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The Strategic Scoop #4
June 14, 2024

Welcome to issue #4 of the Strategic Scoop, your fortnightly one-stop for all the latest guidance and information available in and around the world of law and business, keeping you compliant so you can keep ahead in an advantageous way. In this issue, we will be taking a closer look at the latest report on the Economic Crime and Corporate Transparency Act 2023 (ECCTA) and the important updates on the Register of Overseas Entities. With important reforms on the way affecting Anti-Money Laundering and other facets of business worldwide, it is essential to learn as much as possible about the changes ahead of time. With the information provided below, you can gather all the facts crucial to understanding the Act and its implementation. Throughout, we will provide you with as much guidance as possible, offering support where necessary alongside proactive solutions that will help keep your firm on its upward trajectory towards further success.  

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The ECCTA: Explained

The reforms set out in the Economic Crime and Corporate Transparency Act White Paper will contribute to three key Government priorities:

Boosting enterprise: The companies register is an essential element of the UK’s information architecture. Reform aims to make it more reliable and usable, thus helping businesses across the UK economy make more informed decisions about their creditors and suppliers.

Protecting individuals and businesses from fraud: this transnational threat against individuals and businesses has grown rapidly to become one of the most prevalent crimes globally. The Home Secretary has recently secured a new international agreement with world leaders to tackle fraud at the world’s first Global Fraud Summit, which happened in March 2024.

National security, anti-corruption and organised crime: Recent years have seen a dramatic increase in reports of thousands of UK companies and partnerships being misused by international money laundering networks. The reforms aim to help knuckle down on organised criminals, kleptocrats and terrorists who use opaque companies to abuse our financial system and democracy.

Regardless, the threat of economic crime continues to grow tenfold. Fraud accounted for an estimated 41% of all crime experienced by adults in England and Wales in the year ending September 2022. Register reform, alongside Companies House’s role in the second Economic Crime Plan, will help stomp out crime, protect our national security, and support the UK’s legitimate economic growth. Companies House has been investing in new ways to prepare for the implementation of the reforms as part of their wider transformation programme. This includes transforming their systems, services and structures. The government has made available multiple-year funding of £19 million awarded via the Economic Crime Levy for new intelligence cells in Companies House and the Insolvency Service (INSS), allowing both agencies to plan to further improve upon their Anti-Money Laundering work.

How Can TSP Help?

In an ever-progressing IT world where new products and services are constantly being brought into the sector, it is important to be knowledgeable about the threats to your firm. Cybercriminals use various methods to steal your firm’s data, including phishing, malware and hacking.

Our partners have a deep understanding of how best to ensure your firm’s protection online.

If you would like to learn more about how TSP can help protect your firm, please click here.

The ECCTA: The Six Stages

Core powers came into force on 4 March 2024, with Companies House putting them into immediate effect. This is merely the first step in a major implementation programme, and over the next few years, new requirements will be introduced. These changes will aim to eventually level the playing field for all businesses, ensuring the UK’s open economy remains a world class centre for businesses to grow.

The Economic Crime and Corporate Transparency Act 2023 follows the Economic Crime Transparency and Enforcement Act 2022, which similarly sought to confront the threat of illicit finance whilst maintaining the ease of doing business for legitimate commerce.

The Act is made up of six parts:

1) Dealing with amendments to the Companies Act 2006 to reform Companies House’s processes and furnish the Registrars with new statutory functions and objectives.

2) Reforming to bring the law applicable to limited partnerships to bring it up to date and in greater alignment with the law applicable to companies.

3) Introduction of new provisions relating to the Register of Overseas Entities, which was introduced by the earlier 2022 Act.

4) Make changes to the law relating to the seizure of crypto assets.

5) Make further reforms to the legal framework that makes up the anti-money laundering regime, and

6) the last contains general provisions.

We plan to lay further regulations throughout 2024, with a third tranche expected before the summer, which will include regulations to:

• Specify certain insolvency Office Holders with whom the Registrar may share targeted information under specific circumstances. The regulations aim to support those Office Holders with the exercise of their public functions.

• Enable individuals to “protect” their usual residential address where it appears on the companies register in more cases than is currently possible. This includes certain cases in which a usual residential address is used as a registered office address. This means the Registrar must not display the address publicly.

• Set out the procedure for identity verification via Companies House or via Authorised Corporate Service Providers (ACSPs), along with the legal test that must be met to qualify as an individual whose identity is verified, and the framework for the suspension and deauthorisation of ACSPs.

• Enable Ministers to designate persons for the purposes of director disqualification sanctions in accordance with the designation process established by the Sanctions and Anti-Money Laundering Act 2018. A designated person subject to director disqualification sanctions will commit an offence if they act as a director of a company or directly or indirectly take part in the management, formation or promotion of a company.

• Expand the Register of Overseas Entities (ROE) protection regime so any individual whose information may be published or otherwise disclosed in connection with the ROE can apply for that information to be protected from the public. This will allow individuals such as parties to a trust (settlors, trustees, beneficiaries etc), minors or people who lack capacity to have their information protected.

• Set out information on who and how to apply for access to trust information that is suppressed from public inspection and held on the ROE.

• Require overseas entities that have a beneficial owner that is another legal entity subject to its own disclosure requirements, to provide Companies House with more information about where ownership and control particulars of the legal entity can be found.

Get In Touch

With further reforms underway for AML regulations, it is essential to ensure you firm is doing everything it possibly can to stay compliant whilst making preparations to ensure the firm can evidence it.

Should you have any questions whatsoever on processes required to evidence compliance with AML regulations, or believe your firm may benefit from our packaged services, please click here.

IMPORTANT UPDATES ON:

The Register of Overseas Entities

Companies House performs two vital functions designed to assist the UK’s strong and transparent business environment. It facilitates the creation of limited companies and an array of other legal entities, which are vital cornerstones of the modern economy. It also provides information about those entities on behalf of investors, finance providers and other creditors, government agencies, and the general public at large. Above all, this is to promote transparency.

Companies must provide the Registrars of Companies with information on their ownership and financial position. This is an important component of sufficient governance for businesses within the UK. However, by 2019, there was a call for reforming the role and functions of Companies House. This was both to generate opportunities to support law-abiding businesses and to further contend with wrongdoers. A consultation was run that year, and in 2020, the government committed itself to reform.

The Register of Overseas Entities (ROE) is essential to the government’s strategy to tackle global economic crime and strengthen the UK’s reputation as a country where legitimate businesses can thrive. The register is the first of its kind and builds upon the UK’s global leadership in contending with corruption. The aim of the register is to increase transparency and reveal in greater clarity the beneficial owners of overseas entities that own land or property in the UK.

The register was introduced via the Economic Crime Transparency and Enforcement Act (ECTEA) and received Royal Assent on 1 March 2022, coming into force in the UK on 1 August 2022. Overseas entities who already owned property or land in the UK needed to register within a six-month transition period. Since 01 August 2023, every overseas entity that has registered must file an update statement, with more than 23,900 update statements already having been filed so far.

The ECCTA now features amendments and adjustments to the previous legislation that will bring the requirements for ROE into line with the new requirements for companies. For example, the application of the requirements around identity verification and the registrars’ new powers will apply to ROE.

The ECCTA also includes provisions associated with access to trust data in addition to the introduction of an associated protection regime. Overseas entities that have not registered with Companies House, or have failed to comply with the updating duty, will now face restrictions on selling, transferring, leasing, or raising charges against their property or land.

Overseas entities can also not buy any new UK property or land without an Overseas Entity ID. Companies House continues to review information on the register thoroughly, working with the UK Land Registry and other agencies to identify those who have failed to comply with the obligations.

The register has had a monumental impact since it was launched, with 30,000 overseas entities registered out of the estimated 32,000, with the data on the register having been accessed more than a million times. From 27 December 2023 to 21 February 2024, the Government consulted on the transparency of land ownership, where trusts are involved in the ownership structure. It also sought specific views on options to widen access to trust information held on the Register of Overseas Entities and more general views on how the ownership of land that involves trusts can be made more transparent.

To read our article concerning Companies House’s introduction of Identity Verification, click here.

Compliance Enforced

Companies House guidance on the approach to enforcement was published in July 2023 to improve and guide compliance with the Register of Overseas Entities. Where help and advice do not secure compliance with regulatory requirements, Companies House uses a consistent and thorough approach to enforcement.

This includes, where necessary:

• Restrictions on properties

• Issuing civil financial penalties

• Prosecution of criminal activity.

Companies House take account of and balance:

• The risk posed to people and the economy

• The seriousness of the breach of the law

• The impact on the economy, people or the integrity of the register

• The cost and benefit of taking enforcement action and whether it is in the public interest.

Resources have been prioritised foremostly to consider intelligence, focusing on offences where there has been persistent, repeated, and wilful non-compliance. However, many breaches also occur out of ignorance about current regulations.

To read the full ECCTA’s White Paper and more information on progress of the Corporate transparency and register reform, click here.

What Does TSP Say?

“The Register of Overseas Entitles has helped law firms with the CDD process as it states the beneficial owners. It can be seen as an aid to the CDD process for law firms.” – Anjana Mepani

Anjana Mepani, a compliance manager here at the Strategic Partner, is one of a large staff of experts we employ to give our clients the benefit of as much industry knowledge as possible. If you would like to consult a member of our team, don’t hesitate to contact us via the information provided at the bottom.

To read the full article on the Register of Overseas Entities Updates, click here.

SCAM ALERTS

Beware: Scammers Misusing the Company Name ‘Addleshaw Goddard LLP’

The SRA has stated that an email has been sent from an individual falsely claiming to be “Rebecca Hickman,” “Lawyer/Debt Collection Litigation Counsel” at Addleshaw Goddard LLP. The email refers to a false unpaid invoice and requests that payment is made to avoid any legal action.

The email was sent using the email address ‘rebeccahickman@addleshawsgoddardllp.com’. The email domain is very similar to that of the genuine firm’s email domain, with an additional “s” inserted between “Addleshaw” and “Goddard”. The email also provided the telephone number: “0203 290 7832”.

Any business or transaction through the email ‘rebeccahickman@addleshawsgoddardllp.com’ is not undertaken by a firm or individual authorised and regulated by the SRA.

Addleshaw Goddard LLP is a law firm authorised and regulated by the SRA and the Law Society of Scotland. The head office in England is based at Milton Gate, 60 Chiswell Street, London EC1Y 4AG. The genuine telephone number is 02076064390. The genuine email domain is @addleshawgoddard.com.

The SRA authorises and regulates a genuine solicitor called Rebecca Hickman who is an employee of Addleshaw Goddard LLP.

Emails Sent Misusing the LinkLaters LLP Name

Emails have been sent to members of the public from an individual claiming to be a staff member from “Linklaters” in relation to supposed outstanding invoice.

The email used the domain ‘@linklateradvcom.onmicrosoft.com’.

Any business or transactions through the email domain ‘@linklateradvcom.onmicrosoft.com’ are not undertaken by a firm or individual authorised and regulated by the SRA.

The SRA authorises and regulates a genuine firm of solicitors called Linklaters LLP. The real firm’s head office is at One Silk Street, London EC2 8HQ. The firm’s real email domains end with @linklaters.com.

Scam Letters Misusing the Letterhead of Ellisons Legal LLP

The SRA has stated on their website that correspondence has been sent to an energy company, falsely purporting to be from “Guy Longhurst” of “Ellisons Legal LLP”. The letter appears to be intended as verification from Ellisons Legal LLP of a lease agreement between a Landlord and Tenant.

The letter uses the genuine details of the firm and a letterhead which is similar to that of a real firm. The fake letterhead, however, does not include the firm’s commemoration logo or details of all of the firm’s offices.

The SRA authorises and regulates a real firm called Ellisons Legal LLP (SRA ID: 8001031). The firm’s head office is at Stedman Chambers, 43 Head Street, Colchester, CO1 1NH with a contact number of 01206764477 and a website of www.ellisonssolicitors.com.

The firm also has a branch office at 115 New London Road, Chelmsford, CM2 0QT, the number: 01245847636.

The SRA authorises and regulates a genuine solicitor called Guy Wanham Longhurst, who is a solicitor/member at Ellisons Legal LLP.

Scammers Misuse the Company Name Cheshire Estate & Legal Limited

The SRA has stated on their website that an email has been sent from an individual claiming to be “Chloe Hendricks” from “Forensics Investigation Department” from a genuine firm of solicitors in relation to recovery of funds or assets lost due to fraudsters/scammers.

The firm claims to deal with Fraud Risk Assessments, Financial Fraud, Corporate Fraud, Cyber Fraud, Employee Fraud Investigations, Due Diligence and Background Checks, Fraud Prevention Training and Consulting.

The email was sent from the email address ‘chloe.h@celsolicitors.us’.

Any business or transactions through ‘chloe.h@celsolicitors.us’ is not undertaken by an individual or firm of solicitors authorised and regulated by the SRA.

The SRA authorises and regulates an authentic firm of solicitors called Cheshire Estate & Legal Limited trading as ‘CEL Solicitors’, whose address is 12th Floor, 20 Chapel Street, Liverpool, L3 9AG. The SRA ID is 633955. The email domain used by the firm is @celsolicitors.co.uk.

I’ve Been Contacted
What are the next steps?

When a firm’s or individual’s identity has been copied (or cloned), due diligence is necessary. If you receive correspondence claiming to be from the above firm(s) or individual(s), or have received similar information from sources you believe might be suspicious, you should conduct your own due diligence by checking the authenticity of the correspondence by contacting the law firm directly by reliable and established means.

You can also contact the SRA directly to find out if individuals or firms are regulated and authorised by the SRA and verify an individual’s or firm’s practising details. Other verification methods, such as checking public records (e.g. telephone directories and company records) may be required in other circumstances.

Get in Touch with
The Strategic Partner

TSP are always at hand to provide tailored guidance to help you make the most informed and beneficial decisions. Helping you understand the recurrent regulatory shifts and working with you to provide solutions to any problems that may occur as a result is something we are both equipped and prepared to assist you with. With our team of professional specialists and our renowned legal expertise, we can work with your firm to always ensure you are never left unprepared in the wake of legal changes.

Contact Us

That’s all from us at TSP for another fortnight. Issue four of The Strategic Scoop will be available on 14 June, yet should you require any further information or support or would like to learn more about any of what you have read in this issue, please don’t hesitate to contact us via the information below. We will always be happy to hear from you.

For more information on how we can help, call our consultants on 0203 9119710 or email us at info@thestrategicpartner.co.uk

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