Crimes like corporate fraud and money laundering are difficult to quantify in terms of their cost to the UK economy, but a Home Office statement released in 2017 estimated money laundering in the UK was then hitting more than £90 billion a year.
Attempts to address the problem led to 1,435 convictions in 2016, with the Joint Money Laundering Intelligence Taskforce closing down more than 450 suspicious bank accounts and freezing £7 million in suspected criminal funds.
In March 2020 the government announced a plan to introduce an economic crime levy, the proceeds of which would be used to increase funding for the resourcing of its Financial Intelligence Unit (FIU), which analyses and distributes financial intelligence relating to suspicious activity.
The levy will be payable by organisations currently covered by anti-money laundering regulations. Although more precise details are still to be finalised following a consultation that closed in October, it seems the principle of using a levy to raise £100m in funding is already firmly in place.
Companies House will require more
In conjunction, the government is proposing reforms of Companies House, which follow a May 2019 consultation and cover the following:
Compulsory identity verification will apply to any company directors, including those acting in a similar capacity, as well as persons with significant control (PSC) and any individuals who file information on behalf of the company. An efficient 24/7 digital service, will be established to facilitate this and until verified, the appointment of a director will have no legal effect and their name will not appear on the register at Companies House.
Individuals will be able to create a verified account at Companies House using a third-party agent, covered by the relevant anti-money laundering regulations, which must have their own ‘agent account’ set up.
Once the agent account has been set, it can be used to file information on behalf of all of the companies the agent acts for. Identity checks undertaken by the third-party agent will not then be replicated by Companies House.
Although the identity verification requirements will apply to all companies and agents already registered, there will be a transitional period, when directors and PSCs can continue in their role whilst opening a verified account with Companies House.
At the end of the transitional period, any individuals who haven’t had their identity verified will be subject to compliance action and the possibility of prosecution!
Challenge to information destined for the register
At the moment the Registrar at Companies House accepts any company filing as long as it has been validly submitted. That will change as the Registrar will be given discretion to challenge information before it is placed on the register.
In addition, the power to amend information already placed on the register will be strengthened, mainly through a simplification of the process, which currently calls for an application to Companies House or a Court Order.
It will become easier for inaccurate details on the register to be amended or removed, and where information has been queried and amended, the onus will be on the company involved to provide evidence to support any objections they have.
Although some of the reforms suggested have proved controversial, the idea of reforming company accounts proved so popular the government is now planning further reforms which could include:
Further, in an attempt to broaden accessibility, Companies House will make all the information they hold on dissolved companies since 2010 freely available.
The Government is also looking at removing restrictions which will then enable individuals to request that their personal information is removed from the public register.
The wider reform of the approach to personal information includes directors no longer having to list their occupation, with those who already have it listed on the register, able to hide it if they want.
Other details which can be hidden on the register include an individual’s signature, date of birth and residential address if used as the registered office of the business. All this information will be retained and made available in the event of any law enforcement enquiries.
Intelligence to thwart economic crimes
The use of intelligence and data to identify, then deal with economic crime also plays a large role in the reforms.
In particular, the plan to introduce an obligation on all organisations currently covered by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 to report discrepancies between the information they hold on their customers and the information contained on the public register.
This will be combined with the creation of ‘legislative gateways’ which enable Companies House data to be cross-referenced against other data sets, which it is hoped will make it easier for Companies House to identify, act upon and report suspicious behaviour.
This might all sound sensible, but these proposals are merely that at present, just proposals. Many of the more radical ideas have been floated with the intention of provoking debate and generating input into forthcoming consultation processes. Much of this change however will depend on the available funding, so let’s see how that goes!
If you have any concerns related to your own business, please get in touch with Neil Jones a Director in the Corporate team here at Ansons on 01543 431184 or email firstname.lastname@example.org
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