The Economic Crime and Corporate Transparency Act 2023, also called the Economic Crimes Act, was enacted on October 26th, 2023. Its passage marked a major overhaul of the UK government’s approach and addressed an increasing issue in the UK: financial crime.
Since its introduction, the Economic Crime and Corporate Transparency Act has significantly reformed the UK’s corporate landscape and improved transparency. However, like much legislation, the act has changed since its enactment.
At Brown Turner Ross, we acknowledge the importance of staying up to date with legislative changes, so we will outline exactly what the Act means for the UK and the changes made to the legislation as of 2025.
What is The Economic Crime and Transparency Act 2023?
The Economic Crime and Corporate Transparency Act 2023 was introduced to combat economic crimes and improve corporate transparency. Financial misconduct and money laundering are prevalent issues throughout the UK, which is why the enactment of this act was so valuable.
With the UK’s ongoing difficult financial position, the country experienced a rise in opportunists using nefarious means for economic gains, especially with the continuous growth in the use of cryptocurrency, which only emphasised how outdated UK legislation was.
Two years later, the act underwent further adjustments to ensure that it represented the UK’s current economic position, and it is presumed to have further amendments as the UK’s economy evolves.
Section 196
In the past, it was difficult to hold companies accountable for the actions and discrepancies of their employees, even the most senior members of their team.
Previous laws were dependent on the ‘identification principle’, which made it incredibly difficult to pursue legal charges against a company based on the actions of senior management.
Identifying the company’s ‘directing mind and will’ was required before any legal action could be pursued. This consisted of placing an employee who embodied the company’s intentions and was responsible for making high-level decisions or having a hand in the company’s operations. For example, the company could be liable if a CEO were to commit fraud.
This aspect of the legislation made it difficult to pursue any legal routes, as the criteria were too narrow. Most companies did not depend on one individual for their decisions, so it was nearly impossible to identify one liable individual who represented the company as a whole.
The introduction of Section 196 of the Economic Crime and Corporate Transparency Act 2023 broadened this scope. It held companies liable for the actions of senior managers acting within their authority, making it easier to prosecute larger corporations.
The Key Results of the Act
Since its introduction, the act has significantly impacted corporations in the UK. Some results of the introduction of the act include;
New Powers For Companies House
The introduction of the Act considerably strengthened Companies House’s responsibilities and capabilities in the fight against economic crimes. It also played a vital role in increasing transparency within the corporate sector, making it easier to detect and prevent fraudulent practices and illicit activities.
Thanks to the act, Companies House now has the authority to request information from the register and contest filings that seem fraudulent or suspicious. This means that Companies House can now prevent serious economic crimes.
The Impact on Businesses
The Economic Crime and Transparency Act 2023 has had a significant and constantly evolving impact on businesses. Under the act, businesses must now have an appropriate address as their registered office and a registered email to enhance contact with Companies House.
Businesses must now provide more information about their beneficial owners and guarantee that their formation is legitimate and that they will exclusively engage in lawful activities. Non-compliance results in repercussions.
Changes to the Identification Principle
In the past, large corporations relied on the identification principle to dodge accountability. This rule made it hard to hold them responsible for criminal acts within their organisations, effectively shielding companies from allegations or complicity in misconduct, even when they benefited from actions.
The Act enables corporations to be criminally liable for the actions of senior managers if those actions qualify as economic crime offences from the extensive list.
The Introduction of the Failure to Prevent Fraud
Under the enactment of the Economic Crime and Corporate Transparency Act 2023, a new corporate criminal offence of failing to prevent fraud was introduced. This law aims to strengthen measures against financial misconduct by imposing additional responsibilities on corporations to prevent fraudulent activities within their operations.
Strengthening the Powers of Law Enforcement
The act has also strengthened law enforcement’s powers, providing them with new powers to seize cryptoassets during investigations without a prior arrest, which has not previously been outlined.
This means the police can intercept crypto crimes in real-time and seize any suspiciously shared money believed to be illegally earned or distributed.
Strengthening the power of law enforcement, businesses need to stay informed and updated with the latest developments in corporate law to ensure compliance and protect their interests. If you’re unsure where to start when trying to stay up to date, we suggest working with a corporate law solicitor who can guide you.
Updates to The Act in 2025
The act has been in place for almost two years, and aspects of it have been reviewed to ensure that it is operating as it should.
Some aspects of the act have been consolidated, while some have been removed entirely.
Accounts Filing Reform: Paused & Uncertain
When the Economic Crime and Corporate Transparency Act was initially proposed, the government aimed to change how small and micro-entity businesses submit their annual accounts to Companies House.
Initially, small companies were to submit a profit and loss statement and directors’ reports, and this data would have to be filed electronically. This initially created panic for small businesses, with many needing to seek small business advice, which many could not afford.
In July 2025, the government announced that it would scrap this requirement, acknowledging the burden it would have on small businesses by imposing unnecessary costs. Though small businesses are no longer required to file the information, the move to digital-only filing is still set to go ahead in 2027.
Identity Verification for Directors and PSCs
A significant reform introduced by the Act is the implementation of mandatory identity verification (IDV) for all individuals who manage or have ownership interests in companies. This measure aims to enhance transparency and prevent illicit activities such as money laundering and fraud.
IDV can be performed either directly with Companies House or via an Authorised Corporate Service Provider (ACSP), such as a regulated law or accounting firm. Voluntary IDV became available in March 2025, and existing directors and shareholders have already completed the process.
From November 2025, Mandatory IDV will be implemented, requiring new directors and people with significant control to verify their identity before being appointed to the role.
Existing directors have until November 2026 to register, and failure to do so will result in consequences.
The Register of Overseas Entities (ROE) and Trust Transparency
From July 2025, overseas entities must report any ownership changes before registration. Additionally, they will need to provide trust arrangements upon request to enhance transparency.
The requirements aim to improve transparency and accountability in international transactions, ensuring that ownership structures are clear and compliant with regulatory standards.
What Businesses Should Do Now
The Economic Crime and Corporate Transparency Act is already impacting company operations, introducing identity verification, enhanced Companies House enforcement, and new fraud offences. Although the additional filing requirements for small businesses have been removed, directors and owners should proactively verify their information, keep records up to date, and review fraud prevention strategies to maintain compliance.
If you have questions about the effects this act might have on your business or want more details, contact our team today.