In a pivotal move towards enhancing corporate governance, Companies House is set to introduce new identity verification (IDV) requirements by 2025.
According to FullCircl, this change is a core aspect of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), designed to bolster transparency and trust across the UK’s corporate landscape.
By the end of 2026, this significant overhaul will necessitate the verification of identities for all company directors, Persons with Significant Control (PSCs), and other key personnel, impacting over 7 million individuals.
The UK has witnessed growing concerns over the misuse of its corporate entities for illicit activities such as fraud, money laundering, and tax evasion. The ease of setting up a company has at times been exploited, diminishing the trust in legitimate businesses. The upcoming reforms aim to rectify this by ensuring that individuals involved in establishing, managing, or controlling companies are verifiably who they claim to be. This initiative is aligned with broader efforts to curb economic crime and enhance corporate accountability, promising to foster a safer, more transparent business environment.
The forthcoming ID verification mandate will encompass a wide range of roles within the corporate structure, including company directors, PSCs, company secretaries (if applicable), and authorised filers responsible for submitting official filings. This extensive scope ensures that all individuals linked to the operational, ownership, or administrative aspects of a business will be accountable under the new regime.
The ID verification process is designed to be both straightforward and rigorous. It will require individuals to submit a photo of a government-issued ID and a selfie or video to confirm that their physical identity matches the documentation provided. This can be done directly through Companies House via their new digital platform or through an Authorised Corporate Service Provider (ACSP), which includes regulated professionals like accountants and solicitors who are already compliant with existing anti-money laundering regulations.
Starting in autumn 2025, the incorporation process for new companies will also see significant changes. Prospective entities will be required to complete identity verification at the outset, a departure from the current system which does not mandate such measures. Additionally, Companies House will receive enhanced powers to scrutinise and potentially reject or remove fraudulent or inaccurate submissions, thereby reinforcing the integrity of the corporate register.
For existing registered entities, these changes will unfold over a 12-month transitional period. Directors and PSCs will need to verify their identities in conjunction with their confirmation statements. By the end of 2026, Companies House aims to have fully implemented the verification process for all companies. Non-compliance could lead to severe penalties, including fines, criminal charges, and removal from the register, underscoring the importance of adhering to the new regulations.
Businesses are advised to begin preparations now to ensure they are ready for the upcoming changes. Steps include reviewing the business structure to identify which stakeholders need verification, exploring digital tools for ID and document verification, educating all relevant parties about their responsibilities, and auditing current records for accuracy. Utilizing advanced tools for real-time ID checks, sanctions screening, and fraud prevention can greatly facilitate compliance and enhance operational efficiency.
The reforms at Companies House are set to mark a significant milestone in improving UK corporate transparency and deterring financial crime. For businesses, this represents not just a compliance requirement but an opportunity to demonstrate their credibility and align with evolving expectations from partners, customers, and regulators. Proactive adaptation can help companies stay ahead of the curve and ensure a seamless transition to the new regulatory landscape.
To aid businesses in adapting to the ID verification changes, FullCircl provides a suite of advanced solutions. Their offerings include real-time ID verification, PEPs and sanctions screening, facial comparison, automated document verification, and address verification and lookups, all designed to streamline the compliance process and boost business efficiency.
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