ECCTA Legislation Alert, UK Whistleblowing legislation, Safecall Ltd

ECCTA legislation might not be new, but there are some significant – and important – changes coming into effect this year that companies with a presence in the UK need to be aware of. Let’s take a look…

What is ECCTA? A short reminder

Passed into law in October 2023, the Economic Crime and Corporate Transparency Act (ECCTA) marks a significant milestone in the UK’s ongoing efforts to combat economic crime and enhance transparency in the corporate sector (read more in our full legislation summary).

One of the main drivers behind the introduction of ECCTA is the growing need to reduce the burden of fraud, which is estimated to account for more than 40% of all crime in England and Wales, costing society a whopping £6.8m each year.

What ECCTA legislation changes are coming into force in 2025?

Many of the changes required by ECCTA have already been implemented. Two further changes, however, are coming into effect from September this year:

ID verification will become mandatory for directors of UK companies.

A new ‘failure to prevent fraud’ offence will be introduced

ID verification

Recognising the pivotal role that Companies House plays in maintaining the integrity of the UK’s corporate register, ECCTA legislates that, from 1^st September 2025, ID verification will become a mandatory part of company incorporation and new appointments of directors or PSCs (persons with significant control).

This date will also mark the start of a 12-month transitional period for the approximately seven million existing directors across the UK who will need to ensure their identity is verified by their company’s next confirmation statement.

Although ID verification can be done via Companies House, the coordination efforts required will, no doubt, prove burdensome for many companies and – with failure to comply carrying the risk of various penalties, including criminal proceedings and unlimited fines – this is something that no company will want to fall foul of.

Fortunately, the Act also states that ID verification and filing of documents with Companies House can be done by an Authorised Corporate Service Provider (ACSP).

Find out how we can help with ID verification

Failure to prevent fraud offence

This is a big one – and one that Safecall, as whistleblowing experts, welcome with open arms!

The introduction of the new and eagerly anticipated failure to prevent fraud offence is designed to drive a real change in behaviours – and this is a hugely positive step.

Previously, corporate liability for fraud would have required evidence of wrongdoing at a senior level. From September 2025, however, organisations may find themselves in hot water if they are unable to demonstrate that they have taken reasonable steps to prevent fraud in the first place.

Where will the Economic Crime and Corporate Transparency Act 2023 apply?

The new failure to prevent fraud offence will apply where the alleged fraud – or part of it – has taken place, where there are victims, or where there has been a gain in the UK.

The offence is also limited – initially, at least – to ‘large organisations’ who meet two or more of following criteria in the year that the alleged fraud took place:

Over 250 employees

A turnover of £36m or more

Total assets in excess of £18m

While smaller businesses will not be punished by the offence straight away, we would advise any companies operating in the UK market to abide by the same rules as a matter of best practice – this will also ensure that they are compliant when the offence is, no doubt inevitably, later extended to include them.

The growing importance of whistleblowing in demonstrating prevention of fraud

One of the key things, referenced repeatedly in the Home Office’s November 2024 guidance on preventing fraud, is whistleblowing.

The new failure to prevent fraud offence introduced by ECCTA means that it is imperative – arguably more so than ever before – that organisations have robust whistleblowing programmes in place so that staff can report concerns of wrongdoing, that they can be thoroughly investigated, and that senior management are aware of any trends or patterns that may indicate potential risks.

Well, we always knew that whistleblowing was important – right?!

What should organisations do next?

Make sure that whistleblowing frameworks are in place and ‘fit for purpose’ – fraud is most often uncovered through tip-offs so having systems and procedures in place that allow staff to speak up when they become aware of any wrongdoings is essential. Ensuring anonymity, confidentiality, transparency and guaranteeing whistleblower protection are all important factors to consider.

Make sure senior management have visibility – it’s not just about having ‘fit for purpose’ whistleblowing frameworks in place. It’s important, too, that organisations think about how data is being collated and shared with senior management so that trends, patterns and – ultimately – risks can be identified.

Think about how concerns are investigated – once concerns have been captured, they need to be thoroughly investigated. We know, through our recent research, that concerns are often raised with line managers, and they may not have the experience – or indeed the time, confidence or budget – needed to properly manage subsequent investigations. With so much riding on them, this could prove to be a costly mistake!

Train, train, and train again – whistleblowing isn’t something that is front of mind for most employees, so regular training, communication and promotion of your organisation’s whistleblowing policies are key.

There’s always room for improvement – whistleblowing policies need to be reviewed and updated regularly in response to regulatory changes and emerging risks, as well as whistleblowing incidents across the organisation. Regular audits and anonymous employee surveys can help here.

For more information see our legislation summary:

The Economic Crime and Corporate Transparency Act 2023 (ECCTA)

Need help with complying with ECCTA legislation?

A strong whistleblowing culture doesn’t happen overnight. It requires constant reinforcement, assessment and expertise.

Wherever you are on your whistleblowing journey, Safecall is here to help. Talk to our whistleblowing experts today and make sure your organisation is fully compliant with ECCTA and ready for the introduction of the ‘failure to prevent fraud’ offence by September 2025.