14:08, September 18 132 0 theguardian.com

2020-09-18 14:08:04
Companies House to verify directors' identities before being listed

Company directors will have their identities verified before their names are listed on the UK’s official register of company information, as the government attempts to make life harder for financial criminals.

The reforms to procedures at Companies House will look to provide businesses with greater assurance about who they are dealing with, while also improving the ability of law enforcement agencies to trace their activity for suspected fraud or money laundering, the department for business, energy and industrial strategy said.

Lord Callanan, the minister for corporate responsibility, said: “Mandatory identity verification will mean criminals have no place to hide – allowing us to clamp down on fraud and money laundering and ensure people cannot manipulate the UK market for their own financial gain, whilst ensuring for the majority that the processes for setting up and running a company remain quick and easy.”

However, the move is seen as a small and long overdue step in many parts of the financial world, where there have long been complaints that false data has been given credibility by it being posted on Companies House.

Jonathan Tickner, head of commercial litigation and civil fraud, at the law firm Peters & Peters said: “The Covid-19 pandemic has shone a harsh light on the inaccurate data flows into Companies House – which has simply made it easier for organised crime and fraudsters generally to perpetrate the vast scale of misappropriation sadly seen on the Treasury’s bounce back loan schemes.

“Root and branch reform is essential … The key question will be how quickly government actually takes action, and it is troubling that the announcement makes no mention of when these changes are set to take place, leaving us to question whether the government is ready to take action or this is simply an attempt to show willing.”

The Department for Business, Energy and Industrial Strategysaid that the changes “will require primary legislation which will happen in due course”. It did not explain if or how the changes will be enforced retrospectively to tackle what false entries which already exist on the register.

Despite the lack of checks being performed on Companies House data, the information is widely used.

The government said that the register’s data has been accessed 9.4 billion times in the last year, with research suggesting it is worth up to £3 billion per year to users.