The introduction of The Economic Crime and Corporate Transparency Act 2023 (ECCTA) marks a significant shift in regulatory compliance. It impacts businesses in the United Kingdom, with corporate entities now needing to be more transparent than ever before.
Your business must take action now to ensure it stays compliant with the law.
In this article we'll look at:
- What The Economic Crime and Transparency Act (ECCTA) is
- How to comply with The ECCTA
- Consequences of non-compliance with the ECCTA
- How Gatekeeper prepares businesses for ECCTA
What is The Economic Crime and Corporate Transparency Act (ECCTA)?
The Economic Crime and Corporate Transparency Act 2023 is a regulation designed to enhance corporate transparency and combat money laundering, financial fraud, and corruption.
This ECCTA imposes stringent requirements on businesses, demanding greater oversight and accountability in their financial and contractual dealings.
The Act empowers Companies House with greater oversight of company information, enforces stricter identification measures for directors and significant persons and heightens accountability for larger organisations.
It also introduces reforms in the operation of UK Limited Partnerships and strengthens regulations around the misuse of cryptocurrencies.
One of the key aims of ECCTA is to make it easier to identify and prosecute companies, partnerships and senior managers for economic offences and failure to prevent fraud.
This will apply to larger organisations that meet 2 of the following 3 thresholds:
(i) More than 250 employees;
(ii) more than GBP 36 million turnover;
and/or (iii) assets of more than GBP 18 million.
How to comply with The Economic Crime and Corporate Transparency Act
To comply with ECCTA, your business will need to:
- Disclose more detailed information about beneficial owners. This enhanced transparency prevents shell companies from being used for illegal activities.
- Conduct thorough due diligence on vendors and partners to enhance checks on money laundering and financial fraud.
- Improve financial reporting to ensure all records are accurate.
- Provide regulatory authorities with increased power to investigate and enforce the act.
- Regularly audit and monitor vendor and contract compliance to demonstrate ongoing adherence to the new standards.
What happens if your business doesn’t comply?
Non-compliance with ECCTA can lead to significant legal, financial, operational, and reputational consequences for your business. Consequences of non-compliance include:
- Financial penalties: Heavy fines based on the severity of the violation. Companies House will be able to impose fines up to a maximum of £10,000.
- Legal repercussions: Criminal charges and potential imprisonment for serious offences such as money laundering, fraud or corruption.
- Operational disruptions: Actions like asset freezing or business operation suspension.
- Reputational damage: Loss of trust among customers, vendors, investors, and the public due to public disclosure.
- Regulatory oversight: Increased monitoring and frequent audits leading to higher operational costs.
- Limited market access: Restrictions or prohibitions from certain markets or sectors.
- Financing Impacts: Stricter lending conditions or denial of financing from banks.
How can Gatekeeper help you?
The Economic Crime and Corporate Transparency Act 2023 presents both challenges and opportunities for Legal and Procurement professionals.
Embracing these changes means enhancing your due diligence processes, strengthening vendor relationships, and ensuring all contractual agreements are transparent and compliant.
Complying with ECCTA is not just about avoiding penalties. It's an opportunity to elevate your operational integrity and improve your vendor and contract management processes.
Gatekeeper, the leading vendor and contract lifecycle management (VCLM) platform, is your ally in this new regulatory environment. We offer:
| Feature | How Gatekeeper Helps in The Economic Crime and Corporate Transparency Act Compliance |
|---|---|
| Vendor and Contract Repository | This centralised repository makes it easier to manage and access electronic contracts and vendor information. It aids in compliance by ensuring that all contracts are stored securely and can be retrieved easily, improving visibility. |
| Risk Mitigation Workflows | These workflows can be tailored via our Workflow Engine to identify and mitigate risks associated with electronic transactions and contract management. By proactively managing risks, businesses can ensure they remain in compliance with the legal requirements of ECCTA. |
| Auditable History | Maintaining an auditable history of all actions taken on contracts and vendor interactions ensures transparency and accountability. This feature is crucial for ECCTA compliance, as it provides a clear trail of electronic transactions and amendments, which is necessary for legal validation and dispute resolution. |
| Finance Compliance Alerts (Market IQ Suite) | Market IQ, leveraging Creditsafe integration, provides critical insights into vendor risk profiles, including changes in credit scores and limits. This is vital for compliance with The Economic Crime and Corporate Transparency Act 2023, as it ensures businesses are aware of potential financial risks and vulnerabilities in their vendor network. Such proactive risk management aligns with the act's emphasis on transparency and accountability in financial and corporate dealings. |
| Vendor Onboarding via our Vendor Portal | Our dedicated portal for vendor onboarding (and other vendor processes) enforces consistent, compliant processes for onboarding new vendors, ensuring ongoing maintenance of up-to-date records. The use of this portal significantly simplifies the administrative workload involved in vendor management, making the onboarding process more efficient and compliant. |
| Mandated Due Diligence Questionnaires | These questionnaires are an integral part of the risk management and compliance process, ensuring that vendors meet the necessary regulatory standards. They are customisable, allowing businesses to tailor the questions to their specific requirements. This process not only helps in mitigating risks but also ensures adherence to ECCTA across your supply chain. |
Conclusion
With Gatekeeper, you’re not just complying with the new law; you’re setting a new standard for transparency and integrity in your business.
Safeguard compliance every step of the way while you improve your vendor and contract management processes.
Ready to navigate the complexities of The Economic Crime and Corporate Transparency Act with confidence?
Contact us today to learn more about Gatekeeper and take the first step towards complying with this new regulation.
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