Economic Crime and Corporate Transparency Act gains royal assent
The Economic Crime and Corporate Transparency Act has passed through Parliament and become law, meaning solicitors can continue to support the fight against illicit finance.
The new act also includes reforms to Companies House, which will help to improve transparency of UK companies and strengthen our business environment.
“The Law Society worked hard as the legislation made its way through Parliament to lobby for important changes on behalf of our members,” said Law Society of England and Wales president Nick Emmerson.
“We welcome the government’s focus on fighting economic crime and the recognition of the role solicitors play in this area.
“We appreciate the ambition behind adding a regulatory objective* for legal services regulators to uphold the economic crime agenda.
“We were successful in pushing for a clarification of the scope of the new objective, which risked being so wide that it would divert focus away from the areas of real risk.
“At report stage, the minister agreed with many of our points and made clear the regulatory objective will need to be implemented in a targeted and proportionate way. Regulatory activity should also be transparent, accountable, proportionate and consistent as well as targeted only on cases where action is required.”
On the Solicitors Regulation Authority’s (SRA) new fining powers, Nick Emmerson said: “Under the act, the SRA can now issue unlimited fines in relation to economic crime offences.**
“It is important for any solicitor who has committed serious misconduct to be dealt with swiftly. However, we strongly urged the government to carefully consider the proportionality of any further increases to the SRA’s fining powers, given that its fining powers increased from £2,000 to £25,000 as recently as July 2022. There is no evidence that the current fining powers are insufficient.
“Unlimited fines can already be imposed via the independent and ultimate arbiter, the Solicitors Disciplinary Tribunal (SDT), which was established to deal with the most serious cases of misconduct.
“The independent and transparent SDT process has the confidence of both the profession and the public.”
On Companies House reforms, Nick Emmerson added: “We are pleased the act gives Companies House the powers to be more active in preventing the creation of, and shutting down, fraudulent companies.
“These powers should help to give people more confidence that companies have put correct information onto the register.
“We look forward to working with Companies House to make sure that the powers are implemented in a way that is effective in minimising fraud, but at the same time does not put onerous burdens onto legitimate businesses.”
On the register of overseas entities, Nick Emmerson said: “We worked hard behind-the-scenes to ensure that the reporting requirements for the new register of overseas entities were not unreasonable and burdensome on our members.
“Following close engagement with the government and peers, the update period remains 12 months after the entities’ initial entry onto the register.”
On strategic lawsuits against public participation (SLAPPs), Nick Emmerson concluded: “We understand why the government is implementing these measures. However, as only cases related to economic crime are covered, this means that some claimants may still use SLAPPs to stifle scrutiny. There are weaknesses in the current provisions that will need to be addressed in further legislation.”
Notes to editors
*The new regulatory objective focuses on promoting and preventing the detection of economic crime. The changes will affirm the duties of regulators and the regulated communities to uphold the economic crime regime.
**Prior to the act gaining royal assent, the SRA was subject to a statutory limit of £25,000.
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