New legislation on the horizon to help tackle corporate fraud

There are plans to introduce new legislation in 2023 with the aim of reducing economic crime including corporate fraud and money laundering. The new laws should make it more difficult for businesses to be established and run by fraudsters and lessen the negative impact of financial crime to the economy as a whole.

Every business owner should be conscious of the risk of corporate fraud and the impact that it may have. There are many forms in which fraud can manifest such as identity theft, phishing e-mails and ransomware demands, and businesses need to protect themselves as much as possible, especially during uncertain economic times.

Companies house gaining more powers

The Economic Crime and Corporate Transparency Bill is expected to be passed into law during 2023 and will lead to Companies House gaining more powers to combat economic crime and protect businesses in the UK.

Identity Verification

Companies House is already a key repository of information on incorporated UK companies and their directors. The proposed legislation is designed to make Companies House as more of a gatekeeper of company data rather than a passive recipient. One of the planned measures is to require directors and controllers of companies to have their identities verified. The aim would be to make it more difficult for fraudsters to establish a company anonymously, disguised behind complex ownership structures which conceal the individuals behind the company. At the same time, it is anticipated that individuals will be able to request that information is suppressed from the public register, with the expectation of reducing the misuse of personal data. The financial reporting requirements on small companies are proposed to be increased to improve transparency for those doing business with them.

Increased Assurance

A Menzies icon of a key

The increased regulation should bring about increased assurance, as it will become harder for fraudsters to make use of corporate identities for criminal means. Business owners should have more confidence that their personal information is secure in situations where there is less available publicly. However, despite the crackdown, fraud can and will still occur. Owners and managers must continue to be vigilant and protect their businesses. They should take steps to alleviate risk such as by carrying out due diligence on customers, suppliers and other business partners.

How can you prepare?

Once enacted, it will take time for company directors to become acquainted with the reforms. They will be required to take action, and they may feel an initial strain of further paperwork and administration in addition to their usual business activities.  

The Bill still needs to pass through the final stages and so now is a good time for business owners to familiarise themselves with the changes which may be coming. There is likely to be a resource outlay in complying but, overall, the benefits to the business community in protecting against fraud have to be worth the cost.  


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