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UK Director Verification Measures Target Financial Fraud

13 Feb 2024

New identity verification measures for UK company directors and People with Significant Control ("PSC") for UK companies, bringing greater transparency and reliability to the companies register, extend efforts by the UK government to tackle economic crime and money laundering, with an overhaul of procedures at Companies House.

The Economic Crime and Corporate Transparency Act 2023 introduces a range of new powers for UK authorities to prevent financial fraud. Companies House will also have the ability to actively control the creation of companies, through verification and removing or declining information for the register.

This legislation has been introduced in order to reduce fraudulent appointments to Companies House's register, prevent the misuse of companies, increase certainty for business and improve the accuracy of information available to the public from Companies House. As global attention has been focused on the transparency of the beneficial ownership of corporate entities, the UK corporate register’s system of self-verification has long been seen as inadequate and open to abuse.  

Identity Verification – Key Requirements

Identity verification, which will be a one-off requirement, can be completed either directly via Companies House - where the individual delivering the documents will be verified - or indirectly through an Authorised Corporate Service Provider ("ACSP"). For individual directors and PSCs this will be done by matching the individuals to their identity documents. Where a corporate director is being used, there will be a new requirement that all of its directors must be natural persons and they will be required to have their identity verified. In the case where a Relevant Legal Entity ("RLE") is listed on the PSC register, then one of the RLE's officers will need to have their identity verified and will be known as a "registered officer".

Under the new legislation, only corporate service providers authorised by the Registrar may deliver documents on behalf of clients, with a pre-condition of authorisation being registration with a supervisory body for anti-money laundering (AML) purposes. The Maples Group’s UK office is registered with HMRC for AML purposes and is fully engaged with the authorisation process for ACSP status as it emerges, in order to seamlessly provide our clients with relevant services from Companies House.

A transition period will be implemented for companies already on the register to comply with the new requirements, after which criminal sanctions or civil penalties may apply. The companies register will also be annotated to reflect the unverified status of companies and individuals. In addition to criminal proceedings and civil penalties, individuals failing to comply with an identity verification requirement may be prevented from making statutory filings and/or incorporating new companies. Directors that fail to verify can also be prohibited from acting as directors. Additionally, a new offence has been introduced for directors that fail to notify the Registrar of any changes to their supervisory body within 14 days following the change.

These new verification requirements are one part of a series of changes to be brought in over the next few years, impacting various aspects of running a UK company, from what qualifies as a registered office to how accounts and annual confirmation statements are filed with Companies House, to what powers Companies House will have to query and challenge information. The various changes to UK Company law being brought in through the Economic Crime and Corporate Transparency Act aim to improve the accuracy and quality of the data on Companies House registers, to help tackle economic crime and drive confidence in the UK economy.

The Maples Group

As further details are released on the specifics regarding the framework for authorisation of ACSPs, we will continue to update clients. Assurances can be taken in the meantime, that the Maples Group is fully compliant under the transition arrangements. 

Registered with HMRC for AML supervision, the Maples Group’s UK fiduciary team has an intimate knowledge of the UK’s corporate regulatory environment and compliance culture, including daily interactions with Companies House. Our professionals act as independent directors to a broad range of companies and investment vehicles, bringing extensive experience across numerous sectors, ensuring companies operate and fulfil their obligations to the highest standards. 
If you have any questions about the new requirements for identity verification for companies in the UK, please reach out to your usual Maples Group contact or the professionals below.

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