The UK government is taking further measures to tackle economic crime in the UK, reforming its corporate register, and giving extra powers to the Serious Fraud Office.
By Stuart Alford KC, Clare Nida, and Mair Williams
The UK has published the new Economic Crime and Corporate Transparency Bill 2022 (the Bill), which focuses on reforms to Companies House, the role of limited partnerships, seizure of suspected criminal cryptoassets, and new intelligence gathering powers for law enforcement.
In March 2022, the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) created a new register of overseas entities holding UK property assets alongside changes to the unexplained wealth order and sanctions regimes (see previous Latham blog). The Act was passed in response to the Russian invasion of Ukraine and targeted Russian assets held or flowing through the UK. At the time of the Act in March, the UK government said a second part would follow, and the Bill, published in September 2022, sets out the plans for that second part.
The Bill builds on reforms to Companies House introduced by the Act, aimed at increasing transparency over UK companies. These reforms include:
- the introduction of verification for all new and existing registered company directors, people with significant control over companies, and those delivering documents to the Companies House, to strengthen checks on identity data held on the Companies House register;
- an increase in Companies House’s powers, including the ability to check, remove, or decline information submitted to, or already appearing on, the Companies House register; and
- the provision of greater investigation and enforcement powers for Companies House, including the ability to cross-check and share data with other public and private sector bodies and law enforcement.
The registration requirements for UK limited partnerships will be tightened, including a requirement to maintain a connection to the UK and provide increased transparency — measures intended to identify ultimate owners.
The Bill will amend both the criminal confiscation powers in Parts 2, 3, 4, and the civil recovery powers in Part 5 of the Proceeds of Crime Act 2002 (POCA), enabling law enforcement agencies more effectively to seize and recover cryptoassets that are being used for criminal purposes.
The Bill aims to strengthen anti-money laundering powers by:
- enabling better information-sharing between government agencies;
- dis-applying civil liability for breaches of confidentiality by firms that share information for the purpose of combatting economic crime;
- removing the requirement for a Suspicious Activity Report to be submitted before the National Crime Agency’s Financial Intelligence Unit can obtain information from businesses; and
- focusing private sector and law enforcement resources on high-value activity.
The Bill also expands the Serious Fraud Office’s (SFO) pre-investigative powers, so that they apply to all SFO cases. Currently, Section 2A of the Criminal Justice Act 1987 only permits the SFO to compel individuals or companies to provide information in pre-investigation stages for suspected cases of international bribery and corruption. This expansion will broaden the range of offences to include serious fraud and other cases within the SFO’s remit.
The Bill demonstrates the UK government’s focus on ensuring that cryptoassets do not allow criminals to accumulate and protect the financial benefit of their criminal acts out of the reach of law enforcement.
Although Companies House will see substantial strengthening of its investigative and information-sharing powers, the real impact of those changes will only be seen if Companies House is provided with increased resources to exercise those powers.
Despite recent negative press surrounding the SFO, with a series of failed prosecutions and internal inquiries relating to its conduct, the government appears to have demonstrated its continued confidence in the organisation by extending its pre-investigation powers.