Economic Crime (Transparency and Enforcement) Bill (HL Bill 126)

Part 1 continued    

(a)in relation to an offence committed before the time when paragraph
24(2) of Schedule 22 to the Sentencing Act 2020 comes into force, 6
months;

(b)in relation to an offence committed after that time, 12 months.

(6)5In this section “exempt overseas entity” means an overseas entity of such
description as may be specified in regulations made by the Secretary of State
for the purposes of this section.

(7)Regulations under subsection (6) are subject to the affirmative resolution
procedure.

10Supplementary provision about offences

34 Liability of officers in default

(1)Sections 1121 to 1123 of the Companies Act 2006 (liability of officers in default:
interpretation etc) apply for the purposes of any provision made by this Part as
they apply for the purposes of provisions of the Companies Acts.

(2)15In those sections as applied, a reference to an officer includes a person in
accordance with whose directions or instructions the board of directors or
equivalent management body of a legal entity are accustomed to act.

(3)A person is not to be regarded as falling within subsection (2) by reason only
that the board of directors or equivalent management body acts on advice
20given by the person in a professional capacity.

35 Meaning of “daily default fine”

Section 1125 of the Companies Act 2006 (meaning of “daily default fine”)
applies for purpose of any provision made by this Part as it applies for the
purposes of provisions of the Companies Acts.

36 25Consent required for prosecutions

Proceedings for an offence under this Part—

(a)may not be brought in England and Wales except by or with the consent
of the Secretary of State or the Director of Public Prosecutions;

(b)may not be brought in Northern Ireland except by or with the consent
30of the Secretary of State or the Director of Public Prosecutions for
Northern Ireland.

37 Further provision about proceedings

The following provisions of the Companies Act 2006 apply in relation to
offences under this Part as they apply in relation to offences under the
35Companies Acts—

(a)section 1128 (summary proceedings: time limits);

(b)section 1130 (proceedings against unincorporated bodies).

Financial penalties

38 Financial penalties

(1)The Secretary of State may by regulations make provision conferring power on
the registrar to impose a financial penalty on a person if satisfied, beyond
5reasonable doubt, that the person has engaged in conduct amounting to an
offence under this Part.

(2)The regulations may include provision—

(a)about the procedure to be followed in imposing penalties;

(b)about the amount of penalties;

(c)10for the imposition of interest or additional penalties for late payment;

(d)conferring rights of appeal against penalties;

(e)about the enforcement of penalties.

(3)The provision that may be made about enforcement includes—

(a)in relation to England and Wales or Northern Ireland, provision for
15unpaid amounts to be secured by a charge on an interest in land
(including provision about the priority of any such charge), and

(b)in relation to Scotland, provision for penalties to be enforced in the
same manner as an extract registered decree arbitral bearing a warrant
for execution issued by the sheriff court of any sheriffdom in Scotland.

(4)20The regulations must provide that—

(a)no financial penalty may be imposed under the regulations on a person
in respect of conduct amounting to an offence if the person has been
convicted of that offence in respect of that conduct, and

(b)no proceedings may be brought or continued against a person in
25respect of conduct amounting to an offence if the person has been given
a financial penalty under the regulations in respect of that conduct.

(5)Amounts recovered by the registrar under the regulations are to be paid into
the Consolidated Fund.

(6)The provision which may be made by regulations under this section by virtue
30of section 62(3) includes provision amending provision made by or under any
of the following, whenever passed or made—

(a)an Act;

(b)an Act of the Scottish Parliament;

(c)Northern Ireland legislation.

(7)35Regulations under this section are subject to the affirmative resolution
procedure.

(8)In this section “conduct” means an act or omission.

Interpretation

39 Interpretation

40In this Part—

• “beneficial owner”, in relation to an overseas entity, has the meaning
  given by Part 2 of Schedule 2;

• “the court” has the same meaning as in the Companies Acts (see section
  1156 of the Companies Act 2006);

• “document” means information in any recorded form;

• “government or public authority” means—

  (a)

  5a corporation sole;

  (b)

  a government or government department of a country or
  territory or a part of a country or territory;

  (c)

  an international organisation whose members include two or
  more countries or territories (or their governments);

  (d)

  10a local authority or local government body in the United
  Kingdom or elsewhere;

  (e)

  any other public authority in the United Kingdom or elsewhere;

• “legal entity” has the meaning given by section 2;

• “managing officer”, in relation to an overseas entity, includes a director,
  15manager or secretary;

• “overseas entity” has the meaning given by section 2;

• “registrable beneficial owner”, in relation to an overseas entity, has the
  meaning given by Schedule 2;

• “register” means the register kept under section 3;

• 20“registered”: an overseas entity is registered if its name appears in the list
  of registered overseas entities kept in accordance with section 3(3);

• “the registrar” has the meaning given by section 3(1).

Part 2 Unexplained wealth orders

40 25Imposition of unexplained wealth orders on officers etc of property holder:
England and Wales and Northern Ireland

(1)The Proceeds of Crime Act 2002 is amended as follows.

(2)Section 362A (unexplained wealth orders) is amended in accordance with
subsections (3) to (7).

(3)30After subsection (2) insert—

“(2A)In a case where the respondent is not an individual, the application
may also specify a person who is a responsible officer of the respondent
(and a person specified may include a person outside the United
Kingdom).”

(4)35In subsection (3), in the words before paragraph (a), after “the respondent”
insert “or any responsible officer specified in the order (a “specified responsible
officer”)”.

(5)In subsection (5)—

(a)after “requiring the respondent” insert “or any specified responsible
40officer”;

(b)for “require the respondent” substitute “require them”.

(6)In subsection (6), after “respondent” insert “or any specified responsible
officer”.

(7)After subsection (7) insert—

“(8)For the purposes of this Chapter, each of the following is a “responsible
officer” of the respondent (in a case where the respondent is not an
individual)—

(a)5any director of the respondent, including any person occupying
the position of a director, by whatever name called;

(b)any member of a body of the respondent equivalent to a board
of directors;

(c)any other manager, secretary or similar officer of the
10respondent;

(d)where the respondent is a partnership, a partner or a member of
the partnership;

(e)any person in accordance with whose directions or instructions
the board of directors or equivalent body of the respondent are
15accustomed to act.”

(8)In section 362C (effect of unexplained wealth order in case of non-
compliance)—

(a)in subsection (1), for “the respondent fails” substitute “the respondent
and the specified responsible officer (if any), between them, fail”;

(b)20in subsection (5)(a), after “a respondent” insert “or a specified
responsible officer”;

(c)in subsection (5)(b)—

(i)omit “on the respondent”;

(ii)for “the respondent is” substitute “the respondent and the
25specified responsible officer (if any) are”.

(9)In section 362D (effect of unexplained wealth order in case of compliance or
purported compliance)—

(a)in subsection (1), for “the respondent complies, or purports to comply,
with the” substitute “the respondent and the specified responsible
30officer (if any) between them comply, or purport to comply, with all of
the”;

(b)in subsection (7)—

(i)omit paragraph (a);

(ii)in the words after paragraph (c), for “(a) to (c)” substitute “(b)
35and (c)”.

(10)In section 362G(3) (disclosure of information, copying of documents etc), after
“the respondent” insert “or any specified responsible officer”.

(11)In section 362I(3)(b) (application to vary or discharge unexplained wealth
order), after “respondent” insert “or any specified responsible officer”.

41 40Imposition of unexplained wealth orders on officers etc of property holder:
Scotland

(1)The Proceeds of Crime Act 2002 is amended as follows.

(2)Section 396A (unexplained wealth orders) is amended in accordance with
subsections (3) to (7).

(3)After subsection (2) insert—

“(2A)In a case where the respondent is not an individual, the application
may also specify a person who is a responsible officer of the respondent
(and a person specified may include a person outside the United
5Kingdom).”

(4)In subsection (3), in the words before paragraph (a), after “the respondent”
insert “or any responsible officer specified in the order (a “specified responsible
officer”)”.

(5)In subsection (5)—

(a)10after “requiring the respondent” insert “or any specified responsible
officer”;

(b)for “require the respondent” substitute “require them”.

(6)In subsection (6), after “respondent” insert “or any specified responsible
officer”.

(7)15After subsection (6) insert—

“(7)For the purposes of this Chapter, each of the following is a “responsible
officer” of the respondent (in a case where the respondent is not an
individual)—

(a)any director of the respondent, including any person occupying
20the position of a director, by whatever name called;

(b)any member of a body of the respondent equivalent to a board
of directors;

(c)any other manager, secretary or similar officer of the
respondent;

(d)25where the respondent is a partnership, a partner or member of
the partnership;

(e)any person in accordance with whose directions or instructions
the board of directors or equivalent body of the respondent are
accustomed to act.”

(8)30In section 396C (effect of unexplained wealth order in case of non-
compliance)—

(a)in subsection (1), for “the respondent fails” substitute “the respondent
and the specified responsible officer (if any), between them, fail”;

(b)in subsection (5)(a), after “a respondent” insert “or a specified
35responsible officer”;

(c)in subsection (5)(b)—

(i)omit “on the respondent”;

(ii)for “the respondent is” substitute “the respondent and the
specified responsible officer (if any) are”.

(9)40In section 396D (effect of unexplained wealth order in case of compliance or
purported compliance)—

(a)in subsection (1), for “the respondent complies, or purports to comply,
with the” substitute “the respondent and the specified responsible
officer (if any) between them comply, or purport to comply, with all of
45the”;

(b)in subsection (8)—

(i)omit paragraph (a);

(ii)in the words after paragraph (c), for “(a) to (c)” substitute “(b)
and (c)”.

(10)In section 396G(3) (disclosure of information, copying of documents etc), after
“the respondent” insert “or any specified responsible officer”.

42 5Alternative test to the income requirement: England and Wales and Northern
Ireland

In section 362B(3) of the Proceeds of Crime Act 2002 (income requirement for
making of unexplained wealth order)—

(a)after “suspecting” insert “—

(a)10”;

(b)at the end insert “, or

(b)that the property has been obtained through unlawful
conduct (within the meaning given by section 242).”

43 Alternative test to the income requirement: Scotland

15In section 396B(3) of the Proceeds of Crime Act 2002 (income requirement for
making of unexplained wealth order)—

(a)after “suspecting” insert “—

(a)”;

(b)at the end insert “, or

(b)20that the property has been obtained through unlawful
conduct (within the meaning given by section 242).”

44 Power to extend period for which interim freezing order has effect: England
and Wales and Northern Ireland

(1)The Proceeds of Crime Act 2002 is amended as follows.

(2)25In section 362D (effect of order: cases of compliance or purported
compliance)—

(a)in subsection (3), at the end insert “, or that period as it may be extended
by virtue of section 362DA or 362DB (the “determination period”)”;

(b)in subsection (4), for “60 day period mentioned in subsection (3)”
30substitute “determination period”.

(3)After that section insert—

“362DA Extension of period for making determination where interim
freezing order has been made

(1)The High Court may, on an application made by the enforcement
35authority, extend the determination period if satisfied that—

(a)the enforcement authority is working diligently and
expeditiously towards making a determination under section
362D(2),

(b)further time is needed for the authority to make that
40determination, and

(c)it is reasonable in all the circumstances for the period to be
extended.

(2)The application must be made before the determination period would
otherwise end.

(3)An extension of the determination period must end no later than the
end of the period of 63 days beginning with the day after that on which
5the period would otherwise end.

(4)Where the determination period is extended under subsection (1), it
may be further extended by the High Court (and subsections (2) and (3)
apply in relation to any further extension as they apply in relation to the
first one).

(5)10But the determination period as extended must not in total exceed the
period of 186 days starting with the day of compliance (within the
meaning given by section 362D(7)(b)).

362DB Extension of period pending determination of proceedings etc

(1)Subsection (2) applies where—

(a)15an application is made to the High Court under section 362DA
for the extension (or further extension) of the determination
period, and

(b)the period would (apart from that subsection) end before the
court determines the application or it is otherwise disposed of.

(2)20The determination period is extended from the time when it would
otherwise end until—

(a)the Court determines the application or it is otherwise disposed
of, or

(b)if earlier, the end of the period of 31 days beginning with the
25day after that on which the period would otherwise have
ended.

(3)Subsection (4) applies where—

(a)proceedings on an appeal in respect of a decision on an
application under section 362DA have been brought, and

(b)30the determination period would (apart from that subsection)
end before the proceedings are finally determined or otherwise
disposed of.

(4)The determination period is extended from the time when it would
otherwise end until—

(a)35the proceedings are finally determined or otherwise disposed
of, or

(b)if earlier, the end of the period mentioned in subsection (2)(b).

(5)Subsection (6) applies where—

(a)an application is made to the Court under section 362DA for an
40extension of the determination period,

(b)the Court refuses to grant the application, and

(c)the period would (apart from that subsection) end before the
end of the 5 day period.

(6)The determination period is extended from the time when it would
45otherwise end until—

(a)the end of the 5 day period, or

(b)if proceedings on an appeal against the decision are brought
before the end of the 5 day period, the time when those
proceedings are brought.

(7)The “5 day period” is the period of 5 working days beginning with the
5day on which the Court refuses to grant the application; and for these
purposes “working day” means a day other than—

(a)a Saturday or a Sunday,

(b)Christmas Day or Good Friday, or

(c)a day which is a bank holiday under the Banking and Financial
10Dealings Act 1971 in the part of the United Kingdom in which
the application in question under section 362DA is made.

(8)The restriction on the overall extension of the determination period
mentioned in section 362DA(5) applies to an extension of the period in
accordance with any provision of this section as it applies to an
15extension under an order of the Court.”

(4)In section 362K(6)(a) (variation and discharge of interim freezing order), for “60
day period mentioned in section 362D(3)” substitute “determination period
(see section 362D(3))”.

45 Power to extend period for which interim freezing order has effect: Scotland

(1)20The Proceeds of Crime Act 2002 is amended as follows.

(2)In section 396D (effect of order: cases of compliance or purported
compliance)—

(a)in subsection (4), at the end insert “, or that period as it may be extended
by virtue of section 396DA or 396DB (the “determination period”)”;

(b)25in subsection (5), for “60 day period mentioned in subsection (3)”
substitute “determination period”.

(3)After that section insert—

“396DA Extension of period for making determination where interim
freezing order has been made

(1)30The Court of Session may, on an application made by the Scottish
Ministers or the Lord Advocate, extend the determination period if
satisfied that—

(a)the applicant is working diligently and expeditiously towards
making a determination under section 396D(2)(b) or (3) (as the
35case may be),

(b)further time is needed to make that determination, and

(c)it is reasonable in all the circumstances for the period to be
extended.

(2)The application must be made before the determination period would
40otherwise end.

(3)An extension of the determination period must end no later than the
end of the period of 63 days beginning with the day after that on which
the period would otherwise end.

(4)Where the period is extended under subsection (1), it may be further
45extended by the Court of Session (and subsections (2) and (3) apply in

relation to any further extension as they apply in relation to the first
one).

(5)But the determination period as extended must not exceed the period
of 186 days starting with the day of compliance (within the meaning
5given by section 396D(8)(b)).

396DB Extension of period pending determination of proceedings etc

(1)Subsection (2) applies where—

(a)an application is made to the Court of Session under section
396DA for the extension (or further extension) of the
10determination period, and

(b)the period would (apart from that subsection) end before the
Court determines the application or it is otherwise disposed of.

(2)The determination period is extended from the time when it would
otherwise end until—

(a)15the Court determines the application or it is otherwise disposed
of, or

(b)if earlier, the end of the period of 31 days beginning with the
day after that on which the period would otherwise have
ended.

(3)20Subsection (4) applies where—

(a)proceedings on an appeal in respect of a decision on an
application under section 396DA have been brought, and

(b)the determination period would (apart from that subsection)
end before the proceedings are finally determined or otherwise
25disposed of.

(4)The determination period is extended from the time when it would
otherwise end until—

(a)the proceedings are finally determined or otherwise disposed
of, or

(b)30if earlier, the end of the period mentioned in subsection (2)(b).

(5)Subsection (6) applies where—

(a)an application is made to the Court under section 396DA for an
extension of the determination period,

(b)the Court refuses to grant the application, and

(c)35the period would (apart from that subsection) end before the
end of the 5 day period.

(6)The determination period is extended from the time when it would
otherwise end until—

(a)the end of the 5 day period, or

(b)40if proceedings on an appeal against the decision are brought
before the end of the 5 day period, the time when those
proceedings are brought.

(7)The “5 day period” is the period of 5 working days beginning with the
day on which the Court refuses to grant the application; and for these
45purposes “working day” means a day other than—

(a)a Saturday or a Sunday, or

(b)a day which is a bank holiday under the Banking and Financial
Dealings Act 1971 in Scotland.

(8)The restriction on the overall extension of the determination period
mentioned in section 396DA(5) applies to an extension of the period in
5accordance with any provision of this section as it applies to an
extension under an order of the Court.”

(4)In section 396K(6)(a) (variation and recall of interim freezing order), for “60 day
period mentioned in section 396D(4)” substitute “determination period (see
section 396D(4))”.

46 10Annual reports on use of unexplained wealth orders: England and Wales

After section 362I of the Proceeds of Crime Act 2002 insert—

“362IA Annual reports

(1)The Secretary of State must prepare and publish a report in respect of
each relevant period setting out—

(a)15the number of unexplained wealth orders made by the High
Court in England and Wales during that period, and

(b)the number of applications made to that Court by enforcement
authorities for such an order during that period.

(2)Each of the following is a “relevant period”—

(a)20the period of 12 months beginning with the day on which
section 46 of the Economic Crime (Transparency and
Enforcement) Act 2022 comes into force;

(b)each subsequent period of 12 months.

(3)A report under this section must be prepared and published within the
25period of 4 months beginning with the end of the relevant period to
which the report relates.

(4)The Secretary of State must lay a copy of each report prepared under
this section before Parliament.”

47 Limits on costs orders in relation to unexplained wealth orders: England and
30Wales and Northern Ireland

After section 362T of the Proceeds of Crime Act 2002 insert—

“Unexplained wealth orders: costs of proceedings

362U Costs orders

(1)This section applies in the following cases—

(a)35an enforcement authority has made an application for an
unexplained wealth order under section 362A;

(b)an enforcement authority has made an application for the
determination period to be extended under section 362DA;

(c)an application has been made to discharge or vary an
40unexplained wealth order;

(d)an enforcement authority has made an application for an
interim freezing order under section 362J;