Navigating the Economic Crime and Corporate Transparency Act

Upcoming Changes in the Economic Crime and Corporate Transparency Act: What Data Consumers Need to Know

The UK’s Economic Crime and Corporate Transparency Act is poised to bring significant changes to corporate law, aiming to increase transparency, improve data quality, and provide stronger protections for both businesses and consumers. These reforms will unfold over the next two years, impacting how companies report data, verify identities, and manage their operational and financial disclosures. Here’s a breakdown of what’s coming, when to expect it, and how it will affect data consumers and corporate transparency.

March 2024

Enhanced Data Quality and Accountability

Companies House will gain new powers to question and verify company data to ensure greater accuracy. These new measures will include:

• Data Verification: Companies House can now query and amend suspicious information submitted by companies, such as registered office addresses and officer appointments, strengthening data integrity.
• Naming Regulations: Stricter rules on company names will prevent misleading or fraudulent business names.
• Lawful Purpose Statements: All companies must state a lawful purpose for their business activities, which adds a layer of accountability.

Impact on Data Consumers: For investors, partners, and data analysts, these measures mean access to more reliable, verified information when assessing potential business relationships or investments. This reduces the risk of engaging with entities that may present fraudulent or incomplete data.

New Confirmation Statement Requirements

Companies will be required to submit a registered email address and confirm lawful intentions for their business activities. This update will make it easier for regulators and consumers to track company authenticity.

Impact on Data Consumers: For those reviewing business data, the additional registration and lawful purpose information will help filter out inactive or non-compliant businesses, enabling more accurate evaluations of company activities and legitimacy.

Enhanced Enforcement and Data-Sharing Powers

Companies House and other regulatory bodies will now have increased data-sharing and investigative powers, allowing closer collaboration with law enforcement on matters of economic crime and fraud.

Impact on Data Consumers: This provides another layer of confidence in the regulatory landscape. With better enforcement, data consumers can trust that information provided by Companies House is not only accurate but also thoroughly vetted, reducing the risk of engaging with companies involved in illicit activities.

May 2024

Adjusted Fee Structures

To support these new requirements, Companies House will implement a new fee structure that reflects the enhanced services and regulatory oversight. This change will cover the costs associated with stricter verification processes and data quality control.

Impact on Data Consumers: Though this doesn’t directly affect data consumers, increased fees might lead to higher compliance costs for companies, potentially affecting service prices or business costs.

Spring 2025

Identity Verification

One of the most critical aspects of the reform is phased identity verification. This will require all directors, shareholders, and anyone in control of a company to go through identity verification to improve transparency and reduce fraud.

Impact on Data Consumers: This will bring a new level of trust to corporate data, as consumers and investors can be more confident in knowing the verified identities of those behind the companies. This is especially beneficial for anyone conducting due diligence on potential business partners.

Summer 2025

Enhanced Data Privacy Protections

Individuals will gain the right to request suppression of certain personal details in historical records, balancing transparency with personal privacy rights. This ensures that sensitive personal data doesn’t become vulnerable to misuse.

Impact on Data Consumers: For general data users, this change ensures that while corporate data remains accessible, personal data privacy is protected. This reduces the likelihood of identity theft or personal information misuse while still providing access to critical business data.

Spring 2026

Limited Partnerships Reforms

The act introduces reforms for limited partnerships, which must now submit data through authorised providers and disclose additional information regarding their operations. This includes more stringent filing requirements and disclosure of company controllers.

Impact on Data Consumers: Investors and stakeholders will have a clearer understanding of limited partnerships’ structures and ownership, providing a more comprehensive picture of who’s involved in partnerships.

Ongoing

Ownership Transparency

New rules will require companies to provide detailed information on shareholders and impose restrictions on corporate directors. This helps clarify ownership structures and prevent abuse by shell companies or hidden beneficiaries.

Impact on Data Consumers: This greater ownership transparency helps investors assess potential risks associated with business ties to complex ownership structures. Knowing who truly holds control in a company is vital for those seeking transparency.

Account Filing Changes

The act encourages companies to move towards digital filing of accounts and offers simplified filing options for small businesses, making financial data more accessible and standardised.

Impact on Data Consumers: As more companies switch to digital filing, consumers can expect quicker access to company accounts in standardised formats, aiding more efficient analysis and comparison across companies.

The Big Picture: What It All Means for Data Consumers

The Economic Crime and Corporate Transparency Act reflects a comprehensive drive towards cleaner, more reliable data, aiming to restore trust in corporate reporting while balancing privacy and transparency. For data consumers—whether investors, analysts, or business partners—these changes mean greater confidence in the accuracy and completeness of corporate data.

• Trust in Business Data: Verified identities, enhanced data quality, and clearer ownership structures give data consumers more confidence in corporate profiles.
• Reduced Fraud and Risk: Stricter regulations and enforcement powers make it harder for fraudulent or shell companies to operate, protecting legitimate businesses and stakeholders.
• Privacy Balance: With new data suppression options, personal privacy remains safeguarded without sacrificing essential transparency.

These reforms are anticipated to strengthen the corporate data landscape, enabling Doorda to provide higher-quality data directly from Companies House. Doorda will be closely monitoring and implementing these updates as they roll out.

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Further reading

Companies House Official Guidance: Provides comprehensive details on the changes and their implementation timelines.

UK Government Factsheets: Offers in-depth explanations of the Act’s various measures.

Legislation.gov.uk: Access the full text of the Economic Crime and Corporate Transparency Act 2023.

The Law Society’s Overview: Summarises the Act’s key provisions and their implications for legal practitioners.

All the above changes will be integrated into our Business product as they roll out.