The Economic Crime and Corporate Transparency Act 2023 has ushered in significant reforms aimed at enhancing the integrity of the UK's corporate landscape. Central to these reforms is the transformation of Companies House from a collector of information to an active gatekeeper, equipped with robust powers to combat financial crime and further ensure the accuracy of company data.
A cornerstone of these reforms is the mandatory identity verification for individuals involved in UK companies. This measure seeks to deter the misuse of corporate structures for illicit activities by ensuring that individuals are who they claim to be.
Who Needs to Verify Their Identity?
The identity verification requirement extends to:
- Directors and Persons with Significant Control (PSCs): By autumn 2025, Companies House expects to commence their new identity verification requirements where all directors and PSCs for new incorporations will be required to verify their identity at the point of incorporation. Additionally, there will be a transition period of 12 months for existing companies who will be required to provide identity verification credentials for their directors and PSCs when their confirmation statement is due.
- Individuals Filing on Behalf of Companies: Anyone submitting information to Companies House on behalf of a company must also complete identity verification prior to filing.
Verification Methods
Companies House aims to facilitate a straightforward verification process through two primary routes:
- Direct Verification with Companies House: A predominantly digital service will link individuals to their primary identity documents, such as a passport or driving licence, using scanning and likeness-matching technology. Alternative methods will be available for those unable to access the digital service.
- Verification via Authorised Corporate Service Providers: From 18 March 2025, Companies House will allow Trust and Company Service Providers and other professional service providers (such as accountants and solicitors), who are registered for Anti-Money Laundering with a supervisor in the UK, to register to become Authorised Corporate Service Providers (ACSPs). These ACSPs must register with Companies House, confirming their supervisory status, before facilitating company formations or filings.
Consequences of Non-Compliance
The consequences non-compliance will depend on the circumstances. However, failure to comply with the identity verification requirements could result in:
- Unverified Status: Companies House will annotate the register to reflect individuals with unverified statuses, potentially impacting the company's credibility and operations.
- Legal Sanctions: Both criminal and civil penalties may be imposed on those who fail to verify their identity within the stipulated timeframe, which could result in a fine.
- Rejection of Filings: incorporations/registration of a new company could be rejected and, in the case of existing companies, they may be unable to file statutory filings.
- Prohibited from Acting: For directors, this could also result in being prohibited from acting as a director.
Implications for Businesses
These reforms necessitate proactive measures from businesses to ensure compliance:
- Review and Update Internal Processes: Companies should assess and, if necessary, revise their internal protocols to align with the new identity verification requirements.
- Engage with ACSPs: Businesses may consider collaborating with authorised service providers to streamline the verification process and ensure adherence to compliance obligations.
- Stay Informed: Continuous monitoring of updates from Companies House and relevant regulatory bodies is essential to remain compliant with evolving requirements.
In conclusion, the enhanced role of Companies House and the introduction of mandatory identity verification mark a pivotal shift in UK corporate governance. Businesses must adapt promptly to these changes, implementing robust compliance frameworks to navigate the evolving regulatory environment effectively.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
