New ID verification process by Companies House.

The Economic Crime and Corporate Transparency Act 2023 has introduced and renewed guidelines in an attempt to improve its reliability and transparency. While improving the quality of information held at Companies House, it is expected that this would also deter individuals from engaging in fraudulent and unlawful activities disguised as genuine businesses.

The process is to confirm the key personnel involved in the businesses are who they claim to be. The improved process will look at identification documents as well as further evidence to confirm identity.

Who will need to verify:

The Act require mandatory identity verifications for new and existing Directors, persons with significant influence and any relevant parties in charge of delivering documents to Companies House.

Types of verification:

Direct: Where Companies House will directly verify the identity of individuals setting up businesses.

Indirect: Where Authorised anti-money laundering agents such as accountants, solicitors and third-party company incorporation agents verify the identity of directors. They will either be authorised by Companies House directly, or regulated via an independent anti-money laundering supervisor.

If you are directly liaising with Companies House, then a primary ID document such as a passport or a driving license will be linked to the identity verification. Companies House will then use advanced technology to compare the identity document vs a photograph of yourself in determining whether the identity verification is successful or not.

Effective date:

New company incorporations – Companies will only be able to complete incorporation once detailed identity verifications of directors have been successful.

Existing companies – Where they appoint a new director, they will be required to confirm their identity as soon as possible. Companies House will implement a transitional period for existing businesses to complete verification of their directors and persons with significant influence shortly.

Persons with significant control – They will need to verify their identity as soon as possible following company incorporation. This is believed to be within 14 days of registration.

Consequences of failure to adhere:

Given the seriousness of the offence failure to comply will, this would carry a civil penalty and the individual can be barred from becoming a director in future. The seriousness of the offence could result in criminal proceedings and an unlimited fine.

It is understood that the ID verification will be a one off process, however in certain circumstances, re verifications may be needed. Companies House is expected to reflect the status of individuals as “verified” or “unverified” for relevant individuals.

If your accountant or tax adviser requests additional or detailed information to verify your identity, this is only so they can help protect all businesses including yours, so be sure to help them as best you can!

If you need any further information, please contact your local Perrys branch.