Companies House New Identity Verification Process: An Overview
The Companies House new identity verification process comes as part of the Economic Crime and Corporate Transparency Act, which received Royal Assent at the end of October 2023. The timing of the majority of measures will be set through secondary legislation and remains undefined, but we felt an article to explore in advance the verification process set for Companies House would be welcome.
What is the identity verification process?
Identity verification is the process of someone confirming they are who they claim to be, a crucial component of the impending changes which will apply to registered company directors and people with significant control and be accomplished in two ways: directly through Companies House or indirectly via an ACSP.
- Direct Verification via Companies House – When individuals opt for direct verification through Companies House, they will undergo a meticulous process that involves linking a photo or scan of their face to a primary identity document, such as a passport or driver’s licence. The process may also include cross-referencing primary identity documents with government databases. In cases where digital identity verification is impractical or photographic ID is unavailable, alternative methods will be made accessible. These biometric measures are usually found to be fairly easy to navigate and many will have encountered similar already during transactions with legal firms, for example.
- Indirect Verification through an ACSP – ACSPs, intermediaries registered with anti-money laundering regulatory bodies, can request verification through the Registrar. They bear the responsibility of conducting due diligence on their clients.
What are the implications?
The impact will be on all individuals who manage (Directors) and control (People of Significant Control) companies, plus equivalents of other corporate entities. It will also apply to corporate general partners of limited partnerships and individual directors of corporate directors.
Verification transition period
This is not just forward-looking legislation, applying for new incorporations in the future, but also for existing individuals in these posts. The timing for all has not yet been set out – so don’t panic yet!
Individuals should expect to undergo identity verification only once to gain verified status and create an account with Companies House, which in turn will be linked to all relevant positions across any company or equivalent they are appointed to.
For directors with unverified status incorporating a new entity, ID verification will need to happen before the application for formation.
For those being appointed to existing entities, this will need to be done before their appointment is notified to Companies House.
PSCs will have a “short time” to verify after a new entity is incorporated, and 14 days after registering to existing entities.
Offences and sanctions
Failure to adhere to the verification process during the transition period may result in sanctions. The company’s register may be annotated to reflect an individual’s unverified status. Non-compliance could lead to criminal proceedings, civil penalties, incorporation rejections, the inability to file statutory documents, and disqualification from acting as a director.
What is the impact of the enhanced verification process?
The forthcoming identity verification process signifies a positive shift towards safeguarding the information held by Companies House. Its implementation is geared towards instilling confidence in all UK businesses, ensuring that fraudsters cannot manipulate an individual’s information. Investors and businesses engaged in due diligence will find assurance in dealing with genuine registered individuals and business entities.
Take control of your compliance with Carpenter Box
Adapting to the evolving regulatory landscape is essential for businesses. At Carpenter Box, we specialise in navigating these changes and ensuring that your company remains compliant. As more information is announced, rest assured we will be there to discuss your specific needs and help you stay ahead in the changing landscape of corporate transparency and identity verification.