Economic Crime and Corporate Transparency Act – Quick Guide
If you run a UK company, the Economic Crime and Corporate Transparency Act (ECCTA) is now part of your daily checklist. The law aims to stop fraud, money‑laundering, and hidden ownership by forcing firms to be more open about who owns and controls them. Below you’ll get the basics, why it matters, and what you need to do right now.
Why the Act Was Introduced
Before ECCTA, many businesses could hide real owners behind nominee directors or offshore structures. That made it easy for criminals to move dirty money and for tax evasion to go unnoticed. The government responded with a set of rules that tighten reporting, boost information sharing, and give regulators more power to act fast. In short, the goal is to make it harder for bad actors to hide behind a company.
Key Requirements for Companies
There are three core things every UK‑registered company must do under ECCTA:
- Register Beneficial Owners: You must submit the names, dates of birth, and ownership percentages of anyone who owns 25% or more of the company, or anyone who exercises significant control.
- Maintain Accurate Records: The information you give to Companies House has to stay up to date. If a shareholder’s share drops below the threshold, you still keep a record of the past ownership for five years.
- Report Suspicious Activity: If you spot money‑laundering signs or other economic crimes, you must file a Suspicious Activity Report (SAR) with the National Crime Agency.
Failure to comply can lead to fines of up to £10,000 per day and, in severe cases, criminal prosecution of directors.
Most small‑to‑medium firms find the registration step the biggest hurdle. The good news is that the online portal now guides you through each field, and you can save drafts to finish later.
Practical Tips to Stay Compliant
Here are three simple actions you can start today:
- Do a quick ownership audit: Pull together shareholder agreements, share registers, and any trust documents. Spot anyone who meets the 25% rule and add them to the register.
- Assign a compliance owner: Choose one person—often the finance director or company secretary—to keep the beneficial ownership data current and to handle SARs.
- Use a trusted software tool: Many accounting platforms now integrate with Companies House. They can auto‑populate fields and send reminders when changes occur.
Keep a backup of all documents in a secure cloud folder. If a regulator asks for proof, you’ll have everything at hand.
Remember, the act isn’t just about avoiding penalties. Transparent ownership builds trust with investors, banks, and customers. It also cuts the risk of unknowingly partnering with a shady entity.
In a nutshell, ECCTA makes corporate ownership clearer and economic crime harder to pull off. By registering beneficial owners, keeping records fresh, and reporting suspicious moves, you protect your business and stay on the right side of the law.
