The number of British groups failing to report who their controlling shareholders are has remained static despite moves to stop kleptocrats and scammers from washing their dirty money through UK-registered shell companies.
The new statistics from Global Witness, an anti-corruption campaign group, raise the stakes on the government’s biggest reform of Companies House, the UK’s official registry, since its creation 170 years ago.
Those proposals follow concerns that hundreds of billions of pounds of ill-gotten gains from around the world are laundered through London every year, as criminals take advantage of a system that gives them the imprimatur of a UK company but which does not undertake basic identity checks.
The Department of Business, Energy and Industrial Strategy said on Sunday it wanted Companies House to have more powers to check information and the identities of people setting up businesses, as well as the individuals who control them. It also plans to boost staff, digital capabilities and other resources after previous attempts to tighten the rules failed because of a lack of policing.
Areas affected by weak enforcement include registering “persons of significant control”, or PSCs, according to Global Witness. The idea was introduced in 2013 by David Cameron, the then prime minister, who pledged to attack the “small minority” of companies that had “hidden their business dealings behind a complicated web of shell companies”.
Rules came into force in 2016 requiring companies to name their controlling shareholders but compliance has been lax.
Global Witness found the absolute number of companies reporting that they had no controlling shareholder had increased to 336,224 in 2019 from 335,010 last year, although as a proportion of the more than 4m entities registered at Companies House this represents 7.9 per cent, compared with 8.1 per cent last year.
“Our new analysis shows that serious loopholes and weaknesses remain in the way the current regime is enforced,” the campaign group said. “No substantial changes have been observed in the rates of non-compliance since we first measured them a year ago.”
The organisation wants Companies House to require proof of identity to ensure controlling shareholders actually exist. PSCs should also submit proof of their majority stake, such as a copy of the company’s confirmation statement or voting rights, Global Witness argues.
According to the business department, 66 directors and 79 companies have been convicted for failing to comply with the PSC requirements, and 227 criminal proceedings have been launched against companies.
A department spokesman said: “The UK is the first country in the G20 to bring in a publicly available People with Significant Control register from June 2016 — as a key part of our commitment to transparency — and over 99 per cent of active companies have complied with their filing requirements.
“This excludes companies in the process of liquidation or receivership, or in the course of dissolution. Companies House continues to crack down on any misuse of the register and contacts firms where the register does not contain a name.”
