What does the ECCT Act 2023 mean for the future of business onboarding?

When the Economic Crime and Corporate Transparency Act was passed in 2023 it signified a huge shift for Companies House by dramatically improving the quality and type of data available from the registry. This will be achieved through two main steps: improved collection and visibility of information about UK companies and imposing penalties if this information is not kept updated and verified. One of the significant data points that will now be available on the Companies House register is beneficial ownership for UK registered companies. Disclosing all individuals who ultimately control more than 25% of a company. The UK is not the first to do this and is following a trend seen in over countries including France, Canada, Australia and New Zealand.

The act was set out with achieving some key objectives:

• Reduce organised crime by making it harder for criminals, fraudsters and terrorists from using companies as a way to access funds.
• Strength the response to these crimes. Law enforcement will receive new powers including the ability to seize crypto assets.
• Improve visibility by enabling businesses in the financial sector to share information to prevent and detect economic crime.
• Improve Companies House by increasing the reliability of the information available on it. This will, in turn, better inform businesses and their financial activities e.g. transactions and lending.

‍What are the main changes?‍

Beneficial ownership register: The Act mandates the creation of a public register of beneficial ownership for UK-registered companies. This register will disclose the individuals who ultimately own or control more than 25% of a company's shares or voting rights, or who otherwise exercise control over the company.

Verification of beneficial owners: The Act requires companies to provide accurate and up-to-date information on their beneficial owners, with strict penalties for non-compliance. Companies House, the UK's registrar of companies, will oversee the implementation and maintenance of this register.

Trust registration: The Act expands the scope of trusts required to register with HM Revenue & Customs (HMRC), including trusts that own UK property or generate UK tax consequences. This aims to increase transparency around trust ownership and prevent their misuse for illicit purposes.

Enhanced due diligence: The Act imposes additional due diligence requirements on companies and financial institutions to verify the identities of beneficial owners and trustees. This includes conducting thorough background checks to ensure compliance with anti-money laundering (AML) regulations.

Criminal offences and penalties: The Act introduces new criminal offences for providing false or misleading information to Companies House or failing to comply with beneficial ownership reporting requirements. Penalties for non-compliance include fines, imprisonment, and disqualification from serving as a company director.

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What does this mean for onboarding businesses?‍

The improvement in the quality of data available in Companies House is a great step towards more transparency, accountability and security. However, that does not mean that there is no need for safe business onboarding. As mentioned, one of the big changes is the requirement for further due diligence checks on financial institutions; businesses need to ensure that they are working with legit customers.

At Detected, we're reinventing the traditional approach to business, customer and merchant onboarding. Focused on meeting your needs where onboarding in a compliant way is a time-sensitive and commercial imperative. 

Design your ideal business onboarding sequence using the no-code Detected modules. Connect to Detected’s network of specially selected risk, fraud & compliance sources. Control all your customer data through the Detected Case Management system.

Detected can specifically help a company who is scaling up by providing the customisation and flexibility of an in-house solution while maintaining the same ease of implementation, access to data and functionality found in other suppliers.

If you'd like to hear more about how we can help your onboarding processes please get in touch here.