Knowing who is setting up, managing and controlling corporate entities
The UK’s ‘National Risk Assessment’ report acknowledges that there are some companies which are set up and misused for money laundering purposes. Although it claims that such cases are rare, it does raise questions about whether enough is known about the people setting up corporate entities in the UK.
In order to address this, the government proposes to verify the identity of all individuals who play a key role in a company. This includes company officers, such as directors; people with significant control (PSCs); and those individuals who are responsible for filing information.
The government is also proposing to obtain more information and carry out additional checks on shareholders.
Improving the accuracy and usability of data on the Companies Register
The consultation states that there have been cases of false information being filed on the Register, and only being identified at a later date. ‘False information’ here includes fraudulent audit reports, in which companies have falsely claimed that their accounts have been audited by a well-known audit firm; individuals being fraudulently appointed; and companies providing false addresses.
In the consultation, the government has recommended extending Companies House’s authority to validate information before it is entered into the register.
The government also proposes to make improvements to the ‘process and delivery of annual accounts to Companies House’. The current approach to retaining records of dissolved companies, however, is expected to remain the same.
Protecting personal information
Since 2015, nearly all the information held at Companies House has been accessible online. However, storing information online may potentially make company directors easier for criminals to target in order to commit identity theft. The government proposes to implement legislation to allow directors to suppress certain pieces of information from public view.
The consultation outlines new identity verification processes. Access to the register will be carefully monitored, allowing only authorised persons to file information.
Ensuring compliance, sharing intelligence, and other measures to deter abuse of corporate entities
According to the government, Companies House data on UK corporate bodies could be improved by carrying out cross-checks against data held by other government and private sector bodies.
The government stated that making the exchange of intelligence between different bodies more efficient could lead to faster identification of criminal activity. Additionally, it will deter the abuse of UK legal entities, including preventing the misuse of company names and addresses, and imposing limits on the number of directorships an individual can hold.
Furthermore, in a bid to tackle money laundering, the government is considering implementing a new filing requirement for UK companies to notify Companies House when a non-UK bank account is opened. Information in regard to the bank account would not be made available to the public, but would be available to law enforcement, should it be requested.
The final part of the consultation addresses implementation issues. The entirety of Companies House is set to be modernised and transformed via changes to systems, processes and staffing. Most of the measures will require primary legislation, and it will therefore take a few years to deliver all of the reforms outlined within the consultation.
The consultation is open until 5 August 2019, and can be found here: https://www.gov.uk/government/consultations/corporate-transparency-and-register-reform.