Author: Nicola Sharp 18 December 2020
Business crime specialists Rahman Ravelli is cautiously optimistic about their possible introduction.
The British government has started consultations on proposals to impose new reporting requirements on corporate entities and expand the powers of the UK’s registrar of company beneficial owners.
Under the proposals, Companies House would gain the power to obtain extra information from a business if its own intelligence - or that provided by governmental investigators - indicates that data reported by that firm may be incomplete or incorrect.
The registrar would have more discretion to rectify incorrect data and remove company directors’ names from its database if those names are believed to have been reported fraudulently. The proposals would also remove the existing requirement for businesses to maintain their own register of directors; with the public register of companies becoming the single source of information regarding directors.
The UK is also seeking views on plans to improve the quality of the data that is reported and its intention to ban corporate directors from serving on the boards of reporting entities.
Minister for Corporate Responsibility Lord Callanan said the proposals would help tackle fraud and money laundering. The closing date for submitting comments on the proposals is 3 February 2021.
There is little doubt that the use of corporates to hide beneficial ownership and the true source of funds has been a feature of many business crime cases. With the UK’s Serious Fraud Office having stated that around a quarter of its caseload has involved the use of corporate directorships, it is clear that action is needed.
If adopted, any of the proposals may strengthen the hand of the authorities. But criminals are nothing if not creative. The chain of compliance and regulation will only be as strong as its weakest link - and unless the verification process can stand up to scrutiny it may not prove to be infallible.
The timing of the announcement is perhaps opportune, given that the UK faces an uncertain regulatory future outside of the European Union (EU). The EU will want assurances that business can be safely conducted through the UK, as will many others who may want to take up new opportunities with UK PLC. The implementation of the proposals may go some way to achieving that.
Nicola is known for her fraud, civil recovery, arbitration 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.