Author: Nicola Sharp 5 October 2020
Nicola Sharp of Rahman Ravelli outlines plans for director identity checks to tackle crime.
The government has stated that changes are planned to Companies House in order to ensure that comprehensive checks are being made on whether company directors are real people.
Its announcement comes after years of claims that the existing system is being routinely abused by those looking to commit fraud and use companies as vehicles for other crime, including money laundering. The reforms will compel companies to prove who their directors are.
Under the government's plan, directors will not be able to be appointed to a company until their identity has been verified by Companies House. The government has said that identity verification will take place digitally and will only take a matter of minutes. It believes that the reforms will not affect the current length of time it takes for a company to be incorporated. This can usually be done within 24 hours.
The changes aim to increase the reliability of the data showing who is running each company so that businesses can do proper research into firms that they are considering doing business with.
The current system has been criticised for a lack of identity-checking that has made the UK the favoured location for criminal networks looking to launder money by creating “front’’ companies with fictional directors .
Although the move has been welcomed by those who have been calling for change, the precise timescale is unclear as the legal changes will have to be passed by Parliament. The government has said it will bring forward legislation to enact the reforms to the register “when Parliamentary time allows’’.
Ministers believe the reforms will mean greater transparency and will give Companies House more powers to query and reject information and improve the quality of data on its register. They also expect the changes to assist the National Crime Agency when it is looking to identify and locate suspects.
The government’s full response to the Corporate Transparency and Register Reform consultation has been published online.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.