Act fast to protect your business as new identity verification compliance rules come into force, says MICHAEL LEITH
Do you own or control a registered business in the UK? If so, are you ready to verify your identity with Companies House? The new reforms to the Economic Crime and Corporate Transparency Act 2023 (Act) signal a significant shift in the way that Companies House will accept, and process information submitted to it.
The key objectives of the Act are to promote transparency, reduce economic crime and ensure the public record is accurate by requiring all company directors, registerable people with significant control and certain other individuals to verify their identity with Companies House.
The Act also introduces new compliance powers as directors will be prohibited from acting unless their identity has been verified, or if they are exempt from verification. In practical terms, corporate governance and the ongoing operation of the business could be significantly impacted if a director is prohibited from carrying out their role.
The platform went live on 8 April on a voluntary basis, but it is proposed that identity verification will be compulsory for new incorporations by Autumn 2025. Any individuals hoping to register a business in the near future need to act fast to ensure they don’t run into any roadblocks.
In terms of existing directors and other individuals it is anticipated that a 12-month transition period for compliance will come into effect in Autumn 2025.
However, it is expected that compliance will be linked to the company’s first confirmation statement after the start of the 12-month period, meaning the date for compliance will vary from business to business, with some having to act more promptly than others.
The Act creates two ways an individual can verify their identity: either by verifying identity directly with Companies House or indirectly through an Authorised Corporate Service Provider (ACSP).
An ACSP is an agent such as a law or accountancy firm that is registered for anti-money laundering purposes and authorised by Companies House to make identity verification statements on behalf of others. An ACSP will be able to change an individual’s status from unverified to verified.
To verify their identity, an individual will be required to provide evidence, such as a passport or diving licence, along with other supporting information. The method an individual can use to verify their identity will depend on the type of identity documents they have (e.g. whether they have a biometric ID).
Further, if the individual wishes to verify their identity directly with Companies House, they will need to have access to a mobile app or web browser to carry out facial recognition and answer security questions about their identity.
So, with the mandatory regime creeping up, what are the practical steps that you can take to ensure you are ready to comply?
- Identification documents. Ensure all your identification documents are valid and up to date.
- Inform key individuals. Notify all company directors and others in your business about the upcoming changes.
- Direct or ASPC? Decide whether you will verify your identity directly or engage an ACSP.
- Confirmation statements. Check the due date of your next confirmation statement to avoid inadvertently missing your compliance deadline.
- Voluntary verification. Consider verifying your identity during the voluntary window to ensure you are ahead of the curve.
- Review company information. Maintain accurate information of your directors and shareholders in your statutory registers.
- Audit your Companies House record. Review your filing history at Companies House and proactively correct any errors.
- Professional advice. Speak to your legal advisers about the broader implications of the Act and how they apply to your business.
Taking proactive steps will not only ensure you are legally compliant but pave the way for better corporate governance. To protect your business from potential risks, now is the time to act.
Michael Leith is an associate in the corporate and business advisory team at Aberdein Considine
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