- 31 July 2025
New research from Vistra, a professional services consultancy, has revealed that only 28% of the UK company directors who were surveyed feel ready for the Economic Crime and Corporate Transparency Act (ECCTA). Vistra surveyed 100 company directors and found that 39% of them were unaware of the ECCTA deadlines, despite the fact that the “Failure to Prevent Fraud" (FTPF) offence comes into effect in a few weeks time, on 1 September.
Amongst smaller businesses, 83% of directors stated that they had no ID-check process in place, and fewer than half knew who their “persons of significant control” were. Meanwhile, according to the latest data from Companies House, of the estimated 7 million people required to verify their identity by the Act, only about 250,000, or under 4%, have done so to date.
While these figures may seem concerning, they are perhaps understandable given that the requirements have not yet come into force. It will be instructive to see how this picture changes over the coming year as deadlines approach. But it is never too early to start preparing the ground and this is what most governance professionals will be doing.
ECCTA was introduced in order to combat economic crime and tackle the abuse of UK corporate structures. London's status as a global financial centre has made the UK an attractive haven for illicit finance, including tax evasion, money laundering and sanctions evasion. The National Crime Agency (NCA) estimates that more than £100 billion is laundered through or within the UK each year and ECCTA aims to counter this growing trend by improving transparency.
The Act received Royal Assent on 26 October 2023, but its reforms are coming into force in a phased way, to allow organisations and individuals time for implementation and also to facilitate the secondary legislation that will provide Companies House with the additional powers it needs to enforce the new rules.
ECCTA is a major reform, probably the greatest change to the way Companies House operates since it was created in 1844. The Act introduces several new legal requirements and many new acronyms such as “IDV” and “FTPF”.
Mandatory ID verification (IDV) comes in for new appointments and incorporations from autumn 2025 (exact date yet to be announced), which also marks the start of a 12-month transition period for existing directors, LLP members, and PSCs to complete ID verification. Under ECCTA, it will be a criminal offence, punishable by a fine, for a director who has not had their ID verified to act as a director. The Government has published comprehensive guidance on IDV which can be found here. IDV can already be undertaken voluntarily – that is what the 250,000 who have verified their identity to date have done. The system is fairly simple for UK residents, but may be more complex for directors and PSCs resident abroad.
In addition to IDV, large organisations are also about to become liable to the Failure to Prevent Fraud" (FTPF) offence, which comes into effect on 1 September 2025. This new offence means that large organisations may be held criminally liable where an employee, agent, subsidiary, or other “associated person” commits a fraud intending to benefit the organisation. The offence is a strict liability one, meaning that there is no need to show complicity or even knowledge of directors or senior management. The UK government issued guidance on 6 November 2024 on what constitutes reasonable fraud preventative procedures. This offence only applies to firms which meet two of three of the following criteria: more than 250 employees, more than £18 million in total assets, and more than £36 million turnover.
Nick Ephgrave, Director of the Serious Fraud Office (SFO), has commented that the SFO is “very, very keen” to bring charges against companies under the new FTPF offence, adding that “We’re telling [companies] how to avoid getting trouble” and “come September, if they haven’t sorted themselves out, we’re coming after them.”
While CGI supports ECCTA, the Act does create new hazards for companies and directors. Failing to verify will have serious consequences. It will be a criminal offence for individuals to act as directors while unverified. And companies will commit a criminal offence if they allow unverified directors to act. For larger companies the risks of falling foul of ECCTA are even greater, as organisations which “fail to prevent fraud” face the prospect of unlimited fines.
Peter Swabey, Policy & Research Director, commented:
“ECCTA is an important element in the UK’s fight against economic crime and the changes it brings about are, some might say, long overdue.
But businesses and their boards do not need to face this challenge alone. Chartered governance professionals and company secretaries are uniquely qualified to guide companies through these reforms. They understand the regulatory landscape, can embed the processes necessary to meet statutory requirements, and help boards respond confidently to new duties around fraud prevention and identity verification.
Many of these businesses, certainly the larger ones, will already have a governance professional proving qualified expert support to their board. As enforcement steps up and penalties for non-compliance become more serious, the case for investing in governance expertise becomes undeniable. Our members provide the assurance and practical leadership that organisations of all sizes now need, not just to comply, but to operate with transparency, integrity and resilience.”