Economic Crime and Corporate Transparency Bill House of Lords update

The government changes include a new offence of ‘failure to prevent fraud’ and a significant widening of the ‘identification doctrine’. The defeats include extending the failure to prevent fraud to organisations of all sizes and to a failure to prevent money laundering. Additionally a gap in the Register of Overseas Entities identified last year by CIOT has been addressed by the government.

While the Bill does not contain any changes to the tax system it does include measures relevant to tax professionals. This report summarises the Bill's House of Lords stages.

Overview of the Bill

Measures of particular interest to tax advisers and related professions in the Bill include:

• Reform of Companies House with more powers for the Registrar
• Regulation-making power to require general partners of UK-registered limited partnerships to provide accounting information to HMRC
• New exemptions from money laundering offences to reduce unnecessary reporting by businesses
• Enabling businesses in certain sectors (including large accountancy and law firms) to share information more effectively to prevent economic crime
• Giving legal regulators a duty to uphold the economic crime agenda

This is a lengthy Bill and it has been substantially amended during its passage so far. It stood at 250 pages when first introduced and 326 pages after its Commons stages. This had risen to 354 pages by the end of the Lords committee stage and 380 pages following Lords report stage. A further 40 amendments were made at Lords third reading (the Lords, unlike the Commons, can amend bills at third reading stage).

The Commons stages of the Bill are summarises in earlier blogs: committee stage / report stage

Key Lords changes made by the government are:

• Creation of a new offence of failure to prevent fraud
• Reform of the ‘identification doctrine’ - the principle used to hold companies criminally accountable for the actions of their ‘directing mind and will’
• Introduction of ‘director disqualification sanctions’
• Strengthening of provisions in relation to authorised corporate service providers and identity verification checks
• Changes to provide greater transparency in relation to the Register of Overseas Entities, especially in relation to trusts
• Where an overseas entity holds interests in land as a nominee for another person that person is to be treated as a beneficial owner for the purposes of the register

The six government defeats are:

• Closing the ‘nominee shareholder’ loophole by making it a requirement for shareholders to state, as well as their name and address, whether they are or are not acting as a nominee
• Rather than the Register of Overseas Entities only being updated annually, entities must notify changes within 14 days
• Companies House must publish the names of parties to trusts which own overseas entities in the register. Currently Companies House collects this information but does not publish it.
• Extending the new offence of ‘failure to prevent fraud’ to organisations of all sizes, not just large ones
• Expanding the new offence to include ‘failure to prevent money laundering’
• Protecting enforcement bodies from high adverse costs when undertaking civil asset recovery against deep-pocketed suspects

Useful documents on the Bill, including earlier texts of the Bill and full Hansard reports from the various sittings, can be read here. Particularly useful may be the 88 page document containing all Lords amendments to the Bill in clause order, available here.

This report does not attempt to summarise all Lords amendments to the Bill let alone the 10 days or part days of debate. It focuses on key amendments and those likely to be of particular interest to tax professionals.

The Bill will now proceed to Consideration of Lords Amendments in the House of Commons, which will take place on 4 September. Non-government amendments in the Lords may be reversed by MPs. The Bill will continue to ‘ping pong’ between the Houses until agreement is reached or one House (usually the Lords) gives in.

Rather than reporting proceedings chronologically the report below groups together committee stage, report stage and third reading debate on relevant parts of the Bill.

Part 1 – Companies House Reform 

(Clauses 1-98 in the original Bill, 1-106 at Lords committee stage (debated 27 Mar – 20 Apr), 1-105 at Lords report stage and 1-107 at Lords third reading)

The main measures in this part of the Bill are:

• Broadening the Registrar’s powers so that the Registrar becomes a more active gatekeeper over company creation and custodian of more reliable data concerning companies and other UK registered entities such as limited liability partnerships (LLPs) and limited partnerships (LPs) – including new powers to check, remove or decline information submitted to, or already on, the register.
• Introducing identity verification requirements for all new and existing registered company directors, People with Significant Control (PSC), and those delivering documents to the Registrar. This will improve the reliability of the Registrar’s data, to support business decisions and law enforcement investigations.
• Providing the Registrar with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies.

Objectives of the Registrar of Companies

The government amended the Bill at committee and report stages to expand the objectives of the Registrar of Companies. Objective 2 initially focused on the accuracy and completeness of documents delivered to the registrar. A committee stage amendment expanded it to refer to the accuracy and completeness of the register more generally. This would, for example, be relevant not only to the acceptance of documents for registration but also to their removal. Another amendment ensures that Objective 2 also applies to any other registers and documents kept by the registrar.

The Registrar’s fourth objective was to be to minimise the extent to which companies and others carry out unlawful activities etc. A report stage amendment makes it an objective to prevent companies and others from carrying out unlawful activities etc. Similarly the government strengthened the third objective – which is concerned with the risk of register records creating a false or misleading impression to members of the public – so that instead of tasking the registrar “to minimise that risk”, they will have the more stretching objective “to ensure” that it does not happen.

A committee stage amendment tabled by Conservative peer (and chartered tax adviser) Lord Leigh of Hurley sought to enhance the definition of accuracy as it applies to information submitted to the Registrar, specifically in respect of tagging. A committee stage amendment from Labour sought to add an additional fifth objective to require the Registrar to act proactively in tackling false information and unlawful activity. Neither was pressed to a vote. (NB. Lords protocol dictates that in Grand Committee amendments which would not command unanimity are withdrawn or not moved, with divisions being saved for report stage.)

Introducing his amendments Labour’s spokesperson Lord Coaker said that the Bill “has a lot within it that we appreciate, accept and think are important steps forward—but alongside that, most of us want to see the Bill having some teeth”.

Powers of the Registrar

The government introduced a number of amendments at committee and report stages to potentially increase the powers of the registrar. A committee stage amendment will enable the registrar to require a person to provide information not only to determine whether a document is properly delivered but more generally to determine whether it is a document that must be registered.

A series of 11 report stage amendments allow the Secretary of State to confer on the registrar discretion as to how they exercise their duties. “The common thread linking them is that they determine, at a high level, how various statutory mechanisms for applications, notifications and appeals to the registrar shall be established through secondary legislation,” explained the minister, Lord Johnson of Lainton. Also at report stage the government passed an amendment to confer on the registrar a power to strike off a company where the company was registered on a false basis, and makes provision for restoration of such a company to the register.

Transparency of data on the Company Register

The government passed a number of amendments at committee stage “to further strengthen transparency of shareholder data on the company register”. These included a new clause conferring a power to amend the information that must be kept in a company’s register of members and creating an express duty for companies to retain old information about members (eg former address information). This replaced the previous clauses 46 and 47, which were deleted from the Bill.

Crossbench hereditary peer Lord Vaux (it’s pronounced Vorks) of Harrowden (a chartered accountant) sought unsuccessfully to amend this new clause to ensure that (a) new shareholders provide information as to whether they are holding the shares on their own behalf or on behalf of another party; and (b) that the identity of the shareholder and the people on whose behalf they are holding the shares is verified.

Another government new clause expands the information that an application for the formation of a company must include about the subscribers and confers a power to amend that information. The minister said the government “would look to consult stakeholders about what additional information it would be proportionate to require”.

The Bill places a requirement on companies to retain information about a member in their register of members where it changes, and to note the date on which the information changed and was entered into the register by the company. At report stage the government passed amendments to limit the scope of this requirement to non-traded companies, “to ensure that excessive burdens on traded companies with large numbers of shareholders are avoided”.

One issue discussed at committee and report stages was the publication of information from company accounts, particularly from those of small companies. At report stage the government introduced an amendment to give them the ability to specify through regulations what aspects of the profit and loss account delivered by companies that qualify as micro-entities or small companies might be withheld from public inspection. Prior to this the legislation did not allow for information to be collected but then kept private.

Director disqualification sanctions

At committee stage the government introduced, via amendments, a “completely new type of sanctions measure… called ‘director disqualification sanctions’.” The existing clauses automatically prohibited individuals who are subject to asset freeze sanctions from acting as directors of companies. The amended legislation provides the Foreign Secretary with flexibility as to when to apply it and does not limit it only to people subject to an asset freeze.

The government further amended this legislation at report stage. This included an amendment providing that no financial penalty may be imposed on a person in respect of whom criminal proceedings are ongoing; at the moment it is the other way around so that criminal proceedings cannot be continued once a penalty is imposed. A separate amendment enables Companies House fees to be set at a level to cover the government’s costs in connection with licences for people who are subject to director disqualification sanctions.

Company names and addresses

Labour tabled amendments seeking to place a 90 day maximum on the amount of time a company instructed to change its name (for example, because its name is misleading) may take to do so. The minister resisted, saying that while he is sympathetic to the aim, the government feels it is better to allow an element of flexibility around this. The amendments were not pressed to a vote.

Another Labour amendment sought to clarify the Bill’s definition of an appropriate address for company registration. “It is aimed in particular at trying to stop the terrible practice… of companies using false addresses,” said Baroness Blake, the shadow minister. “Although Clause 28 defines an appropriate address, our amendment goes further in defining what is not an appropriate address, including a Post Office box.” Lord Leigh, while acknowledging the problem of false addresses, was concerned that the amendment would prohibit companies from using their solicitor or accountant as their registered office, which he thought would be a particular problem for homeworkers and virtual companies (where they do not have a single office space but move around). Lord Vaux agreed, as did two Lib Dem peers, Lord Thomas of Gresford and Lord Clement-Jones.

Disclosure of company shareholders

Former Treasury minister Lord Agnew of Oulton (Conservative) proposed an amendment at committee stage to create a duty of disclosure on shareholders holding more than 5% of shares in a company (down from the current figure in the Bill of 25%). The registrar would have to verify this information. Agnew also proposed an amendment to mandate companies to disclose whether their shareholders are acting as nominees. Nominee shareholders protect the identity of the beneficiary of the shareholding, he explained, so this measure would mitigate the risk of abuse.

Neither of these were pressed to a vote at committee stage but the issues were brought back at report, in amendments tabled by both Agnew and Lord Vaux (supported by Lib Dem spokesperson Lord Fox). Vaux explained that his amendment 16 aims to close the ‘nominee shareholder’ loophole by making it a requirement for shareholders to state, as well as their name and address, “whether they are — or, importantly, are not — acting as a nominee.” The importance of stating that they are not holding the shares on behalf of someone else is because they would then have to lie actively if they are a nominee but do not disclose it. Agnew’s report stage amendment sought to mandate companies to disclose whether their shareholders are acting as nominees.

Vaux also introduced an amendment to reduce the shareholding threshold that would require the identity of a shareholder to be verified down to 5%. Why 5%? This is the level deemed of sufficient importance for all listed companies to disclose (though some must at 3%). Additionally, said Vaux, the rules around entrepreneurs’ relief state: ‘A company is your personal company if you hold at least 5% of the ordinary share capital and that holding gives you at least 5% of the voting rights in the company’.

Labour spokesperson Baroness Blake backed these amendments, as did Lord Fox for the Lib Dems.

The minister, Lord Johnson, resisted the proposals, telling peers that he does not believe they would achieve their intent, and that they risk ‘disproportionate burdens’ on legitimate actors and Companies House. On the threshold for being a Person with Significant Control (PSC) he observed that “a person with significant control can own one share in a shareholding of a billion shares and would still be registered as the PSC if they controlled the business.” He claimed that “introducing identity verification for all shareholders in non-traded companies could have a net annual direct cost to business of up to around £150 million.” Lord Vaux, responding, disagreed with the minister, finding this figure “frankly unbelievable”.

The minister argued that amendment 16 was not warranted “because the provisions in the person with significant control framework already require the whole process of disclosure of a PSC behind a nominee. To reaffirm, if a nominee does not declare that they are acting on behalf of a PSC, or becomes a PSC on account of their nominee holdings, then they are committing an offence.” Lord Vaux said this was not correct: “The nominees need to declare they are nominees only if the company seeks out and asks them. We are talking about a situation where a bad actor controls the company—so guess what? It will not.”

Amendment 16 was pressed to a vote and the government was defeated 218-175.

Persons with Significant Control

At committee the government proposed a new clause relating to the provision of false or misleading information about PSCs. The previous wording required the prosecution to prove knowledge or recklessness in all cases. The new clause sought to replace that with a strict liability offence (not dependent on knowledge) and an aggravated offence (where there is knowledge). However peers identified flaws in the drafting of the provision (including that it purported to create a strict liability offence with a ‘reasonable excuse’ get out, a seeming contradiction. The minister withdrew it for further consultation.

Also at committee Lord Agnew proposed an amendment aimed at requiring the Registrar to cross-check statements attesting to the identity of a PSC against company records and to verify the ‘status’ of beneficial owners (i.e. if the person declared is, in fact, the PSC rather than a nominee).

During report stage debate the minister told peers that, after further review of the PSC framework and the changes made to it by the Bill, the government “have identified a number of necessary improvements”, and he undertook to bring forward amendments to address these at third reading, which he did. Speaking at third reading the minister described them as “a refashioning of existing rules to make them work in the new context of a central register, rather than locally held PSC registers. These amendments improve this by requiring companies to collect additional and more useful information, and by improving the mechanisms through which companies collect the information and report it to Companies House.”

Specifically the government’s third reading amendments:

• Require a company to notify the registrar if the company knows, or has cause to believe, that a person has become a PSC but the company has not yet had confirmation from them
• Require a company to give notice to the registrar if it knows or has cause to believe that the company has no PSC
• Provide protections for personal information where someone might not have been aware the have been reported as a PSC
• Require a company that is exempt from the PSC requirements to explain why it is exempt in each confirmation statement
• Introduce a reasonable excuse defence for offences relating to a failure to comply with PSC information notice duties. It also replaces the offences relating to false or misleading information with a strict liability offence (not dependent on knowledge) and an aggravated offence (where there is knowledge).

Identity verification and the role of ACSPs

A number of opposition and backbench peers tabled committee stage amendments related to the responsibilities of authorised corporate service providers (ACSPs). The Bill, to a great extent, effectively outsources much of the verification work around companies to ACSPs.

Labour sought to add a requirement for ACSPs to confirm the individual they are verifying has signed a confirmation statement stating they already have a unique ID on the register. They also sought to include a photo-identity document and an identity document issued by a recognised official authority on the list of evidence required to verify an individual’s identity. Additionally Labour tabled an amendment to require third-party agents to provide an annual risk assessment and summary of fees charged, to help the registrar identify questionable practices. Another Labour amendment sought to create a high-risk property use list, which might cover businesses such as candy stores, souvenir shops and car washes – and require the identification of a liable individual who HMRC, local authorities and others could pursue for any unpaid taxes such as VAT or business rates. Finally Labour asked for a report into the number of ACSPs based outside the UK.

Lord Agnew, drawing on his experience as a Treasury minister, said the system was ‘broken’ with ACSPs not being supervised adequately. “A 2021 review found that 81% of professional body supervisors were not supervising their members effectively… Half of these supervisors were found not to be ensuring that their members take timely action to improve their money laundering procedures. A third of those procedures still do not have an effective separation between advocacy and regulatory functions.”

Agnew pointed to the role played by Trust and Company Service Providers in the activity exposed by the ‘FinCEN files’ in 2020 and the ‘Pandora Papers’ in 2021. He wanted to suspend the ability for ACSPs to carry out ID checks until the supervisory regime is reformed. This would say: “Stop. Do not let this legislation take effect until we have cleaned up this sector”.

Responding to Lord Agnew, the minister said it “would be disproportionate to block all ACSPs from carrying out identity checks while the Treasury works through its reforms to the supervisory regime” which would, he said, begin in the summer. He reminded peers that ACSPs will be required “to carry out checks to at least the same standard as the registrar and that she will keep an audit trail of their activity and will be able to query any activity that she thinks suspicious.”

Replying, Lord Agnew said his point was that Companies House is going to be relying on what he believes to be a broken regulator at the moment.

Lord Vaux wanted the identity of the ACSP who makes the verification statement to be included in the verification statement and on the register. He also tabled amendments to make (a) any statements of a person’s unique identifier (or that they have not been allocated one), and (b) verification statements, available for public inspection. Lord Cromwell sought to require any ACSP registering companies to make transparent to the registrar their client risk assessment processes and various other information.

At report stage the government tabled a number of amendments to strengthen provisions in relation to ACSPs, some of them in response to suggestions made at committee stage. These included:

• Increasing the transparency of the verification checks carried out by ACSPs by making them available for public inspection
• Requiring ACSPs to specify their AML supervisor on the verification statement
• Ensuring regulations can be made that impose duties on ACSPs to provide information to the registrar where this relates to monitoring compliance with any requirements under any part of the Companies Act 2006 (including the requirement to carry out identity checks to the correct standard)
• Requiring the registrar to refuse an application for authorisation as an ACSP if it appears that the applicant is not a fit and proper person to become an ACSP
• Closing a loophole that could have allowed third-party agents not to register as ACSPs

Peers praised the government for listening on this part of the Bill. Lord Agnew said the minister had “completely revolutionised the impact of the Bill in relation to ACSPs”. Lord Fox said he had “hit an important nail very firmly on the head with this set of amendments”. Baroness Blake expressed Labour’s support for the amendments.

Incorporation fees and funding of fighting economic crime

Labour tabled an amendment at committee stage to require a fee of at least £100 for the incorporation of a company, and for this to be increased annually in line with inflation. They also pressed for a report examining the case for fees paid being paid into a fund established for the purposes of tackling economic crime.

Lord Agnew went further, proposing creating such a fund, with any penalties imposed by the registrar going into it. In a separate amendment he suggested fines imposed by Companies House go into it too. Another Conservative, Baroness Altmann, combined Labour’s and Agnew’s proposals, with her new clause seeking both a fund for this fighting economic crime and a minimum incorporation fee of £100.

Replying, the minister said the government do not believe that £12 is a reasonable amount for setting up a company. “However, it is very important that fees are set via regulations and that the government have flexibility over the right level of fee, which has not yet been established.” He continued: “We are currently finalising our modelling but are increasingly confident that we can fully fund the reforms, including creating around 400 new roles at Companies House, while keeping fees low. Current estimates from Companies House suggest fees of no more than around £50.” He noted that as well as an establishment fee for setting up a company there is an annual fee, which is currently £13: “it is more expensive to register your firm annually than it is to set it up in the first place.”

On the funding of tackling economic crime, the minister said that a combination of the 2021 spending review settlement and private sector contributions through the new economic crime levy will provide funding of £400 million over the spending review period, with the levy providing around £100 million of that. In addition to this, a proportion of assets recovered under the Proceeds of Crime Act 2002 are already reinvested in economic crime capability.

International co-operation and overseas territories

Lib Dem peer Lord Wallace of Saltaire observed in committee that verification of information about companies and directors based overseas will require cooperation with foreign governments and with organisations responsible for monitoring cross-border finance, trade and crime. He proposed an amendment to probe whether the government is putting such arrangements in place. The minister responded that Companies House already has excellent relationships with overseas counterparts. In particular, it works closely with authorities in the Crown dependencies and overseas territories on the implementation of the register of overseas entities.

The minister cautioned peers over their tone in the debate, suggesting that a casual listener might be forgiven “for thinking that every single authorised corporate service provider, Crown dependency and overseas entity was somehow engaged in and designed for criminal undertakings, which we all know is not the case.” “[T]he discussions we are having are about a very small minority of bad actors and… the overall industry is worthwhile and valuable,” he stressed. Lord Fox, for the Lib Dems, and Lord Coaker, for Labour, agreed with this assertion.

Labour later proposed a new clause seeking to require open registers of beneficial ownership in the British Overseas Territories to come into force no later than 30 June 2023. (The debate was taking place in April.) Lord Wallace, for his part, sought to extend the Act as a whole to the Channel Islands, Isle of Man and British overseas territories.

The minister, responding, reminded the House that all inhabited overseas territories and Crown dependencies have now committed to introduce publicly accessible registers of company beneficial ownership. “[W]e expect these to be in place by the end of 2023,” he said. The attempt to extend the Act in the way proposed by Lord Wallace would not work, he suggested, as the Bill operates primarily by amending Acts which do not themselves extend to the Crown dependencies or overseas territories.

Part 2 – Partnerships

(Clauses 99-134 in the original Bill, 107-150 at Lords committee stage (debated 20 April), 106-152 at Lords report stage (debated 20 June) and 108-154 at Lords third reading (no debate on these clauses))

This part of the Bill aims to tackle the abuse of limited partnerships (LPs) (including Scottish LPs), by strengthening transparency requirements and enabling them to be deregistered.

At committee stage the government passed a series of amendments clarifying parts of the Bill concerning disqualified officers in LPs. Introducing them the minister, Lord Johnson, said they would “basically mean that if you are disqualified as a company director you cannot be a general partner of a limited company, and vice versa - which obviously makes great sense, because for some reason that was not necessarily the case”.

Lord Agnew tabled a number of amendments at committee stage. He sought to require LPs and limited liability partnerships (LLPs) to have at least one partner who is a natural person. This would have brought them in line with companies who are mandated to have at least one natural person as a director. He also sought to oblige the government to bring LPs into the PSC register to improve transparency.

The minister replied that partnerships in England, Wales and Northern Ireland are registrable business relationships, not separate legal personalities. “As such, they cannot be beneficially owned in the same way that companies and LLPs can. It would take a fundamental review of partnership legislation more broadly to apply beneficial ownership-style transparency measures to [these] limited partnerships in the way that my noble friend intends.” The minister told the House at report that the government plan to bring forward work ‘very soon’ in this area, specifically work to “bring into force provisions to require a company director to be a natural person, with limited exemptions for corporate directors”.

Part 3 – Register of Overseas Entities 

(Clauses 135-140 in the original Bill, 151-166 at Lords committee stage (debated 20 April), 153-172 at Lords report stage (debated 20 June) and clauses 155-177 at Lords third reading (debated 4 July)

This part of the Bill amends the Register of Overseas Entities introduced by the Economic Crime (Transparency and Enforcement) Act 2022 to maintain consistency with changes to the Companies Act 2006. The register requires overseas companies and other entities owning or buying property in the UK to give information about their beneficial owners to Companies House. 

This part of the Bill saw substantial government amendments at all three stages in the Lords as well as two defeats for the government at report stage.

The minister told peers in committee that there were nearly 28,000 entities on the register at that point (April), with an estimate 1,500 to 2,000 companies non-compliant. However, Lord Agnew noted that Transparency International estimates that there are at least 7,000 entities on the register which we continue “to have no visibility on” because the beneficial ownership trail just leads to “a cascade of other entities”.

Updating the register

At committee stage the government introduced amendments to require overseas entities on the register to provide further information to the register of companies in order to counter avoidance, particularly where there is a trust involved. This included a provision that an overseas entity cannot remove itself from the live register without providing any scheduled annual update. “This will help to prevent any attempt to circumvent the disclosure requirements by selling up and applying to remove the entity… from the register without providing the required information,” the minister explained. Another measure would allow for the standards and methods of verification to be prescribed so that verifiers are more certain about what they need to do.

Crossbencher Lord Vaux proposed three amendments at committee stage seeking more timely updates of the register. The legislation currently only requires it to be updated annually, but Vaux, with support from other peers including former Treasury Permanent Secretary Lord Macpherson, aimed to introduce requirements that (a) changes should be notified within 14 days of the entity becoming aware of any change, (b) an entity confirm all information remains up to date and accurate before deregistration can be accepted, and (c) the information held must be updated prior to any property transaction being agreed to. Responding, the minister expressed sympathy for Vaux’s argument but said he was advised that it was “more complicated than it looks” and offered only “further discussions” on the matter.

Vaux brought his main amendment (the one seeking updates of the register within 14 days of a change) back at report stage, having improved the wording after discussions with officials and the Law Society. The minister continued to resist it but Vaux pressed it to a vote, winning 172-153, defeating the government.

Provision and publication of information about trusts

The government introduced a new schedule at report stage to require an overseas entity that has a beneficial owner who is a trustee to provide information about changes in beneficiaries under the trust that take place during an update or other period, rather than just providing a snapshot of the beneficiaries at the end of the period. This, said the minister, was to deal with “a small risk that a beneficiary determined not to be registered might use convoluted means to ensure that they are not a beneficiary at the time of the update but become so immediately afterwards”.

The government also amended the Bill to allow them to, by regulation, require the registrar to disclose protected trusts information where an application is made by a person in accordance with the regulations. The minister said the government was doing this after listening to the strength of feeling among parliamentarians in both Houses. “While the Government remain of the view that, in most circumstances, it is appropriate to withhold information about trusts, good arguments have been made that more transparency is required. In particular, it would seem appropriate to allow certain people, such as investigative journalists, to access the information under certain circumstances,” he explained.

But Lord Agnew wanted the legislation to go further, stating that Companies House should publish the names of parties to trusts which own overseas entities in the Register. Currently Companies House collects this information but does not publish it.

Resisting Agnew’s amendment in committee, the minister said that trusts are not companies. “They do not undertake corporate activity but are, in effect, a repository for investments or holdings. In a sense, the transparency measures and efforts of Companies House are to ensure that corporate activity is clearly governed and is transparent, but trusts perform different functions. That is not irrelevant. In many instances, they are used to protect vulnerable people, minors, other individuals and families who want some privacy around their economic affairs.” The government are not trying to encourage opacity, he said, but “to achieve our goals I do not think it necessary to publish every piece of information about every business or personal activity. Sometimes, it is right or necessary to protect the privacy of individuals.”

Agnew brought the amendment back at report stage. Nearly half of all trusts now registered with Companies House are shown to own assets anonymously, he commented, adding: “we can register as much as we like, but if we cannot see what is inside then the whole thing is a futile exercise.”

Responding, the minister committed that, in addition to the amendments the government had already tabled, they would consult “on how we can improve the transparency of trust information, both by using this new power and by other relevant means. This will allow us to get the views of businesses, operational partners, civil society and others to inform any changes in accessibility and the publishing of trust information.” This will be a formal consultation and will be published this year, he added. He argued against letting Agnew’s amendment through without “the necessary rigour and checks of a full consultation”, citing in particular the need to protect children and other vulnerable beneficiaries of trusts.

Lord Agnew, however, was unpersuaded and pressed his amendment to the vote, with the amendment passing 171-151, inflicting a further defeat on the government.

Beneficial owners of property

At third reading the government introduced an amendment to close a gap in the register of overseas entities which had originally been identified and highlighted by CIOT during the passage of last year’s Economic Crime (Transparency and Enforcement) Act, which introduced the register. This was that the legislation for the register requires the identification only of the beneficial owners of the entity in question, which might not be those of the land or property itself (for example, in a situation where a nominee company holds property on behalf of large numbers of different clients). During the passage of last year’s Act Lord Clement-Jones moved an amendment drafted by CIOT, and other peers, including Lords Vaux and Agnew, spoke in support of it, but the then minister, Lord Callanan, said that while he could see the good intent behind the amendment, the government felt that that Bill “would not be the appropriate vehicle” for the wider objective of capturing ultimate beneficial owners of land.

A year on, however, prompted by an amendment tabled by Lord Vaux at report stage, the government agreed that this gap in the requirements should be closed and brought forward their own (rather lengthier!) amendment at third reading to do so. “It amends Schedule 1 to the Economic Crime Transparency and Enforcement Act 2022 to ensure that, where there is a nominee relationship, this is declared,” the minister, Lord Johnson, explained. “It then inserts a new definition of beneficial ownership into Schedule 2 to the 2022 Act: ‘registrable beneficial owners’. I hope that noble Lords will welcome this amendment and agree that it closes the gap that we discussed on Report.”

Part 4 – Cryptoassets 

(Clauses 141-142 in the original Bill, 167-169 at Lords committee stage (debated 25 April), 173-175 at Lords report stage (debated 27 June) and clauses 178-180 at Lords third reading (no debate on these clauses))

This part of the Bill creates powers to quickly and more easily seize and recover cryptoassets, which are the principal medium used for ransomware. The creation of a civil forfeiture power will mitigate the risk posed by those who cannot be criminally prosecuted but use their funds to further their criminality, or for use for terrorist purposes.

The government introduced 20 ‘small and technical changes’ to Part Four of the Bill at Lords committee, including amendments to ensure that the measures will function effectively in the context of the Scottish courts and to ensure that they mirror existing asset recovery powers so that immigration officers can utilise the crypto-asset forfeiture powers. These were uncontroversial.

There was, however, broader discussion around the government’s approach to crypto. Lib Dem Lord Fox proposed an amendment seeking to require the Secretary of State to review the adequacy of definitions of crypto assets and how they can be confiscated under the Bill, within 18 months. “Because everything is changing so quickly in this sphere, it does not seem unreasonable to ask the government to come back to Parliament and tell us how it is going,” he asserted. For Labour Lord Ponsonby of Shulbrede wanted to hear how the government would ensure it was part of the development of these technologies, while bearing down on sources of fraud and money laundering.

The minister, replying, reassured peers that the government would be able to move quickly to amend the definitions of crypto assets where necessary but this would be subject to debate in Parliament.

Part 5 – Miscellaneous and New Clauses 

(Clauses 143-157 in the original Bill, 170-187 at Lords committee stage (debated 25-27 April), 176-202 at Lords report stage (debated 27 June) and clauses 181-215 at Lords third reading) (debated 4 July)

This part of the Bill:

• Creates new exemptions from the principal money laundering offences to reduce unnecessary reporting by businesses carrying out transactions on behalf of their customers and gives new powers for law enforcement to obtain information to tackle money laundering and terrorist financing.
• Removes the need for a Statutory Instrument to be laid in order to update the UK’s high risk third country list.
• Enables businesses in certain sectors to share information more effectively to prevent and detect economic crime.
• Removes the statutory fining limit to allow the Solicitors Regulation Authority to set its own limits on financial penalties imposed for economic crime disciplinary matters.
• Adds a regulatory objective to the Legal Services Act 2007 to affirm the duties of regulators and the regulated communities to uphold the economic crime agenda.
• Allows the SFO to use its powers under section 2 of the Criminal Justice Act 1987 at the ‘pre-investigation’ stage in any SFO case.

Following amendment in the Lords it additionally now includes new offences of failure to prevent fraud and failure to prevent money laundering, as well as reform of the 'identification doctrine'.

Money laundering and terrorist financing

The government introduced a new clause in committee creating a defence for people who fail to report money laundering if their knowledge or suspicion is based on information supplied under a status or immigration check. The defence applies where, but for that information, the person would not have reasonable grounds to know or suspect money laundering. “This is intended to avoid unnecessary burdens on business from having to submit the same information for immigration purposes and under the SARs regime,” explained the minister.

The government also introduced amendments to address concerns that information orders could be used be used by foreign Financial Intelligence Units to circumvent existing intelligence and information-sharing procedures and to remove the extension of the definition of money laundering to include predicate offences. “The inclusion of these offences in the definition of money laundering would have broadened the scope of the clause beyond its intended purposes,” said the minister.

Lord Agnew proposed an amendment to provide that suspicious activity reports (SARs) include a risk rating element in their disclosure enabling them to be triaged. “This would reform the SARs regime to ensure quality over quantity and so prioritising SARs that need investigation,” he argued, noting that there were 901,000 SARs in 2021-22. The minister resisted the amendment, saying the NCA already has procedures in place to enable reporters to alert specific concerns.

Lord Agnew also attempted to legislate to make it a priority for HMRC to exercise its AML supervisory role. He noted that the government’s Financial Action Task Force had said that tax issues “carried too much weight [with HMRC] compared to other” money laundering risk factors. “HMRC has a repeated tendency to view AML risks from a more narrow tax perspective instead of considering a broader set of AML risks,” the former minister told peers. He said that HMRC was failing to keep pace with the requirement to register a business within 45 days, meaning more businesses are operating outside the scope of its supervision for longer periods. He also expressed concern that HMRC is short of qualified personnel in this area, about delays in publishing guidance for businesses under its supervision and about a fall in the number of face-to-face AML visits conducted by HMRC from 1,265 in 2018-19 to 289 in 2021-22. He observed that HMRC has not yet used civil powers it has at its disposal to issue censuring statements for failing to comply with money laundering regulations, or injunction powers to prevent a future breach. He concluded: “[T]here is a huge cultural focus on tax collection in HMRC. There is nothing wrong with that, but… it is HMRC’s responsibility to look after this stuff [too], and, frankly, it is not doing the job properly.”

Noting his membership of CIOT, Lord Leigh encouraged the minister to accept Agnew’s amendment. Noting that the amendment sought to amend the HMRC Act of 2005, Leigh said that the problem with that Act “is that it does not make stopping tax avoidance or even evasion a big enough priority for HMRC, and as a result HMRC views it as part of a sort of cost-benefit analysis rather than as a deterrent.” Particularly noting issues around VAT abuse and fraud in R&D tax credits, he concluded that: “more pressure on HMRC to put greater effort and time into detecting fraud, money laundering and other such matters would be time well spent.” The amendment was also backed by Lord Fox for the Lib Dems and Lord Ponsonby for Labour.

The minister, however, resisted the amendment, claiming it would duplicate existing provisions around AML supervision and could be interpreted as making HMRC responsible for all AML supervision, cutting across other regulatory relationships. He said while face-to-face visits by HMRC had fallen the overall number of interventions had increased from 1,396 in 2018-19 to 3,725 in 2021-22 (2,329 if you leave out a mass-targeted exercise checking for business risk assessments and other key documents in 2021-22). (At report stage he updated this to over 3,200 AML interventions in 2022-23 and said that the number of HMRC staff working on supervisory activity has more than doubled from 197 in 2018 to 397 in 2023.) He repeated that the government recognise that further reform of the AML supervision system is needed and said this would be the subject of a formal consultation by the end of June 2023. Lord Agnew withdrew his amendment.

At report stage the government passed amendments concerning the designation of high-risk countries for AML purposes. These remove the power to make regulations about enhanced customer due diligence by reference to a list of high-risk countries published by the Treasury, instead allowing regulations to refer to a list of countries published by the Financial Action Task Force.

Abusive lawsuits

Lord Thomas of Gresford (Lib Dem) proposed a new criminal offence to deal with groundless threats in pursuance of ‘strategic lawsuits against public participation’ (SLAPPs). It would make it an offence “for a person or entity without reasonable excuse to threaten civil litigation against another person or entity with intent to suppress the publication of any information likely to be relevant to the investigation of an economic crime”.

Baroness Stowell (Conservative), chair of the House of Lords Communications and Digital Select Committee, with the support of other members of that committee, tabled amendments at both committee and report stages aimed at deterring and preventing solicitors from supporting anybody in bringing forward SLAPPs which seek to stifle reporting on economic crime, by increasing fines and preventing criminal property being used to pay legal fees in order to pursue such cases.

Lord Cromwell (crossbencher) proposed amendments to enable a public interest defence for someone investigating economic crime and attacked with a SLAPP, and to enable a court to strike out all or part of a case that is being used to prevent disclosure or publication of information relevant to the investigation of an economic crime.

These various proposed amendments won widespread cross-party support. However the minister, Lord Bellamy, told peers in committee that while the government are clear that legislative action against SLAPPs is needed, this Bill is not the correct vehicle for that as there are wider issues to SLAPPs than just tackling economic crime.

Notwithstanding this the government reflected between committee and report stages and brought forward amendments at report to “provide for the making of rules of court with a view to preventing claimants from improperly using civil proceedings to restrain certain disclosures of information relating to economic crime”. Essentially this is to be done by defining a SLAPP claim and then, for those cases, putting in place certain conditions that may allow a case to be struck out, reversing the burden of proof and protecting the defendant’s costs. For the time being it will only include those related to economic crime, due to the scope of the Bill, but the minister said that the government “will come forward with completing the jigsaw as soon as a suitable legislative vehicle appears”.

These amendments were widely welcomed though some peers would have liked to go further. Lord Faulks, a non-affiliated peer, and Lord Thomas re-proposed the creation of a new criminal offence (see above), but were again rebuffed by the minister who said it would be ‘criminalising access to justice’. Faulks was concerned that there would be arguments as to what constitutes a SLAPP: “That issue of itself has a lot of litigation potential.” Lord Cromwell observed reflectively that, “like the song by Messrs Jagger and Richards says, ‘You can’t always get what you want. But if you try sometime … You get what you need.’ These amendments give us a good chunk of what we need.”

Definition of economic crime

Crossbencher Lord Etherton attempted to tighten the definition of economic crime to “the offences of fraud, false accounting, money laundering or offences under any binding sanctions regime, whether at common law or in primary or secondary legislation” rather than the lengthy schedule currently in the Bill defining this. He said his amendment had the support of the Law Society and Bar Council, which the minister said he was surprised about. “[T]the Government are reluctant to run the risk of introducing loopholes into the Bill by reducing the scope of Schedule 9,” the minister told the House.

Etherton also sought to amend a new regulatory objective being brought into the Legal Services Act by the government to, among other things, assert the place of legal professional privilege. The minister said the principle of legal professional privilege is not affected either way under the Bill.

Etherton brought his amendments back at report stage. He did not achieve legislative change but did gain assurances from the minister that would, he said, “assist in settling the concerns of many of those in the legal profession”. These included the importance of proportionality and that the Legal Services Board will work closely with the professions in developing guidance to support the new objective.

Failure to prevent fraud (and money laundering)

The government amended the Bill at committee stage to create a new offence of failure to prevent fraud, following cross-party pressure in both Houses to do so. “Under the new offence, a large organisation will be liable to prosecution where fraud was committed by an employee, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention procedures in place,” explained the minister. “The new offence covers fraud and false accounting, while keeping money laundering responsibilities contained under the existing regulatory regime. This ensures that the offence is targeted, focused on offences most likely to be committed by corporations and where prevention can have the most impact, and not duplicative of existing regimes.”

The new offence was broadly welcomed but support was generally qualified. Lord Fox for the Lib Dems proposed a series of amendments which would have extended it to all relevant organisations regardless of size. Lord Garnier (Conservative), a former Solicitor-General, agreed, saying: “A burglar of five foot four should be prosecuted just as vigorously as a burglar of six foot six”. However another Conservative, Lord Leigh, broadly supported the exclusion of SMEs (though he was open to lowering the cut off for eligibility).

Garnier also felt that there were further offences beyond fraud which it would be appropriate to add in to the ‘failure to prevent’ regime. He proposed a new clause to introduce a new criminal corporate offence for failure to prevent fraud (including false accounting), sanctions evasion, and money laundering.

Former Conservative cabinet minister Baroness Morgan was concerned that the government amendment requires the company whose employee has committed the fraud to have benefited from it, when the vast majority of frauds are not committed in a way that benefits the company, which is often just the platform used to perpetrate a fraud. She proposed an amendment to create a corporate ‘failure to prevent fraud’ offence which would not require the company to benefit from the fraud that had been committed or attempted. The minister said this would extend the offence to ‘facilitation of fraud’. While the government agrees that companies that facilitate fraud, even if they are not complicit in the offending, must do more to prevent and detect it, they intend for this to be achieved “by seeing through existing plans for regulatory and voluntary activity, rather than by creating a new offence which risks duplicating those existing approaches”.

The minister resisted all of the amendments. He argued that a ‘failure to prevent’ money laundering offence “would duplicate the systems, controls and penalties of the existing regime” and extend AML obligations to organisations with very low risk. He said applying the new offence to SMEs would cost them “billions of pounds in year one and hundreds of millions in each subsequent year”. Additionally, excluding SMEs from the new offence “does not mean they can get away with fraud; powers already exist to prosecute small companies, their owners and their employees for criminal acts. It is currently easier to hold these companies to account than larger organisations with complex structures.”

Nevertheless, having listened to the points raised, the minister returned at report stage with amendments to the legislation on the definition of large organisations and the treatment of subsidiaries. First there was “a clarification to ensure that an assessment of whether an organisation meets the size criteria, and is therefore in scope of the offence, is made cumulatively across the parent company and its subsidiaries… rather than being based on each individual entity”. Whichever of the individual entities within a group is responsible for a fraud can be directly liable for a failure to prevent fraud, in the same way as any other entity in scope of the offence. Additionally an employee of a subsidiary can be an associated person of its parent or owning company, making it more feasible to attach liability to the parent company should the approach of targeting the subsidiary be inappropriate.

Lord Garnier also returned at report stage, proposing a range of amendments to this part of the Bill, two of which were put to the vote and saw the government defeated. One of these was essentially Lord Fox’s amendment from committee stage, seeking to apply the new offence to all organisations not just large ones. The amendment was backed by Labour and Lib Dem spokespeople but the government’s position on the threshold remained unchanged. The amendment passed 179-176. One consequence of the amendment passing was that one of the government’s amendments relating to parent companies could not be put to the House because Garnier’s amendment now pre-empted it.

The other Garnier amendment pressed to the vote was expanding the ‘failure to prevent’ offence to include money laundering as well as fraud. “The government say there is no point adding money laundering because it is all covered by regulations,” said Garnier. But “the regulations do not cover the situations that I am seeking to encourage our jurisdiction to prevent”. “They deal with something completely other than what I am talking about, which is failure to prevent those POCA offences being committed by associates of those companies,” he continued. “It is a much more serious set of circumstances, which are not dealt with or catered for by the regulations from 2017.”

This amendment also gained cross-party backing. The minister acknowledged that the proposed new offence would apply to all sectors whereas the money laundering regulations only apply to the regulated sector. However, he argued, all the sectors that pose a significant money laundering risk already form part of the regulated sector. The House found this argument unpersuasive and passed the amendment 176-160.

Identification doctrine

At report stage the government introduced a series of amendments to reform the ‘identification doctrine’. This is the principle used to hold companies criminally accountable for the actions of its ‘directing mind and will’. This has generally been interpreted to be a member of the board, such as chief executives, but complex management structures can conceal who key decision makers are. Under the new legislation, senior managers will be brought within scope of who can be considered the ‘directing mind and will’. It means if they commit an economic crime, the company can also be held criminally liable and fined for the offence. A test will be applied to consider the decision-making power of the senior manager who has committed an economic crime, rather than just their job title. Extending the doctrine in this way “better reflects how decision-making is often dispersed across multiple controlling minds, mitigating the ability to artificially transfer, remove or create titles to escape liability,” the minister told peers. He called it “a positive step to increasing lines of clear governance and accountability in corporations”.

Lord Garnier thanked the government for the reform, observing sardonically: “We are now slowly catching up with the Americans; they did something similar to this in 1912, but this is the United Kingdom and we must not rush.” Other peers were also supportive.

Supervisory and regulatory bodies

The amendments in this group were inspired by the work of the Fraud Act review committee, chaired by Baroness Morgan.

Baroness Bowles (Lib Dem) proposed a new clause to create offences of (i) regulatory failure to prevent economic crime; and (ii) regulatory failure to prevent the facilitation of economic crime. If passed regulations would have to have been made within 18 months in respect of communications and financial services regulators as well as regulators in the legal and accountancy sectors.

The minister responded that the government’s approach “allows all sectors to be in scope, not just regulated bodies, and is less resource-intensive for business and the public sector than establishing new regulatory approaches.” On the position of regulators of accountants he took the example of ICAEW (named in the amendment), explaining that its work in areas regulated by law—for example, audit, anti-money laundering, local audit, investment business, insolvency and probate—is monitored by oversight bodies such as the Insolvency Service, the FCA, the Office for Professional Body Anti-Money Laundering Supervision, the Civil Aviation Authority and the Legal Services Board. “[T]he offence introduced via the government’s amendments covers fraud and false accounting, while keeping money-laundering responsibilities contained under the existing regulatory regime,” he reminded peers. The new clause was not pressed to a vote.

Whistleblowing and victims of economic crime

Baroness Kramer (Lib Dem), supported by Baroness Altmann and the Bishop of St Albans, proposed an amendment at both committee and report stages to require the Secretary of State to set up an Office for Whistleblowers to receive reports of whistleblowing in relation to economic crime. Altmann spoke of a friend who had ‘blown the whistle’ but only because she had already decided she was going to retire, knowing it would be the end of her career. The Bishop had spoken to a woman in one of his churches who was in “precisely this situation, and her whole life has basically fallen apart”.

Replying, the minister said that the reforms risk duplicating and creating confusion with the role of regulators, and also that the government is currently reviewing the whistleblowing framework. Kramer responded that she has had many a conversation with regulators and “they are all desperate for something like the Office of the Whistleblower, because dealing with whistleblowing is completely outside their standard remit”.

Kramer welcomed the minister’s update on the government’s review and did not press this to a vote.

Lord Coaker (Lab) proposed a new clause which would have required the Secretary of State “to prepare and publish a strategy on the potential establishment of a fund to provide compensation to victims of economic crime within 180 days of this Act being passed.”

Cost capping

Lord Agnew proposed an amendment to protect enforcement bodies from the risk of high adverse costs when undertaking recovery action against deep-pocketed suspects. The government introduced a new costs order last year for the use of unexplained wealth orders. It ensures that costs are not awarded unless the law enforcement authority had acted unreasonably, dishonestly or improperly. Agnew’s amendment would extend this costs cap to civil asset recovery cases beyond unexplained wealth orders. He was backed by Lord Leigh, Baroness Bowles and others. However the minister claimed that the amendment “would overturn the very basis on which the entirety of civil costs and funding is built. It would negatively affect every other category of civil litigation, all for minimal, if any, financial savings in a very limited number of cases”.

Agnew brought his amendment back at report stage. Explaining its importance he said that Bill Browder – the financier and anti-corruption campaigner – had told him: “The one clause you must get through in this Bill is the one on cost capping”. The minister argued that this was not an occasion to “make an exception to the well-established rule that has stood for hundreds of years, whether it applies to HMRC, the National Crime Agency or the FCA. If they make a complete Horlicks of a case, there is no reason to let them off the costs.” But Agnew responded that English law has plenty of exceptions to the landscape which the minister had set out — “for example, when local authorities bring cases following the Booth case, law enforcement bodies when they bring cases in the magistrates’ court, the Law Society when it brings disciplinary action, its prosecutions that fail following the Baxendale-Walker case, and the Competition and Markets Authority, where the Competition Appeal Tribunal can rule in its favour when it is unsuccessful in bringing a case.” His amendment was passed 164 votes to 150.

International tax co-operation

Green peer Baroness Bennett proposed an amendment that, if passed, would have required the government “to begin negotiations with international partners to work towards the establishment of a United Nations convention on tackling global tax evasion”. She explained that she was doing so in support of UN General Assembly Resolution 77/244, which was passed on 30 December last year with leadership from African countries. This calls on the UN Secretary-General to prepare a report on how “to strengthen the inclusiveness and effectiveness of international tax co-operation”. She explained that this “has been seen as a step towards a UN convention on the issue and the establishment of international bodies to enforce it. I hope that some noble Lords who are taking part in this debate or who read Hansard later will be interested in joining me in pushing this forward as an issue on which Britain can and should be a leader.”

Lord Ponsonby said that as a Labour spokesperson he did not want to say they were against what Bennett was proposing, but he noted that “there are other potential models for bearing down on corruption”.

The minister, Lord Sharpe, said that the UK works within various UN committees, but standard-setting powers on tax currently sit within the OECD’s inclusive framework and global forum, “and the UK believes that this is the mechanism best placed to deliver consensus-based reforms aimed at tax avoidance and evasion.”

He continued: “The inclusive framework and the global forum have wide and diverse memberships of more than 140 and 160 countries respectively. Furthermore, the OECD holds strong technical expertise in matters of international tax avoidance and evasion, and a potential UN convention on global tax evasion as envisaged by this amendment would duplicate and be likely to hinder the OECD’s work. This would delay the co-ordinated global response and effort to address tax evasion and avoidance and combat harmful tax practices, as well as creating divergence in international tax standards.” But he promised the UK would engage constructively with the upcoming report by the Secretary-General and consider how mechanisms for international tax co-operation can be improved to better meet developing countries’ needs. The UK has submitted evidence to the Secretary-General demonstrating these points, he added.

Freeports and investment zones

Baroness Kramer sought to require governing bodies of freeports to make the information they are required to collect about beneficial ownership of companies operating within the freeport available to the public, and to require the governance bodies of investment zones to verify information about the beneficial owners of businesses operating within the zones, and to publish this information. She was supported in this by Labour spokesperson Lord Coaker.

Replying for the government, Lord Sharpe claimed that imposing additional requirements on businesses investing in freeport tax sites “would directly undermine the objective of freeports: to facilitate investment and regenerate some of the most deprived areas of the UK”. Given the early stages of policy development on investment zones, it is too early to set out the governance arrangements in any detail, he continued. However both amendments would duplicate existing requirements on UK-registered businesses, he argued.

Other proposals

Lord Coaker proposed the establishment of a statutory Economic Crime Committee of Parliament, made up of members of both Houses, to examine and oversee regulatory, enforcement and supervisory action against economic crime. However the minister responded that the creation of parliamentary committees is the responsibility of the House authorities, not the Government.

Coaker also moved an amendment to probe what data the government holds on property and wealth obtained through economic crime being taken from vulnerable adults. Another Labour peer, Lord Faulks, sought an annual report on unexplained wealth orders where the wealth or property in question was obtained through economic crime.

Lord Alton (crossbencher) proposed to enable asset seizure where there has been deliberate concealment to escape the enforcement of sanctions. Despite having cross-party support he did not press this to a vote, taking comfort in assurances such as that the government are ‘carefully considering’ his suggestion of a provision to require a designated person also to report assets which were held six months prior to the designation.

Other (unsuccessful) non-government attempts to amend the Bill included Lord Fox seeking to require the Home Office to publish findings of their review of the Tier 1 (Investor) visa scheme, and a cross-party group of peers trying to get the government to work to establish an International Anti-Corruption Court (IACC).