ECCTA and the Future of Financial Crime
The Economic Crime and Corporate Transparency Act (ECCTA) first came into effect in March 2023 and it marked a significant moment in the UK’s work to tackle Financial Crime, including Money Laundering and Fraud, with a focus on increasing corporate transparency. The act requires companies to provide clearer and more accessible information regarding their ownership and financial structure, including mandatory registers of Beneficial Owners, meaning any individual who has significant influence over a company must be disclosed. It also gave Companies House more power to challenge and remove incorrect or fraudulent information and to tighten the rules around registered office addresses and company names.
ECCTA in Financial Services
ECCTA has major ramifications for AML and KYC, improving the accuracy of corporate records and ensuring that businesses engage in Know Your Customer checks more thoroughly – this was already true for regulated Financial Services firms but it’s now much more widely applicable, and authorities are able to demand greater scrutiny, making it harder for companies to be used for money laundering. ECCTA also empowered the FCA to impose more severe penalties on firms that fail to fulfil these AML requirements.
2024 saw multiple ECCTA deadlines pass – many of the powers came into effect in March, and from October Companies House was able to issue financial penalties for any businesses failing to comply with the new rules.
Upcoming Changes
This year, new parts of the legislation will continue to rollout. The first of these arrives on February 25th, when professional service providers (including accountant and solicitors) will be able to register to become Authorised Corporate Service Providers, enabling them to carry out AML verification services for their clients.
Later in the year, Companies House will introduce new identity verification requirements where all directors and people with significant control of a company (referred to as PSCs in the legislation) will be required to provide proof of ID at the time of incorporation, and over the following 12 months all existing companies will have to meet this requirement when their next confirmation statement is due. Individuals are able to voluntarily verify their identity from March 25th, with the mandatory verification expected to be in effect by autumn.
There are approximately 50 new statutory instruments set to be deployed as part of ECCTA with a planned completion date of 2027, and many of these don’t yet have fixed dates but we do know that by the end of 2026 Companies House will require all limited partnerships to submit more information and will be facilitating greater sharing and cross-checking of information between themselves and other bodies including regulators.
What Does This Mean For You?
All of these elements together represent a huge shift in the legislative landscape, pushing us forward to a safer economic ecosystem in the UK. It also represents a unique opportunity for AML, KYC and Financial Crime professionals who have honed their skills and experience within the existing Financial Services regulatory environment to take what they’ve learned to a wider variety of companies than ever before who will be newly in need of their specialist talent.
Kind Consultancy works with many UK businesses in Financial Services and beyond who regularly need top-tier, niche Financial Crime talent for contract projects, both short and long term. This is part of our motivation for maintaining the Kind Agile Solutions bench of pre-screened, top-quartile talent – meaning we have a team of people we trust to deliver game changing results on crucial projects, and those people are available much faster than through traditional recruitment.
If you’re interested in how we can assist your business, or you’re a Financial Crime contractor who would like to be part of KAS, get in touch on 0121 643 2100 or via kiran@kindconsultancy.comfor a confidential conversation.
