The UK is planning the biggest overhaul of its official corporate register in 170 years following criticism that it is being used by criminals around the world to launder ill-gotten gains through shell companies.
The consultation aims to tackle misuse of the register and is part of a shake-up of the UK’s registry of more than 4m companies, including increasing Companies House staff, digital capabilities and other resources, amid concerns that criminals are taking advantage of a system that does not have the power to verify even basic details. It also strives to provide business owners with ‘greater protection from fraud’ by giving more power to Companies House to check information and the identities of people setting up businesses, as well as the individuals who control them. Some of the key measures proposed by the government include a ‘robust’ identity check for company directors and people with significant control; a cap on the number of directorships an individual can hold simultaneously; and new systems to ‘better protect’ the personal information that is held on the Companies House register.
The government also advocates creating a more sophisticated method of identifying criminal activity given that The National Crime Agency estimates that hundreds of billions of pounds of dirty money is laundered through London every year. It intends to do remedy this by establishing effective links between the records held by Companies House and other government bodies, so that anomalies can be identified sooner.
Louise Smyth, Chief Executive of Companies House, said: ‘This package of reforms represents a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protecting directors from identity theft and fraud, and improving the accuracy of the register.’ Nearly 3,000 companies list their beneficial owner on Companies House as a company based in a tax haven, even though this is against the rules, according to research from Global Witness, the anti-corruption group. It also spotted over 2,000 persons of significant control behind companies on the registry who were disqualified directors. Even more worryingly, 76 beneficial owners in the registry share their name and date of birth with individuals on the US sanctions list. The hope is to deter scammers by enabling Companies House to challenge the information it is given and carry out identity checks on key people behind companies.
The consultation is open until 5 August 2019.