With the new laws enacted and some in the pipeline, the United Kingdom is trying to strengthen the UK’s fight against economic crime. Recently, the UK enacted the Economic Crime (Transparency and Enforcement) Act 2022.¹ with the aim to set up a register of overseas entities and their beneficial owners so as to make it a requirement for the overseas entities who own land in the UK to register with the aim to create a record. Further, the Act also sought provisions dealing with unexplained wealth orders and to make provisions about sanctions. Therefore, the intent of this Act is to tackle rising concerns about laundered or dirty money being used to purchase UK property, and thus to ensure transparency of ownership, such measures have been enacted.² 

Now recently, the UK has tabled another Bill i.e. Economic Crime and Corporate Transparency Bill³ which complements the 2022 Act and strengthens the different legal provisions dealing with corporates in different legislations. This Bill has been tabled to make laws regarding economic crime and corporate transparency and to further add such provisions in current legislation dealing with companies, limited partnerships, and other kinds of corporations. Further, the Bill also aims to regulate the already enacted laws related to the registration of overseas entities to reduce economic crime.  In this article, some of the important provisions have been discussed below which are provided by the Bill-

Restriction on the name of the company-

The Bill seeks to amend the Companies Act 2006 by adding section 53A wherein it aims to deal with those companies that register their name for criminal purposes. According to this section,  a company must not register under the Companies Act 2006 by a name, if in the opinion of the Secretary of State, such registered name would signify the intention of the company to facilitate the commission of crime dealing with dishonesty or deception, or, carrying any activity by the company which would be a criminal offense. Similarly, the Bill amends section 56 of the 2006 Act by adding section 56A to restrict the usage of the name of the company if such name gives a false impression that the said company is connected with any foreign government or international organization. Even names containing computer code have been restricted by adding section 57A in the 2006 Act. The Bill also ensures that it is exhaustive enough to deal with the issues of re-registration of company names or prohibition of using names that are initially disallowed to be used. The power of registrars has also been exhaustively defined regarding their ordering of name change or name restriction in different contingencies including those discussed above.

Seizure of crypto-assets-

Sections 141 and 142 of the Bill significantly deal with the issue of crypto-assets. By the virtue of section 141, the power to deal with confiscation orders of cryptoassets has been provided whereas, in section 142, civil recovery in the case of crypto-assets has been dealt with.  These sections aim to amend the Proceeds of Crime Act, 2002 so as to make provisions for confiscation and civil recovery. Schedule 6 of the Bill deals with crypto-assets and the power to confiscate by amending Part 2 of the Proceeds of Crime Act, 2002. Through this amendment, it has been stated that an appropriate officer on being satisfied with the condition of confiscation, can seize any free property if the officer has reasonable grounds for suspecting that it is a crypto-asset related item. The term crypto-asset related firm is defined as an item of property that is or that contains or gives access to information that is likely to assist in the seizure of any crypto-asset. The provisions dealing with detention and release of crypto-asset have been also duly provided, and at the same time, certain safeguards to mitigate illegal confiscation have also been provided. Therefore, a new power has been provided to seize and recover crypto-assets that are acquired through money laundering or other types of financial crime. 

Required information for Partners in Limited Partnership-

By the virtue of section 101, the general partners in the limited partnership must deliver a statement to the registrar specifying the information as sought in schedule 4 of the Bill about each person who is a partner in the limited partnership and who had become a partner on the registration of the limited partnership. Information shall include- name, date of birth, nationality, any relevant former name, usual residential address, the part of the UK in which the individual is usually resident or, if living in another country, then name of that place, etc.

If the partner is a legal entity, then similar information is also required to be provided for the entity. In case there has been a failure on the part of partners to comply with the said provision, then in the absence of any evidence to the contrary, the registrar shall have reasonable cause to believe that the limited partnership has been dissolved. Similarly, additional duty has been cast on the partners to ensure that the details of their registered office as well as of their email address, at all times at an appropriate address which means that in the ordinary course of events, any document posted to them would get come into the attention of the partners. Failure of keeping an updated record would be an offence at the end of a partner and can be punished with a fine. 

Higher penalties in case of false statements made in the Register of overseas entities-

Through this Bill, a higher penalty has been intended on a person who makes a false statement in a register of overseas entities as per the Economic Crime (Transparency and Enforcement) Act 2022. As per section 4 of the 2022 Act, the registrar of companies for England and Wales is required to keep a register of overseas entities that shall consist of a list of registered overseas entities, documents delivered to the registrar, or any other information required to be included in the register. On registration of an overseas entity, the registrar must record the date of registration and allocate an overseas entity ID to the entity. In that Act, there was no classification made between a basic offence and an aggravated offence in cases of a person giving a false statement before the Register of Overseas entities as per the information sought by the Registrar. As per the Bill, if a person now makes a statement that is misleading, false, or deceptive in a material particular, without any reasonable excuse, then it shall be seen as a basic offence. However, if a person gives this false statement with the knowledge that the statement is false, then the person would be made liable for the aggravated offence. Therefore, the offence is termed to be aggravated offence when there is adequate knowledge in the mind of a person to make a false statement. As followed, aggravate offence is, therefore, liable to be punished with greater penalties.

Provisions for money-laundering-

Through this Bill, civil liability has now been removed in case there is a breach of confidentiality when firms share the information which directly deals with economic crimes. So presently, if a company shares confidential information about any company, there is a civil liability that is attached as sharing confidential information is seen as a breach of law, however, now such liability has been waived in order to promote information sharing to tackle an economic crime. The same law also applies to privileged disclosure that is made to a legal adviser. Moreover, the administrative role has been reduced which was causing a burden in order to increase focus on high-value criminal activity. 

CONCLUSION

These measures provided in the Bill clearly show that the UK is now making its fight against financial crime on top priority. By engaging through having a strong regulatory focus, there is a clear intention to reduce, mitigate, and stop the inflow of dirty money or laundered money in UK territory. This Bill is an example of how the UK is planning to bring more transparency to financial institutions. Moreover, by giving adequate focus on modern methods of money laundering like crypto-assets, the real efforts behind the Bill can easily be seen. Such measures are the need of the hour as after the Covid Crisis and in the current stage of the Ukraine-Russia crisis, there is a need for the countries to safeguard their reputation as legitimate business destinations. There is a possibility of an inflow of dirty money into many countries and thus, the governments of these regions must make sure that their legal framework is adequate and strong enough to tackle the potential economic crimes.