The Economic Crime and Corporate Transparency Bill, aimed at preventing the abuse of UK corporate structures and tackling economic crime, received Royal Assent and was published on 26 October 2023.

Our Companies House reform three-part series has previously highlighted key details from the new legislation including guidance on what the new identity verification means for directors and controlling shareholders of UK companies and changes to the role of the Companies Registrar.

The final part in our series examined the new offence of failing to prevent fraud (with a defence of adequate procedures in place to prevent fraud). The House of Commons rejected the House of Lords’ amendment, and the Act will only apply to large organisations which are defined as:

1. A body that satisfies two or more of the following conditions in the financial year which precedes the year of the offence:

• A turnover of more than £36 million
• A balance sheet total of more than £18 million
• More than 250 employees

or

2. A parent undertaking of a group where the group satisfies two or more of the following conditions in the financial year which precedes the year of the offence:

• An aggregate turnover of more than £36 million net, or £43.2 million gross
• An aggregate balance sheet total of more than £18 million net, or £21.6 million gross
• More than 250 employees

The UK Government is expected to publish guidance to set out what would be considered reasonable fraud prevention procedures, clarifying the expectations on businesses within the next couple of months.

In the meantime, companies and partnerships which may be affected by the new law will need to:

• Review their existing policies and risk assessment processes and, if necessary, modify these to mitigate fraud risks;
• Communicate those policies and processes to employees and organise necessary training;
• Review and amend (if necessary) contracts with third parties (e.g. with agents and contractors); and
• Monitor compliance and carry out periodic risk assessment reviews and audit.

Hamlins has the necessary expertise to help with the actions companies and partnerships may need to take outlined above. If you would like a conversation to find out how we might help, please get in touch with Aselle Djumabaeva-Wood.