Companies House turns over a new leaf, helps tackle economic crime.

The Economic Crime and Corporate Transparency Bill received Royal assent and became an Act on 15^th March 2022. The Act has set the stage for Companies House to leave behind its role as a passive repository of information and to assume the role of a more proactive gatekeeper of company formations and custodian of accurate and reliable data on companies and their people.

This step is crucial to prevent misuse of companies, address the concerns regarding inaccurate company registers and deal with the challenges of protecting personal data held by the company register. Setting up a financial system free of organized criminals is the sole purpose of this Act.

The Act mandates the setting up a registry of overseas entities and beneficial owners. The Act also amends the financial sanctions law and reforms the Unexplained Wealth Orders to facilitate criminal investigations. An economic or financial crime occurs when an individual or group of individuals commit illegal acts for their financial or professional growth. The prospects of monetary gain often drive these acts. 

The Companies House planned measures that will help the UK Government keep such criminals at bay include:  

1. Identity Verified Accounts 

Anyone setting up, managing, or controlling a UK company or an entity registered in the UK will be required to have a verified account at the Companies House. This ensures that the company’s ownership cannot be hidden through obscure corporate structures. Any member with a significant level of control must follow this step to verify their identity. 

2. Red Flags regarding Filings 

Any filing that raises a fair amount of suspicion can be queried by the Companies House to bring anomalies in those filings to light. The Companies House can also inform security agencies about potential fraud/crime. 

3. Position of Corporate Directors

Companies House is looking to promote transparency with a plan that restricts the use of corporate directors. This will end the reign of anonymous chains of corporate control. A corporate director can and will be appointed or retained if they are natural persons who have undergone the identity verification process. An overseas corporate director will not be allowed to assume any control over the companies in the UK or other registered entities. 

All these plans will be implemented with the help of “The Economic Crime and Corporate Transparency Bill” turned Act. This Bill’s singular goal is to mitigate any threats to national security, boost small businesses and tackle economic crime issues. The open economy of the UK has been abused and exploited over the years by the criminal acts of Kleptocrats. The Act will be key in introducing reforms that will tackle wrongdoers so legitimate businesses can thrive in the UK economy. 

Read the Corporate Transparency and Register Reform White Paper