure and detention powers to make clear how they apply to cryptoasset wallets;
• provide magistrates courts with powers to deal with cryptoassets; and
• provide for the destruction of cryptoassets in certain circumstances.

In relation to civil recovery Part 4 would:

• give law enforcement search and seizure powers in relation to cryptoassets;
• enable law enforcement to recover cryptoassets from third party holders;
• provide for the freezing of crypto wallets; and
• enable cryptoassets to be converted into cash or destroyed in certain circumstances.

Part 5: Miscellaneous (clauses 143 to 157)

Part 5 makes a number of discrete changes relating to money laundering, terrorist financing and the regulation of legal services. These include:

• creating new exemptions from money laundering offences to reduce reporting by businesses carrying out transactions on behalf of clients in certain circumstances;
• providing law enforcement with new powers to obtain information relating to money laundering and terrorist financing;
• enabling certain businesses to share information about economic crime without breaching confidentiality duties;
• removing the £25,000 cap on the Solicitors Regulation Authority’s powers to impose penalties for economic crime disciplinary matters;
• adding a regulatory objective for legal services regulators to uphold the economic crime agenda; and
• expanding the Serious Fraud Office’s (SFO) pre-investigation stage powers to all SFO cases.

Part 6: General (clauses 158 to 162)

Part 6 contains general clauses (such on the title and territorial extent of the Bill) typically found at the end of Bills. Most of the Bill’s measures would extend across the UK. Legislative consent motions are being sought from each of the devolved administrations.

Follow the progress of the Economic Crime and Corporate Transparency Bill

The Economic Crime and Corporate Transparency Bill is a Government Bill introduced in the House of Commons on 22 September 2022. The second reading debate was held on  Thursday 13 October.

• Bills before Parliament: Economic Crime and Corporate Transparency Bill
• Read Explanatory Notes: Economic Crime and Corporate Transparency Bill
• House of Commons Library Briefing Paper

Oral evidence sessions are expected to be held on 25 and 27 October.

Guidance on submitting written evidence

Deadline for written evidence submissions

The Public Bill Committee is now able to receive written evidence. The sooner you send in your submission, the more time the Committee will have to take it into consideration and possibly reflect it in an amendment. The order in which amendments are taken in Committee will be available in due course under Selection of Amendments on the Bill documents pages. Once the Committee has dealt with an amendment it will not revisit it.

The first sitting of the Public Bill Committee is expected to be on Tuesday 25 October and the Committee is scheduled to report by Tuesday 29 November. However, please note that when the Committee concludes its consideration of the Bill it is no longer able to receive written evidence and it can conclude earlier than the expected deadline of 5.00pm on Tuesday 29 November. You are strongly advised to submit your written evidence as soon as possible.

Your submission should be emailed to scrutiny@parliament.uk

Further guidance on submitting written evidence can be found here.

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