Businesses and Consumers to be Given Increased Protections from Criminal Activity

By Nicola Lindop

Principal Associate

T: 01279 750664
E: nlindop@nockolds.co.uk

On 5 May 2019 the Department for Business, Energy and Industrial Strategy (BEIS) published a consultation on proposals to enhance the role of Companies House and increase the transparency of UK corporate entities.

In recent years, concerns have arisen that the UK’s framework is too open to misuse by criminals. Such concerns stem from matters such as:

  • The misuse of UK registered entities;
  • False information being filed accidentally or deliberately at Companies House;
  • The abuse of personal information on the register relating to directors; and
  • The limited nature of cross checks between Companies House and other public and private sector bodies.

The proposed reforms aim to improve the accuracy of information on the companies register and to improve the UK’s ability to combat economic crime. An outline of the proposals is provided below.

Knowing who is setting up, managing and controlling corporate entities

The government wants to ensure that it is obtaining correct identity information of those setting up and running entities (including directors, Persons with Significant Control (PSC) and those filing information (presenters), in order to combat the use of UK corporate entities by international criminal organisations. The government believes that such identity verification would have the additional benefit of enabling Companies House better to link the records of people with multiple roles across different companies. It therefore proposes to introduce identity verification into the incorporation and filing processes run by Companies House.

Improving the accuracy and usability of data on the companies register

The government believes that there is a case for extending the powers of Companies House to better ensure the accuracy and reliability of information on the register. The proposals would allow Companies House to query and corroborate information before it is entered on the register, in a move away from its traditional role of accepting information and dealing with inaccuracies later.

Protecting personal information

While the government proposes to extend the amount of information that companies and individuals associated with them must provide, much of this information would not be publicly available on the register. This would result in a register of two parts, distinguishing between public and non-public information.

The government has proposed that there should be two tiers of access to non-public information: with limited rights given to credit agencies and the broader access made available to public authorities.

Improving the detection of possible criminal behaviour

The government proposes to explore ways in which information sharing by Companies House, other government bodies and financial institutions can take place. This will better protect businesses and ensure faster and more sophisticated identification of possible criminal activity – benefitting businesses and consumers.

Implementation

The proposed changes to the powers of Companies House will require primary legislation and a major transformation of the work undertaken by Companies House. The measures will therefore take some years to deliver and the government will set out its next steps when it formally responds to the consultation.

Next steps

The closing date for responses to the consultation is 5 August 2019.