New Companies House rules require verification of key people, writes SCOTT MONCUR
If your business is set up as a corporate or your firm advises corporate clients, from 18 November Companies House will require mandatory identity verification (IDV) for company directors, LLP members, and people with significant control (PSCs). Existing individuals will have a 12-month transition window typically aligned with their next confirmation statement, to complete verification.
This is part of the Government’s strategy to disrupt economic crime, support economic growth, and increase trust in who sets up, owns and controls companies in the UK.
Why you must verify
The incentives to verify are strong, including legal requirement, filing consequences, penalties and risk. Failure to complete the Companies House identity verification process will prevent someone being legally able to act as a director, company filings may be rejected, and you or your firm could face criminal or financial penalties.
How verification works
There are two key routes.
- Directly through Companies House using One Login and the digital verification process.
- Through the new breed of RegTech providers known as Authorised Corporate Service Providers (ACSPs). These firms are either already in the KYC and AML space, or solicitors, accountants, and company formation firms, registered with Companies House.
Some practical steps for your business
We know that failure to comply with the identity verification regime will result in penalties, reputational damage, and operational disruption and therefore some proactive risk mitigation strategies will be helpful:
Create a Verification Calendar. Track key dates for each firm within your business. Involve your HR team and agree communications to affected individuals so they know what they have to do and by when.
Conduct a Readiness Audit: Review current director and PSC records to identify gaps or individuals who may face challenges with verification (e.g., lack of biometric ID, limited access to web service).
Implementation and Escalation Protocols: Everybody has competing priorities. It will be useful to have escalation procedures to remind people what they need to do by when, and you may need to prepare for taking people out of scope if they do not meet the verification deadline. For cases where verification is delayed or problematic, include plans for a support team to help in scope people to complete, and board-level reporting.
Monitor Regulatory Updates: Stay informed of guidance from Companies House and adjust internal procedures accordingly. This includes changes to verification standards or enforcement practices.
Document Compliance Efforts: Maintain detailed records of verification attempts, communications, and decisions to demonstrate good faith compliance and be ready for scrutiny or enforcement action.
Company House returns: Think through what you need to have in place to legitimately record personal codes for directors and PSCs, ready for later submission.
Should your firm consider becoming an ACSP?
You must register with Companies House for you or your firm to become an authorised agent and be registered with a UK AML supervisory body.
There are many reasons to add ACSP service to your client offering. Some clients will use ACSPs believing that it reduces digital and legal risk to use another firm’s One Login system. Others, because it keeps governance, operational implementation and delivery with their existing providers. If your firm is already required to carry out AML, it is an added value service to bolt onto a regulatory requirement providing the opportunity to initiate the verification process, rather than rely on your clients to do the right thing.
You will be able to help your clients manage risk, extend your compliance support, as well as file their corporate information, and maintain the records for the legally required seven years.
Infrastructure and operational considerations.
These include scale and complexity, building solutions and governance.
It is estimated that there are around six million individuals that will need to comply and verify. Commentators have already detailed the increased administrative burden on business, the complexity and potential for confusion of what needs to be done and when. These challenges however, also present a clear opportunity to deliver practical solutions that ease your clients’ compliance burden.
Final Thoughts
The identity verification regime means businesses need to make timely preparation to reduce the risk of disruption and maintain smooth operations.
If in doubt as to how the new IDV rules affect your business or your clients, always seek good professional advice.
Scott Moncur is a senior legal director at Vialex Vialex
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