How will the Economic Crime and Corporate Transparency Act help fight corruption, and does it go far enough?

27 October, 2023 | 8 minute read

Introduced in the wake of Russia’s full-scale invasion of Ukraine, which highlighted the UK’s role as a hub for illicit Russian money, the Economic Crime and Corporate Transparency Act (ECCTA) has finally become law. From our perspective, the key changes, and areas the government could have gone further, are:    

Making it easier to hold big companies to account for economic crime

Perhaps the most significant and transformative change is the historic reform of the “identification doctrine” – the underlying rule for how companies are prosecuted in the UK – for cases involving economic crime. 

It will now be far easier for UK law enforcement to bring prosecutions when large companies have engaged in wrongdoing such as fraud and money laundering. Prosecutors will no longer have to prove that a director both had the intention to commit the crime and the authority from the board to do so – an impossibly high bar that put many large companies beyond the reach of the law.

We strongly welcome this major change for which we have long advocated. The ECCTA also introduced a new “Failure to Prevent” (FTP) Fraud criminal offence which means large companies can be prosecuted for failing to prevent fraud, unless they have reasonable procedures in place that could have prevented it.

Could government have gone further? 

Companies house reform

Another major change in the ECCTA was to the UK’s corporate register: Companies House. Our allies at Transparency International and Open Ownership have long called for an overhaul of the body after UK companies played a key role in several huge money laundering schemes. Companies House will now be empowered to verify the information it receives and receive more investigative and enforcement powers.  

Could government have gone further? 

Empowering legal sector regulators to stop economic crime

The ECCTA also made significant changes to how the legal sector is regulated for economic crime. The Solicitors Regulation Authority (SRA) now has unlimited fining powers for economic crime related wrongdoing, while legal sector regulators have a new regulatory objective to promote the prevention and detection of economic crime. The SRA now also has powers to demand information from regulated firms for the purposes of detecting and preventing economic crime. 

Could government have gone further? 

More powers for law enforcement bodies    

More low-key, but still highly significant, changes in the bill give new powers to  the SFO to use pre-investigative Section 2A powers – which allow them to compel individuals and companies to provide information at a pre-investigation phase – in all cases, not just international bribery cases.  That means the SFO  will be able to use these powers for fraud cases as well as domestic corruption cases. 

The National Crime Agency (NCA) meanwhile will have new powers to obtain information from businesses relating to money laundering and terrorist financing without needing a pre-existing Suspicious Activity Report (SAR) to have been submitted before an Information Order can be made. This will enhance the UK’s Financial Intelligence Unit’s (housed in the NCA) analytical functions and align it with international standards.

Could government have gone further? 

New anti-SLAPP law

Finally, the ECCTA will make it easier for judges to strike out abusive SLAPP (strategic lawsuit against public participation) lawsuits, which have been used to silence journalists, civil society actors and others when they try to expose wrongdoing, including corruption. The new law also provides cost protections for SLAPP defendants if they lose the case.

Could government have gone further? 

Is the ECCTA enough to make a difference in  the fight against corruption? 

The reforms introduced by the ECCTA are very welcome and potentially very significant. 

With an empowered Companies House and a radical overhaul of the law for holding big companies to account, law enforcement agencies now have some powerful new tools to fight economic crime. 

That is not to say that government should rest on its laurels in the legislative space – the Law Commission has recommended a major upgrade in our domestic corruption laws for example, as well as big changes to the criminal confiscation regime

Government meanwhile has committed to tightening sanctions law by the end of the year to make it easier to prosecute sanctions evasion and potentially seize assets for the benefit of Ukraine. We hope at least some of these measures are included in the King’s Speech on 7 November.    

Laws however are only as good as their enforcement – there’s no point having a fancy sports car if it sits unfuelled and driverless in the garage. 

And while recent commitments in the latest Economic Crime Plan (ECP) and Fraud Strategy to increase law enforcement resourcing for economic crime are welcome, they pale in comparison to what experts, law enforcement and parliamentarians have been calling for to tackle the scale of threat.  

So, ensuring these new powers are effectively enforced requires the government to make UK economic crime law enforcement fit for purpose by: 

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