Economic Crime And Corporate Transparency Act 2023: What To Expect From The New Identity Verification Regime

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Identity verification ("IDV") is key to the successful implementation of the Economic Crime and Corporate Transparency Act 2023 ("ECCTA").
UK Corporate/Commercial Law
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  1. What is IDV?
  2. Who does the IDV regime apply to?
  3. How will IDV work in practice?
  4. When will the IDV regime come into force?
  5. How to prepare for the new IDV regime?

1 What is IDV?

Identity verification ("IDV") is key to the successful implementation of the Economic Crime and Corporate Transparency Act 2023 ("ECCTA"). IDV under ECCTA is designed to ensure that people on the Companies House records are who they claim to be. All new and existing directors and persons who have significant control over a company ("PSCs") (among others) must have their identity verified. What we already knew under ECCTA was that IDV could be carried out by either Companies House itself, or by a person (called an authorised corporate service provider ("ACSP")) authorised by Companies House to do IDV (among other things). What we did not know, until a few days ago, was how Companies House, or an ACSP would carry out IDV.

However, that changed last week when the Government released draft regulations (Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 ("IDV Regulations")), which mandate the procedure for carrying out IDV and the Registrar of Companies published draft rules (Registrar's Rules ("IDV Rules")), which prescribe the type of information needed to effect IDV.

In this briefing we will look at the procedure for IDV, in particular highlighting the information and evidence likely to be required, and we will also give some suggestions on how you can prepare for IDV verification before the regime comes into force.

2 Who does the IDV regime apply to?

IDV is required from:

  • all new and existing directors of UK companies;

  • all new and existing members of UK limited liability partnerships (LLPs) (if the LLP member is a corporate entity, all of the directors (or equivalents) of that corporate entity must verify their identity);

  • all new and existing persons in the UK and overseas, who are PSCs of UK companies and LLPs; and

  • anyone who delivers documents to Companies House on their own behalf, or on behalf of another, including an ACSP.

Once the IDV regime is in force, any person, before they can be appointed a director of a UK company, must have their identity verified and must obtain from Companies House a unique identifier which confirms that IDV has been successfully carried out on that person.

What is a 'unique identifier'?

A unique identifier is likely to consist of sequences of one or more letters or numbers and will be allocated by Companies House once IDV has been carried out. An individual will have only one unique identifier.

New PSCs have 14 days after the formation of a company, or after the PSC has notified Companies House that they have become a PSC, to confirm to Companies House that their identity has been verified. For Relevant Legal Entities ("RLE"), this period is extended to 28 days within which they must provide Companies House with the name of a verified relevant officer of the RLE (this will either by a director of the RLE (or their equivalent in other registrable entities)).

For existing directors (and their equivalents in other registrable entities) and existing PSCs, it is envisaged that there will be a transitionary period within which they must verify their identity. We do not at this stage have any information about how long this transitionary period might be.

Offences for directors

Continuing to act as a director without being verified will be an offence committed by the company and every officer in default and will be punishable by a fine. However, actions carried out by unverified directors will not be automatically invalidated. If a director persistently continues to act without being verified, they may face disqualification.

3 How will IDV work in practice?

Direct verification with Companies House

Under the IDV Regulations, a person applying for IDV must provide:

  • a valid email address (being an email address at which, in the ordinary course of events emails sent to it by Companies House would be expected to come to the attention of that person);

  • a current residential address; and

  • supporting documentary evidence as set out in the IDV Rules.

Individuals can complete IDV using the following routes:

  • using the Gov.UK ID Check application;

  • using the Government's One Login web journey: and

  • at the Post Office.

In the first instance, where available, biometric or photographic evidence that can be compared against the individual must be provided. Where biometric or photographic evidence is not available (for example if their country of citizenship does not issue a passport with a biometric chip) there is an exceptions route whereby ID documentation can be checked by a Companies House approved third party.

There is no set time period within which Companies House must determine an application and, in fact, Companies House can request further information and require the applicant to take other reasonable steps before any application is approved. If approved, Companies House will provide the applicant with their unique identifier.

Verification by an ACSP

For an ACSP to carry out IDV the individual must provide the ACSP with the personal information and contact information (similar to that referred to above). As regards ID evidence, this is predominantly the same as the ID evidence required for a direct verification by Companies House. The difference here is that the ACSP takes responsibility for verifying the individual's identity and not Companies House.

If an ACSP is satisfied that it has verified an individual's identity, the ACSP may deliver to Companies House a verification statement. The verification statement must:

  • state the name of the individual to which the verification statement relates;

  • state the date on which the ACSP was satisfied that the required personal information was true;

  • include a statement that the ACSP has delivered or will be delivering at the same time as the verification statement, the following information:

    • the individual's date of birth;
    • the required contact information of the individual;
    • a description of the information and evidence which formed the basis on which the ACSP approved the individual's application; and
    • the ACSP's unique identifier.

Once Companies House has received all this information, Companies House must provide the individual with their unique identifier.

4 When will the IDV regime come into force?

Exact timings for the implementation of the new IDV regime are still unclear. The IDV Regulations and IDV Rules have been published but only in draft-form, which means they may still be changed. There are other areas where we are awaiting further guidance from Companies House and the Government. It appears that Companies House still needs to finalise the updates to its own internal infrastructure and systems before it is ready to launch the new IDV regime.

The recent publication of the draft IDV Regulations and the IDV Rules indicates that IDV remains a priority. However, with the upcoming election and likely busy Parliamentary timetables on the horizon, it is possible that the introduction of the IDV regime could slip into next year.

5 How to prepare for the new IDV regime?

  • Updates - the IDV Regulations and the IDV Rules are still in draft-form and so may change. Keep an out for any future updates from us on IDV so you are clear on how any new changes might affect you and your business.

  • Group structure – carry out a pre-IDV regime audit to establish who in your business will need to be IDV verified.

  • Contact details - make sure you have up-to-date contact details for all directors and PSCs. In particular, if you PSCs based in overseas jurisdictions, who may be more difficult to contact.

  • Training – ensure that your directors and PSCs are briefed and prepared for ECCTA and IDV.

  • ID documents - establish whether directors or PSCs have the necessary ID documentation.

  • Internal processes - set up internal processes now for IDV verification.

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.

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