More Transparency and Less Crime – a new UK Act
Overview
This briefing considers the UK’s new Economic Crime and Corporate Transparency Act 2023 (“the Act”) which received Royal Assent on 26 October 2023, and the effect on Jersey businesses.
Facts
The UK government says the aim of the Act is to reduce the opportunity for criminal and terrorists to abuse the UK’s financial system by introducing:
Reforms to the powers of the England and Wales Companies House, including additional documentation to be submitted to Companies House
New powers to seize and convert crypto-assets
Changes to permit greater sharing of information (potentially confidential or personal) between business entities to prevent money laundering or other economic crime
A new “failure to prevent fraud offence” which will hold corporate entities liable for the fraud or economic crime of their own employees, subsidiaries and other persons that perform services on its behalf where the corporate entity failed to have in place appropriate policies to prevent the fraud;
A new test for corporate liability in order to make it easier to prosecute crimes; and
A number of other related reforms.
More detail and the effect for Jersey Businesses
The changes will be brought in over a period of time. For Jersey clients, it may increase the burden of information and documentation when setting up UK based companies or limited partnerships. For example there is a specific requirement for a UK entity to supply a registered email address. There may also be a need to review internal fraud and economic crime policies where a Jersey entity has a UK operation to ensure they are sufficient to meet the new law and related guidelines.
This “failure to prevent fraud offence” will be a form of strict liability so is potentially onerous but initially it will only apply to “large organisations”, with financial requirements such as an annual turnover of more than £36 million.
The changes to make it easier to prosecute corporate criminal acts result in a company or unincorporated partnership committing an offence if one of its “senior managers” commits the offence whilst acting within the actual or apparent scope of their authority, or if they attempted or conspired (or encouraged or assisted someone else) to do so. Previously it was necessary to show that someone was involved who was the “directing mind and will” of the company. Initially this offence will only apply to certain economic crimes, such as bribery, money laundering, fraud, false accounting, fraudulent trading and financial services offences. This will be broadened in the future and the UK government intends to extending the policy to all criminal offences when a suitable bill arises. Whether Jersey will change its policy in this area is a space to watch.
Conclusion
This is lengthy and detailed Act. There are a number of highly specific provisions which may escape attention due to the initial focus on the headline grabbing points, such as the introduction of a power for the Secretary of State to authorise a non-UK entity to become an authorised corporate service provider even if the entity is not a relevant person as defined by the UK Money Laundering Regulations.
Amati Law’s experts regularly assist Jersey businesses in guiding them through changes to the regulatory environment.
To find out more contact info@amatilaw.com