The UK is planning the biggest overhaul of its official corporate register in 170 years following criticism that is being used by criminals around the world to launder ill-gotten gains through shell companies.
Companies House is to be given more power to check information and the identities of people setting up businesses, as well as the individuals who control them.
The move is part of a shake-up of the UK’s registry of more than 4m companies, including boosting Companies House staff, digital capabilities and other resources, amid concerns that criminals are taking advantage of a system that does not have the power to verify even basic details but which gives scammers and kleptocrats the imprimatur of a UK business.
Nearly 3,000 companies list their beneficial owner on Companies House as a company based in a tax haven, even though this is against the rules, according to research from Global Witness, the anti-corruption group. It also spotted over 2,000 persons of significant control behind companies on the registry who were disqualified directors. Even more worryingly, 76 beneficial owners in the registry share their name and date of birth with individuals on the US sanctions list.
The hope is to deter scammers by enabling Companies House to challenge the information it is given and carry out identity checks on key people behind companies.
The revamp, largely welcomed by anti-corruption campaigners and industry, comes after previous attempts at tightening up the rules fell flat because Companies House could not police the measures.
The National Crime Agency estimates that hundreds of billions of pounds of dirty money is laundered through London every year.
The reforms planned by the Department of Business, Energy and Industrial Strategy, which oversees Companies House, are the latest attempt to galvanise the official registry, which is one of the most transparent in the world: last year it was accessed 6.5bn times.
BEIS said late last year that it wanted to tighten century-old rules around corporate structures known as limited partnerships, which are blamed for facilitating money-laundering.
Global Witness welcomed the move but said: “the devil will be in the detail”. The group’s anti-corruption campaigner, Nienke Palstra, said: “Unless Companies House is given full statutory powers to check the information it receives, as well as the resources to do so, money launderers will be given a free pass to continue to use UK companies for their crimes.”
Meanwhile, more than 10,000 people have complained that their legitimate details on Companies House have been stolen by fraudsters. This problem is also to be addressed by BEIS’s consultation, with proposals to give directors more control over personal information such as home addresses.
“Companies House is worse than useless,” said Alexander Wilson, a former stockbroker who now owns and runs a 150-tenant commercial property in Leeds whose address he complains has been used fraudulently. “By not doing basic checks, they’re aiding and abetting fraud. All legitimate traders would prefer the system to be much tougher than it is.”
