The Economic Crime and Transparency Bill strengthens anti-money laundering powers enabling better information sharing on suspected money laundering, fraud and economic crime. It also reforms the role of Companies House and increases transparency over UK companies and other entities including setting stricter rules on the management of limited partnerships. Lastly, it provides additional powers to seize cryptoassets that are the proceeds of crime or money laundering. In this article I will give you my top five tips for limited companies to ensure you are ready for this new bill.
Make sure your registered company information is accurate
The new bill gives Companies House increased powers to check registered information and, if necessary, to challenge and reject information which it considers inconsistent, incomplete or inaccurate. Every UK company must now provide Companies Houses with an appropriate email address for communication and a registered address to which documents can be delivered.
So, check that your registered information is up-to-date, and that any inconsistencies are swiftly rectified.
Maintain an internal register of company members
It will no longer be possible to keep your register of members on the central register at Companies House. This must now be maintained locally. So, you should put measures in place to hold this information internally.
Also note the more stringent stipulations for recording names. In a drive to improve the accuracy of company and shareholder information, Companies House will no longer accept abbreviations or initials for shareholders names, so make sure these are recorded accurately and in full.
Be aware of changes on abridged/ filleted accounts
In a change that will be welcomed by smaller companies, abridged and filleted accounts are to be abolished in the new bill. Micro-entities (businesses with fewer than 10 employees and a turnover of less than £632,000) need now only file a balance sheet while companies with fewer than 50 employees and a turnover under £10.2m must file a balance sheet, directors’ report and profit & loss account.
Verify your directors and any Person with Significant Control (PSC)
Key to combatting fraud and criminal activity is the introduction of identity verification measures to check the validity of directors, PSCs and those people submitting documents to the registrar.
Each new director appointed must be verified by photo ID. There are two ways in which you can do this: directly via Companies House or indirectly through an Authorised Corporate Service Provider. Have a look at this government factsheet for more detailed information about how to do this.
There is a transition period for current directors to verify their IDs but be aware, non-compliance will be a criminal offence and could potentially result in a fine or sanctions on directors who fail to comply.
Embrace the changes – it will give businesses trading with you greater confidence
It may seem that this bill has brought in a raft of administrative jobs for businesses, so I want to end on a more positive note. Fraudulent activity threatens to ruin the reputations and fortunes of British businesses and this bill is designed to tackle these issues. By improving information sharing, tackling money laundering, and reducing economic crime, these changes will help ensure that companies are created for lawful purposes and are less able to be misused.
