Economic Crime and Corporate Transparency Act

The Economic Crime and Corporate Transparency Act has passed through parliament and become law. Find out what this means for solicitors.

The legislation aims to deliver reforms on tackling economic crime and improving transparency over corporate entities.

It follows the Economic Crime (Transparency and Enforcement) Act, which was passed in 2022. The first act:

The provisions

The act introduces:

  • a new regulatory objective into the Legal Services Act 2007 on tackling economic crime
  • reforms to Companies House to prevent the creation of, and shutting down, fraudulent companies
  • reforms to prevent the abuse of limited partnerships
  • additional powers to seize and recover suspected criminal cryptoassets
  • a new 'failure to prevent fraud' offence
  • measures to address strategic lawsuits against public participation (SLAPPs)

Read the UK government's factsheets on the changes

Our view

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 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, and
  • regulatory activity should be transparent, accountable, proportionate and consistent as well as targeted only on cases where action is required

Under the legislation, the Solicitors Regulation Authority (SRA) can now issue unlimited fines for economic crime offences.

"It is important for any solicitor who has committed serious misconduct to be dealt with swiftly," said Law Society president Nick Emmerson.

"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."

We are pleased the legislation 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.

"We worked hard behind-the-scenes to ensure that the reporting requirements for the register of overseas entities (ROE) were not unreasonable and burdensome on our members," Nick said.

"Following close engagement with the government and peers, the update period remains 12 months after the entities' initial entry onto the register.

"We understand why the government is implementing measures on SLAPPs.

"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."

What we did

As the professional body for solicitors, we amplify the powerful collective voice of more than 200,000 solicitors with your diverse experiences and backgrounds, advocating on the issues you've told us matter most.

We worked hard as the legislation made its way through parliament to lobby for important changes on behalf of our members.

Next steps

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