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Major changes to UK Companies House legislation to curb abuses

UK regulations governing Companies House underwent significant adjustments in an effort to crack down on rampant abuses.

The long-awaited Economic Crime Bill from the UK fundamentally alters how businesses are formed in an effort to rein in systemic abuses.

Anyone who establishes a business in the UK will now need to authenticate their identity in accordance with the Economic Crime and Corporate Transparency Bill.

Additionally, Companies House will be given additional authority to "check, challenge, and decline incorrect or fraudulent information," and its investigative and enforcing capabilities will be strengthened.

The Bill would also tighten the rules for limited partnerships, particularly those created in Scotland for "money laundering and other nefarious purposes," regarding registration and transparency.

Business Secretary Jacob Rees-Mogg issued a statement in which he said: "We want the UK to be the best place in the world to invest and start a business but we must not allow this openness to be exploited by fraudsters misusing the identities of innocent people, or corrupt elites attempting to disguise their dodgy dealings."

"Via strict enforcement measures, we are telling investors that the UK is open for legitimate business only," he continued.

Suella Braverman, the home secretary, emphasized: "The UK is no home for dirty money. The government has taken unprecedented action to prevent kleptocrats and organised criminals from abusing our open economy, and this Bill will go even further."

In order to stay one step ahead of the criminals determined to keep their illicit assets out of reach, Ms. Braverman stated, "Through this Bill we are giving our law enforcement agencies greater powers and intelligence capabilities."

The Economic Crime Bill also aims to facilitate the seizure, freezing, and recovery of cryptocurrency assets by law enforcement organizations like the NCA.

The prior Economic Crime (Transparency and Enforcement) Act, which was enacted earlier this year, will also be expanded upon by the new package.

Director General of the NCA Graeme Biggar commented on the bill, saying: "Domestic and international criminals have for years laundered the proceeds of their crime and corruption by abusing UK company structures, and are increasingly using cryptocurrencies."

"These reforms – long awaited and much welcomed – will help us crack down on both," he continued.

Before becoming law, the Bill must now be discussed and passed by the UK Parliament.

According to Executive Director Susan Hawley of the advocacy organization Spotlight on Corruption, "UK corporate structures have been the vehicle of choice for fraudsters and money launderers all over the globe for years owing to serious weaknesses at Companies House."

Transparency International UK, an anti-corruption organization, expressed support for the Bill but cautioned that the way it is now written might provide loopholes that could be exploited.

"We welcome the priority the Government is giving to much-needed reform of the UK’s company incorporation system," said Duncan Hames, the organization's director of policy.

"Over the years, lax controls on company incorporation has seen thousands of UK firms and partnerships being used to launder the proceeds of corruption," he said, "hundreds of billions of pounds lost all around the world."


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