Identity verification is one of the significant measures being introduced by the Economic Crime and Corporate Transparency (ECCT) Bill. But what is it? How will it help to increase transparency over UK companies and improve the accuracy of information on the Companies House register?
What identity verification is
Identity verification is the process of confirming that a person is who they claim to be.
Most of us will be familiar with needing to use an identity document, such as a passport or driving licence, to prove who we are when doing things like setting up a bank account or starting a new job. It’s not something new but previously we may have done it in person, taking the physical documents along to be checked or copied. But now, like most things in life, you can do it digitally and usually at any time, using just your smartphone.
In recent years there have been lots of advancements in identity verification, including the use of biometrics. This is the use of unique physical characteristics to identify someone, like fingerprints, facial recognition, or even iris scanning.
Despite these tech advancements, identity fraud in the UK is growing, with around 1 in 10 people affected each year. The most common type of identity fraud is credit card fraud, but the stealing of personal, medical or financial information to access services or benefits is also becoming more widespread.
At Companies House, we will be implementing a new identity verification process to help deter those wishing to start companies for illegal purposes. Anyone setting up, running, owning or controlling a company in the UK will need to verify their identity to prove that they are who they claim to be.
For new companies and other registerable legal entities, this will mean that all directors (or equivalent) and people with significant control (PSC), will need to complete identity verification before or as part of the company incorporation process.
For existing companies on the register, all directors (or equivalent) and PSCs will need to verify their identity within a set period, to be set out within secondary legislation.
Anyone acting on behalf of companies will also need to verify their identity before they’re able to file information with us.
How identity verification will work at Companies House
Our aim is for identity verification to be as easy as possible for people to do. There will be 2 routes to choose from and both will achieve the same level of identity assurance. You’ll be able to verify directly with Companies House or through an Authorised Corporate Service Provider (ACSP).
Verifying directly with Companies House will mainly be via a digital service that links a person with their primary identity document, such as a passport or driving licence. Alternative methods will be available for those who cannot use or access the digital service.
The ACSP route will involve using an intermediary such as an accountant, legal adviser, or company formation agent. To become or act as an ACSP, the intermediary must be registered with a supervisory body for anti-money laundering (AML) purposes and already have an existing duty to carry out customer due diligence checks on all of their clients. Identity verification will simply build on these existing checks.
ACSPs will need to register with Companies House, confirming their own AML supervised status, before they’re able to form new companies or file company information. They’ll also be required to declare that they’ve completed all the necessary identity verification checks on their clients before any filings can be made.
Once complete, your verified status will be held by Companies House for all future filings. There may be some instances where re-verification is needed, for example if someone changes their name.
There will be consequences for people who do not comply with the identity verification requirements - in the form of both criminal sanctions and civil penalties. The Companies House register will also be annotated to reflect where someone has an unverified status – using our delegated powers of annotation, which will also be introduced when the ECCT Bill becomes law.
Why identity verification is important for corporate transparency
Identity verification will make it much harder to register fictitious directors or beneficial owners, stopping the vast majority of fraudulent appointments from reaching the register. Businesses of all sizes will benefit from greater assurance that the information on the register is genuine. If you’re someone who uses the register to search for potential suppliers or partners, you’ll have greater assurance that the people behind the company are who they say they are.
You can find updates on the Bill’s passage through Parliament on the UK Parliament website and keep up to date with the implementation by signing up to receive email updates from Companies House.
Find out more about the changes to UK company law and how they might affect you.
32 comments
Comment by Kevin John Kiff posted on
Let us hope that DVLA and HM Passport Office can manage to get these vital documents issued in a timely and efficient manner otherwise, it will be a further drag on UK productivity, economic growth, and UK future prosperity.
Comment by Martin Altria posted on
Just look at the amount of businesses closing down, their plan is working !
Comment by Clare Walker posted on
Once again, a measure with a laudable aim risks simply increasing stress, costs and burdens primarily onto those of us who never did anything wrong in the first place.
Comment by Debra Smith posted on
I hope that the new systems will not disadvantage disabled people who are company owners or PSI – they are already excluded from so many systems!
Comment by Neil Christiansen posted on
Please make sure that you keep all concerned up to date with changes. I had great difficulty filing our accounts because they had upped company numbers from 7 digits to 8 digits without telling anyone.
Total waste of my time.
Comment by Brian Lopez posted on
Another fee payment from hardworking directors, to Companies House.
Comment by Eric Lowe posted on
WHO, WHAT, WHY, WHERE & HOW is described but WHEN is not mentioned, only WILL BE!
What is needed is a clear time schedule / plan of implementation.
Comment by Martin Altria posted on
Just another step in the direction of fascism/communism whatever it ends up being ! if anyone thinks we are still in a free society ? maybe they need to think again, This is simply control for controls sake !
Comment by Jane J posted on
No it isn’t -identity verification is a measure which will help prevent financial crime if it is carried out appropriately. I don’t want taxpayers money wasted chasing criminals guilty of ID theft while innocent victims are obliged to bear the costs of clearing their name
Comment by Martin Altria posted on
Then you are completely missing the point ! the new system is going to be even worse because now thw criminals will be able to get our passport photo, these morons simply cannot see that they are making ID theft and fraud easier for criminals and harder for us ! You only need to think about it really, but I doubt if many have that ability !
Comment by Curtis Warren posted on
Show me your papers!
Comment by Peter Cunningham posted on
What happens to those Directors who, on age or health grounds, no longer hold a driving licence and choose not to own a passport? As our country does not issue compulsory official identity documents how does it become compulsory to go to the personal cost of obtaining a passport so as to identify ourselves for official purposes, including acting as a Director of (often) one's own Company? I am fully behind the objectives of this exercise but must question the methodology.
Comment by James Fox posted on
Identity verification is an important but tricky thing to implement safely. Hopefully, this will be done without increasing the potential for the theft of personal data by creating yet another stored digital database of personal documents and data.
Comment by Gareth Thomas posted on
why has the companies house app been discontinued?
Comment by Steve Green posted on
Lets hope that there is a method of verification for those of us who do not and will not have either a passport or driving license.
Comment by Mr ANTHONY ISRAEL posted on
IT IS A POSITIVE STEP TO LINK IDENTITY TO OUR PASSPORTS AND TO OUR DRIVING LICENCES. THE GOVERNMENT KNOWS SO MUCH ABOUT US THAT WE SHOULD APPLAUD ANY EFFORT TO SECURE OURSELVES FROM FRAUD
Comment by BRIAN CRAIG posted on
My wife's Passport has expired and mine expires in 2026. As both of us our in our late 70's and have little or no ambitions to fly or travel outside the UK again Passport renewal is not intended. With driving licenses the situation is reversed. I am no longer driving due to health reasons and my wife's license will need renewing soon and whilst renewal is most likely prospects change.
No problem with verification but hope alternative processes but as our group companies have been formed since 1989, and are set up for the next two generations to follow, I trust alternatives to Passport or driving Licenses will be practical and as easy to comply with directly with Companies House.
Comment by Malcolm posted on
Who is expected to meet the costs of verification ? Is this yet another stealth Tax on business ?
Comment by Martin Altria posted on
Whatever it does it's about security but more about control ! they even denied my posts, clearly they don't like people asking them the wrong questions
Comment by Alex posted on
Why would you need biometric data for the identitification of company directors who have been in business, paying tax for decades?
Comment by Susan Wood posted on
What about verifying addresses. I have been the victim of my address being used as the registered address for a company. No checks were done by Companies house to verify that the company had any claim to that address. I was lucky. It was only a director and registered office to avoid the company being struck off. If my address had been used as a person of significan interest it would have cost me thousands to rectify. This bill still does not address this or the fact that Companies House does not check any information that is supplied to it.
Comment by Ian Buckmaster posted on
This is a welcome change but will it be possible to use the existing Digital ID verification process for government services, such as accessing personal HMRC accounts, for Companies House purposes?
Comment by Michal Frydrysiak posted on
If it is "to help deter those wishing to start companies for illegal purposes" then why the directors of companies existing and operating for years with no law violation of any kind must verify also? And, more importantly, why they will be punished and persecuted if they do not? Is it not about preventing and stopping a criminal activity?
Comment by John Harvey posted on
1 And how can someone such as myself prove identity without passport or driving licence?
2 I understand from correspondence in the legal press that there is concern at lax AML certification by legal advisers. Eg
https://www.legalfutures.co.uk/latest-news/firm-fined-for-long-term-anti-money-laundering-compliance-failures
How is this being addressed ?
Would it not be better to have have certification? restricted to those with significant relevant experience and training?
Comment by John B posted on
It is rather ironic that Companies House are now pushing identity verification when they themselves are one of the largest sources of identity theft. Their blatant disregard for personal data security by the wholesale scanning and publishing of old submission documents, without any attempt to redact personal information, puts every company officer who has been in post since the days of paper-based filing at significant risk. If you have been with your company for around a decade, look back at your company's filing history and you will see documents containing your full name, home address, date of birth and even signature, for heaven's sake. I have been targeted by fraudsters in the past and I know others who also have - in every case we are convinced that Companies House was the source.
Comment by Martin Altria posted on
You are of course correct, but to think that this is anything other than control is where 99.99% fall down, as they think this new system will give us better security whilst it will in fact make it far worse they just cannot do "joined up thinking" unfortunately
Comment by Clive B posted on
We're all for becoming verified, but precisely what hardware, software and operating system are you expecting to accomplish this task. We are currently restricted to Windows 7, and it is company policy not to fit webcams to our PCs. Don't even think about demanding Windows 11.
Comment by GM posted on
Hmm - Microsoft stopped supporting Windows 7 on 14 January 2020.
Comment by Clive B posted on
Excuse me for being cynical, but I don't see Microsoft as ever fully supporting Windows 7 or anything following it. They are a share price driven organisation concerned with obsoleting old product and selling new product, which is inconsistent with them being an unregulated de facto monopoly utility supplier.
What the UK desperately needs is its own system supplier, supporting all software, whether it be 16, 32, 64 or 128 bit; it doesn't open myriads of ports to the internet; it remains stable and fundamentally unchanging; and is backed by a tough UK regulator. We need this before we start demanding that companies are burdened by particular, but ever-changing, hardware/software requirements, whether it be for identification, accounts submission or digital tax submission.
Comment by David Spinks posted on
This is so long overdue .... what are they going to do about all the fake companies and fake identities on the systems today? No idea what these people do .... they certainly do not verification checks today!
Comment by Martin Altria posted on
What is long overdue ? the fact that our identification will be 100% online ? or that we are starting to see how much BS these people can cram down our throats !
Comment by GM posted on
Is it likely that CH will adopt GOV.UK's One Login as an option for ID verification?