Companies House is set to see its powers increase following several fraud and money laundering cases, as well as complaints regarding possible identity theft.
“The UK already has some of the strongest protections in the world against money laundering,” said UK business minister Kelly Tolhurst.
“We are ranked as one of the top countries worldwide for cracking down on economic crime – protecting businesses and consumers.
“The reforms will support the fight against the use of dirty money in the UK and enhance the protections for entrepreneurs and directors from criminal activity.
“Knowing that a company’s information is accurate and transparent is a fundamental part of a leading business environment – giving entrepreneurs and businesses the confidence they need to do business in the UK,” she added.
The UK has been under fire from the crown dependencies and British Overseas Territories (BOTs) over its insistence that they introduce publicly accessible registers of the beneficial owners of companies.
One of the key criticisms has been the inaccuracy of the UK’s record keeping, compared with the existing non-public registers in the crown dependencies.
Back in 2016, the representative organisation for Jersey’s financial services sector, Jersey Finance, issued a statement on the matter: “We believe that the new UK public register will provide data of questionable value, as the criminal fraternity and individuals seeking to misuse UK companies to launder money would be unlikely to comply with the self-reporting requirements.
“The data will be unreliable as there are unlikely to be any meaningful checks in place (such as those undertaken by regulated Jersey service providers) on the quality of information being captured. In addition, those looking to get around the rules, or those who simply wish not to disclose their information, could simply incorporate non-UK companies which would not be covered.”
It seems the UK has finally taken heed and is looking to introduce changes to the way it which it collects and verifies data.
‘Substantial package of reforms’
In the consultation, Companies House outlined what the augmented powers would entail, as they cover areas such as consumers, businesses and information.
The changes include:
- Knowing who is setting up, managing and controlling companies: Those who have a key role in companies will have their identity verified;
- Improving the accuracy and usability of data: Companies House will now be able to query and corroborate information before it is entered on the register. This will also mean it is easier and quicker to remove inaccurate information;
- Protecting personal information: In a minority of cases the register can be misused to identify personal information, which can then be used for criminal purposes. Under these proposals directors will be given additional rights over their information, for example personal home addresses, while ensuring this information is still available in a transparent manner to public authorities where appropriate;
- Improving the detection of possible criminal behaviour: Improved information sharing by Companies House, other government bodies and financial institutions will better protect businesses and ensure faster and more sophisticated identification of possible criminal activity – benefitting businesses and consumers.
Stepping it up
In 2018, the UK was the top rated country for anti-money laundering and terrorist financing framework by the Financial Action Task Force (FATF).
The chief executive of Companies House, Louise Smyth, said: “The register already plays a vital role in contributing to the UK’s economy through the investment decisions which rely on our data.
“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, protect directors from identity theft and fraud, and improve the accuracy of the register.”
Complaints and transparency
This follows the rising number of complaints received by the Institute of Directors (IoD) regarding misuse of data published by Companies House, said Edwin Morgan, interim director general of the IoD.
“Transparency is a key feature of UK-registered companies, but if that transparency can be exploited by criminals or fraudsters, then trust in the legal framework of business is undermined.”
Companies House was set up in 1844, and if the reforms will be accepted, this will make it the biggest change to its system since the register’s inception.