Directors will no longer be appointed until their identity can be verified under newly proposed Companies House rules, it has been revealed.

The regulator said “compulsory identity verification” is being introduced to clamp down on fraud and money laundering.

Under the proposals, any person seeking to form or be added as a director or as a Person of Significant Control (PSC) of a company will be required to undergo a new identity verification process.

To reduce the burden on companies, it is believed that verification will take place through a “fast, efficient, digital process” and is “expected to take a matter of minutes” to prevent delays in incorporations and filings.

The official register of companies – which was used 9.4 billion times in the last year – said the changes “aim to increase the reliability of the data showing who is behind each company so that businesses have greater assurance when they are entering transactions with other companies, such as when small businesses are consulting the register to research potential suppliers and partners”.

The regulator also suggests that the measures will support law enforcement agencies in tracking suspected criminal activity, such as fraud or money laundering.

Commenting on the changes, Minister for Corporate Responsibility Lord Callanan said: “We are committed to making the UK the best place in the world to start and grow a business. The reforms we are making to the Companies House register will provide businesses with greater confidence in their transactions.

“Mandatory identity verification will mean criminals have no place to hide – allowing us to clamp down on fraud and money laundering and ensure people cannot manipulate the UK market for their own financial gain, whilst ensuring for the majority that the processes for setting up and running a company remain quick and easy.”

Click here to access the government’s full response to the Corporate Transparency and Register Reform consultation too find out more about the proposals.

For more company formation and secretarial advice, please get in touch with our expert team today.

Categories: BlogBusinessSME