Cash deals ban at scrap metal yards
The crime has plagued the railway industry for the past few years, disrupting train services across the country.
Amendments to the Legal Aid, Sentencing and Punishment of Offenders Act (Laspo) will close loopholes which have allowed criminals to make money from the theft of metal.
British Transport Police (BTP) said the new measures will "seriously curtail" the market for stolen goods.
Under the legal change, all cash transactions for metal at recycling yards in England and Wales will be outlawed, removing the "cash-in-hand, no questions asked" culture which has flourished in some areas.
The upper limit on fines will also be removed for scrap metal dealers breaking the law.
BTP Deputy Chief Constable Paul Crowther said: "Despite recent reductions in offending, metal theft remains a serious threat to the infrastructure of Great Britain and we will only make a real difference if we continue to take positive action in conjunction with strengthened legislation.
"For several years, metal thieves and unscrupulous metal recyclers have exploited outdated legislation to make profit from criminal activity. This stops now.
"Changes to the Laspo Act have outlawed all cash transactions at metal recycling yards across England and Wales and there has been a significant increase in fines for those dealers who fail to abide by the rules."
© 2012 Press Association