Companies House to introduce Digital Identity Verification

Under the governments new Economic Crime and Corporate Transparency Bill, which gained Royal Assent in March and is currently being finalised, Companies House will be given greater powers to assist in the fight against economic crime. Mandatory identity verification processes along with the power to challenge information which is submitted to them, will form part of Companies House corporate plan for 2022-2023.

The new Register of Overseas Entities (ROE)

Russia’s invasion of Ukraine has led to the Economic Crime and Corporate Transparency Bill being fast-tracked through parliament. Part of the new legislation includes the creation of a Register of Overseas Entities (ROE) held by Companies House. Any foreign entity who owns, or wishes to own property in the UK must now reveal their identity and join the register. The aim of this is to ensure that fake companies and UK properties cannot be used by crimi-nals as a means to launder money or host criminal activity.

Mandatory ID Verification for all individuals starting companies

In an effort to deter the creation of companies for the sole purpose of committing crime, all individuals who wish to run, own, control or set up a company must now verify their identi-ty with Companies House to prove who they are. This is likely to utilise digital identity verifi-cation where possible, in order to match photo ID with live images of the individual. It is hoped that using this verification technology should provide confirmation within minutes, and Companies House are in the process of transforming their systems to roll this out.

Powers to challenge information submitted

Companies House will also be able to challenge any information which is submitted to them, should concerns about the validity of it be raised. Organisations will have to respond to any queries which Companies House may have, and provide evidence to resolve queries where necessary. If organisations do not comply with requests for information, then Com-panies House will be able to annotate the register, remove material from the register, or even impose a penalty to the organisation. The aim of this approach is not only to assist law enforcement in general, but also to allow identification of companies being created fraudulently using the identities of other people (victims of identity theft).

Quality of information

Imposing these reforms around Companies House and the way in which companies are registered in the UK not only serves to assist in mitigating the risk of economic crime and fraud, but also strengthens the quality of the information in the Companies House registers.

Many organisations rely on the information Companies House provides, in order to make business decisions or to verify information that has been gathered else-where; with the addition of mandatory identity verification, the overseas entity register and the new levels of scrutiny around information that is submitted, Companies House should become a more reliable, useful source of information to many organisations.

Around 800,000 businesses are registered every year; the new digital identity verification process will be rolled out to all new entrants, as well as existing di-rectors on the register.

Upon the publication of the Companies House corporate plan for 2022-2023, Louise Smyth who is the Chief Executive and Registrar of Companies stated that it will be:

“…one of the most significant years for Companies House since it was created in 1844.”

Summarising the new measures that will be put in place, Smyth emphasises the benefits of the new plan:

“These measures combined will ensure that the UK continues to be a great place to do business, while taking a tough stance against economic crime and the misuse of corporate entities.”