Companies House to tackle corruption and bolster legitimate business under new bill

Robust laws to fight fraud, counter corruption and bolster legitimate business have received Royal Assent on 26 October as the Economic Crime and Corporate Transparency Act officially became law.

Under the new bill, UK authorities will proactively target organised criminals and others seeking to abuse the UK’s open economy.

Companies House will receive enhanced abilities to verify the identities of company directors, remove fraudulent organisations from the company register and share information with criminal investigation agencies. 

Law enforcement agencies will benefit from greater powers to seize, freeze and recover crypto assets, while groundbreaking legal reforms will allow the courts to dismiss spurious lawsuits which seek to stifle freedom of speech. Prosecutors will be better able to hold large corporations accountable for malpractice.

These changes will level the playing field for all businesses, ensuring the UK’s open economy remains a world class centre for businesses to grow and prosper.

Home Secretary Suella Braverman said: “I am committed to ensuring criminals do not profit from their offending and this landmark act will help law enforcement clampdown on the tactics they use.”

“It will have a big impact on our ability to fight organised crime, including terrorist funding, fraud and money laundering, and that will ultimately help keep us all safe.”

Once the powers come into force, the agency will take immediate steps to improve the quality of information on the company register. 

Invalid registered office addresses, such as those used fraudulently to set up companies, will be removed. Verification checks will assess the identities of people setting up and managing companies, stopping criminals hiding behind false names or registering companies with fictional characters. This will help prevent fraudulent appointments and avoid people involved in money laundering hiding behind false names.

Changes to public beneficial ownership registers will also close loopholes that allow corrupt actors to use opaque companies to move and hide money.

It will additionally provide businesses with greater clarity on who they are working with, while allowing civil society organisations to expose corrupt actors, and for the public to increase their trust in governments.

Business Minister Kevin Hollinrake said: “We’re providing Companies House with the tools to take a much harder line on criminals who take advantage of the UK’s open economy, ensuring the reputation of our businesses is not tarnished by the UK playing host to the world’s scammers.

“These reforms will remove the smoke and mirrors around companies hiding behind false identities, provide further protection to the public from companies fraudulently using their addresses, and deliver better data to support business and lending decisions across the economy, enhancing the UK’s reputation as a great and safe place to do business.”

Companies House chief executive Louise Smyth said: “These new powers are without doubt the most significant change for Companies House in our long history. 

“We have known for some time that UK companies have been misused by criminals to commit fraud, money laundering, and other forms of economic crime and our thoughts have always been with those affected.”