Economic Crime and Corporate Transparency Bill: Identity verification

This article forms part of a series looking at the measures to be introduced by the Economic Crime and Corporate Transparency Bill (“the Bill”), which intends to deliver a suite of wider-ranging reforms to tackle economic crime and improve transparency over corporate entities.

This article focusses on proposed changes to the powers of the Registrar of Companies (“the Registrar”) in relation to identity verification.

What is proposed?

Individuals who register companies or file with the Registrar will have to prove they are who they say they are by verifying their identity. This will make it much harder to register fictitious directors or beneficial owners, stopping many fraudulent appointments from reaching the Companies House register.

The requirements will also apply to existing directors, People with Significant Control, and those delivering documents to the Registrar. Companies already on the register will have a transition period in which to verify these identities.

In general, it is expected that identity verification will be a one-off requirement. Once a person is verified, they obtain a verified status. However, there may be instances where re-verification is required, for example if someone changes their name.

How will it work?

It is intended that identity verification will be a simple, quick process.

There will be two types of identity verification:

• direct verification via Companies House, and
• an indirect route through an Authorised Corporate Service Provider.

Direct verification

If a person is verifying their identity directly with Companies House, identity verification will link a person with a primary identity document, such as a passport or driving licence. The person undergoing verification will take a photograph or scan of their face and the identifying document. The two will be compared, using likeness matching technology, and the identity verified. If successful, the person will be notified in a matter of minutes. Primary identity documents may also be checked against government databases as part of the identity checking process. Alternative methods will be available for individuals without photographic ID and digitally assisted/non-digital identity verification will be available for users who cannot use the digital identity verification system.

Identity verification by Authorised Corporate Service Providers (ACSP)

People might decide to use an ACSP to file with the Registrar, form a new registerable entity, or verify their identity. These are often intermediaries such as accountants, legal advisers, and company formation agents. They must be registered with a supervisory body for anti-money laundering (AML) purposes and already have an existing obligation to conduct customer due diligence checks on all their clients; identity verification will build on these existing checks. These third parties must register with the Registrar and demonstrate that they are supervised for AML purposes. They will be known as ACSPs.

Corporate directors

The government already has powers to restrict the use of corporate directors, and these will be brought into force in parallel with this Bill along with regulations which will set out the more limited basis upon which companies will be permitted to retain or appoint corporate directors in the future.