Companies House reform - closing down the fraudster's paradise?

On 28 February 2022, the Government published a White Paper on corporate transparency and register reform, which sets out its plans to reform Companies House and to increase the transparency of UK corporate entities. 

It has been well-known for many years that fraudsters take advantage of the fact that Companies House has been powerless to check the veracity of information supplied to it. The result, said one expert in The Mail on Sunday last year, is a "fraudster's paradise" and there are allegations that it has helped make the UK a haven for money-launderers.

White Paper

The White Paper outlines reforms in a number of key areas, including:

• Identity verification and other measures relating to directors, beneficial owners and agents - under the proposals, all new and existing company directors (and the equivalents for other registrable entities), Persons with Significant Control (PSCs), and anyone else submitting filings will be required to have a verified account at Companies House, either direct or through a third-party agent. Changes are also proposed to improve the quality of information held on UK company shareholders, for example requiring private companies to file a full shareholder list and update it annually, and on PSCs. A transition period will apply for existing companies and other entities, following which criminal sanctions and civil penalties may apply.
• Changes to the role and powers of the Registrar of Companies:
  • expanding the registrar's function to include the promotion and maintenance of the integrity of the register;
  • new powers to query errors and anomalies that appear fraudulent, suspicious or that may impact upon the integrity of the register or the wider business environment;
  • expanded powers to remove information more swiftly and in wider circumstances than is presently possible;
  • new powers to verify and, if necessary, change company names and addresses.
• Enhanced data sharing - including powers for the registrar to pass on information to law enforcement and other public and regulatory bodies, and to cross-reference data held by public and some private bodies. Discrepancy reporting requirements will also be expanded to include discrepancies in director information and in the registered office address.
• Transformation of Companies House - proposes operational reforms to Companies House based around key services, supplemented by new investigation and intelligence functions.

There will also be changes aimed at improving the financial information on the register, and new processes to protect personal information and sensitive addresses, as well as enhanced availability of information on dissolved companies.

The Government has also proposed a number of measures in the Economic Crime (Transparency and Enforcement Bill). Amongst other things, that Bill will require overseas owners of UK property to register at Companies House. Further measures will be set out in an Economic Crime Bill, which the Government says it will bring forward in the coming months.