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The new Economic Crime and Corporate Transparency Act became law on 26 October 2023.
The act is wide-ranging and includes significant reforms to Companies House. It has been described by its chief executive Louise Smyth as “without doubt the most significant change for Companies House in our long history.” Those changes include more investigative powers for Companies House, as well as more obligations on directors to provide detailed information on the formation of companies and where there any changes to ownership, control and the directors.
Other changes provide much greater powers to the police, SFO, the National Crime Agency and other enforcement agencies across the UK. Amongst other things these changes provide them with additional powers to compel businesses to hand over documents and provide information in relation to suspected criminal activity, money laundering and terrorist financing.
Additionally, the act has introduced a fundamental change to how companies and other entities such as partnerships cannot be investigated and held liable for the actions of others and how financial crime will be investigated and prosecuted. For the first time in English law a failure to prevent fraud offence has been introduced which extends corporate liability for fraud offences committed by a Company’s senior managers, directors and others with significant control. The act provides a defence for the company if it has what are known as adequate procedures.
There are a great many issues which arise from the act but it’s worth highlighting one other transformative consequence. As UK banks form a central plank of what is known as the regulated sector, these provisions, and a company’s compliance with them, are now critical to a company’s relationship with its banks, and how it operates its accounts. The banking sector is being given an even greater ability to share information and effectively police and monitor the financial sector.
The new legislative landscape will mean that where there is a perceived failure to comply with this legislation, or where there is an investigation, and possibly prosecution, by an enforcement agency such as the police or the SFO against a company and/or some of its employees, consideration will have to be given by the bank as to whether it will allow the company to continue with its existing banking facilities or if the company’s accounts should be closed.
One effect of the change to the statutory environment, and with it a requirement to evidence compliance to both the authorities and potentially the bank, is that a company may be limited in how it deals with these issues. Therefore, to evidence compliance with the act, it may now need to report all such employees and third-party conduct to the police as well as commencing an employee disciplinary process which may result in dismissal.
In summary, what does the failure to prevent fraud offence and extension of corporate liability mean for you and what can you do to prepare?
The only practical difference is that the National Living Wage (NLW) is a higher minimum wage rate for workers aged over 23. The current NLW rate is £10.42 per hour. From 1 April 2024, the NLW rate increases to £11.44 per hour and will be available to workers aged 21 and over. The current 'standard adult’ National Minimum Wage rate for workers aged over 21 will not apply from 1 April 2024 because all workers over 21 will be entitled to the NLW. The NLW is, therefore, simply the highest of the age-related bands of minimum wages.
You do not require an additional permission simply to host a wedding reception. Check the hours on you premises licence to make sure that these cover the times of the reception. If not, you may need to apply for a TEN. If you wish to host the actual marriage on your premises, then you will need to apply for a marriage licence.
This article was first published in Pub & Bar.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.
08 February 2024