About new Companies House identity verification regime
The UK Companies House Register is soon to require that all individuals who register companies or file with the Registrar will have to prove who they are by verifying their identity. This will apply to all new and existing registered company Directors, People with Significant Control (PSCs) and anyone else filing with the Registrar.
The move, introduced via the Economic Crime & Corporate Transparency Bill 2022, is intended to make it more difficult for fraudulent appointments to reach the Companies House register and to enhance corporate transparency. It will also provide greater assurance to businesses of all sizes when they consult the Register to research potential suppliers and partners.
Scope of Identity Verification Regime
This process will apply to most existing companies that are registered on the UK Companies House register, as well as to new registrations going forward. There are currently about 4.5 million companies registered in the UK, so this will be a substantial exercise.
For companies already on the Register, there will be a transition period to give existing Directors and PSCs time to comply with the new requirements, whilst ensuring the integrity of data already on the register.
Identity Verification Process
Identity verification will be a simple, quick process that is designed not to add significantly to the existing requirements on businesses. There will be two types of identity verification:
- Direct verification via Companies House
- Indirect verification via an Authorised Corporate Service Provider (ACSP)
If a person is verifying their identity directly with Companies House, identity verification will link a person with a primary identity document, such as a passport or driving licence.
Authorised Corporate Service Providers (ACSPs)
The identity verification checks undertaken by a Companies House ACSP will achieve the same level of assurance of the claimed identity as those undertaken through the direct verification route. ACSPs will be required to declare that they have completed all the necessary identity verification checks when they interact with the Registrar and Companies House.
A Companies House ACSP must be registered with a supervisory body for anti-money laundering (AML) purposes and have an existing obligation to carry out customer due diligence checks on all their clients; identity verification will build on these existing checks.
ACSPs will need to confirm they are AML supervised and register with the Companies House Registrar before they are allowed to form companies or registerable partnerships, or to file on their behalf. Under AML regulations, all ACSPs are required to retain records and the Registrar can request further information on identity verification checks if necessary.
Identity Verification Deadlines
Identity verification of Directors must take place before any application for the formation of a company is submitted to the Registrar. Post-incorporation, the identity of any new Director should be verified as soon as possible and before their appointment is notified by the company to the Registrar.
If PSCs are not verified within a short time after the incorporation of a company, they will commit a criminal offence. Individual PSCs will have a 14-day period after registration in which to verify their identity. For Relevant Legal Entities this period will be 28 days. Relevant Legal Entities will also need to provide the name of their verified relevant officer.
Anyone wishing to file documents with the Registrar will need to verify their identity before they are permitted to do so.
A transition period will provide existing companies with a set amount of time to comply with the new requirements. Those that do not comply by the end of the period may face criminal sanctions or civil penalties.
The consequences of non-compliance with the identity verification requirements will depend on circumstances. An individual who fails to comply with the requirement to verify their identity with the Registrar could be subject to:
- Criminal proceedings that could result in a Level 5 (unlimited) fine
- Civil penalties issued by the Registrar of Companies
- Rejection of incorporation of a new company
- Prevention from making statutory filings
- Annotation of the public Register to show the individual’s status as ‘unverified’
- Prohibition from acting as a Director
For directors (or their equivalent) of an ACSP, there will also be a new offence of failing to notify the Registrar of changes to their supervisory body or bodies within a period of 14 days after the change.
The government already has powers to restrict the use of corporate directors, which will be brought into force in parallel with the Bill. It will be made explicit that only corporate entities with ‘legal personality’ will be properly appointable as corporate directors and that all directors of such entities will be required to be natural persons that have been subject to an appropriate identity verification process.
Companies with be given corporate directors will be given 12 months to comply; within such time they must either ensure their corporate director is compliant with the conditions or resign them. New companies or companies appointing a corporate director must ensure they satisfy the conditions from the date this measure comes into force.
When in force?
These measures will require new secondary legislation and guidance, as well as system development, under the Economic Crime & Corporate Transparency Bill, which entered Parliament on 25 November 2022. Subject to Parliamentary approval, Companies House has indicated that it expects the Bill to receive Royal Assent in Spring of 2023.
Sovereign Corporate & Trustee Services Ltd (SCATS) is a UK-regulated agent that is currently permitted to undertake verification checks on all beneficial owners and managing officers of overseas entities. It anticipates also being recognised by the Registrar as an ACSP under the new regime. We will, of course, update you further when Companies House provides more information.