Identity verification and Authorised Corporate Service Providers 

Perhaps the most significant of the Act’s reforms is the introduction of compulsory identity verification procedures for all new and existing company directors, persons with significant control (PSCs) and agents who file information at Companies House. The main aim behind the new verification process is to prevent fraudulent or fictitious appointments of directors or beneficial owners from being recorded at Companies House.

Identity verification for directors

Once the new provisions are in force, all directors, both new and existing, will have to undergo identity verification, and the Act specifically prohibits directors (including shadow directors) from acting unless their identity has been verified. The Act also places an obligation on companies to ensure that individuals do not act as directors unless their identity is verified.

In practice, this means that until an individual’s identity is verified, a director should not take any actions on behalf of the company in their capacity as a director. If a person fails to verify their identity and continues to act as a director, they are committing an offence which is punishable by a fine. However, the director’s appointment and the actions they may have undertaken as a director will still be valid.

A company will also commit a criminal offence if it allows a director to act while unverified.

Timing

On incorporation, it will be necessary to confirm in the Companies House application form that the proposed officers of the new company have been verified. It will not be possible to incorporate a new company without this confirmation.

Post-incorporation, new directors will have to verify before their appointment is notified to Companies House (which must happen within 14 days of appointment). 

For existing directors, there will be a transition period in which they will be given time to comply with the new verification requirements. All directors will be required to file evidence of their identity being verified at the same time as filing the company’s first confirmation statement after the provisions of the Act come into force.

Identity verification for PSCs

All new and existing PSCs will also need to verify their identity and maintain that verified status as long as they are registered at Companies House. Where the registrable PSC is a legal entity – a relevant legal entity (RLE), the entity will have to nominate a managing officer who is an individual and whose identity has been verified.

When the provisions of the Act come into force, new PSCs and RLEs will be able to be registered without having had their identities verified in advance. However, any new PSC must become verified and confirm that status to the registrar within 14 days of receipt of a notice from the registrar. RLEs will have 28 days from receipt of the notice to comply.

There will be a transition period during which existing PSCs and RLEs will have time to verify their identity. Companies that do not comply by the end of that period may face criminal sanctions or civil penalties. 

How will identity verification work?

Details of how identity verification will work are set out in the draft Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 (the IDV Regulations), and the draft Registrar’s Rules (published by Companies House on 22 May 2024). The IDV Regulations will come into force when the relevant provisions of the Act become fully effective. 

There will be two routes for verifying an individual’s identity:

• direct verification with Companies House; or 
• verification by a third party provider – an authorised corporate service provider (ACSP) (see below).

Regardless of which route is chosen, an individual applying to verify their identity will need to provide a valid email address, a current residential address and supporting evidence of identity. Where available, the identity documentation must include biometric or photographic evidence that can be compared against the individual (such as a biometric passport, a UK biometric residence card or UK photocard driving licence.) Where biometric or satisfactory photographic evidence is not available, there is an exceptions route whereby two pieces of identity documentation will be required – a form of photographic ID, together with another form of supporting documentation.

Individuals verifying their identity directly with Companies House will be able to do so using either:

• the Gov.UK ID Check application;
• the Government’s One Login facility: or
• the Post Office.

Authorised Corporate Service Providers

As stated above, individuals might choose to use an intermediary or agent (an ACSP) to verify their identity, rather than using the facility provided by Companies House. The identity verification checks undertaken by ACSPs will achieve the same level of assurance as those undertaken by Companies House.

To obtain ACSP status, intermediaries and agents will have to be authorised by Companies House and be supervised within the UK by one of the relevant anti-money laundering (AML) supervisory bodies. A Companies House blog post provides some detail on the ACSP registration process. It confirms that the process should be completed by someone senior within the relevant organisation, such as a director, and that the senior person will need to have their own identity verified as part of the process. 

Once registered, the ACSP will be provided with a digital account and identity number which will allow them to complete identity verification checks and to file information at Companies House for their clients (see below). If an ACSP conducts identity verification, it will need to keep records for seven years. 

The person registering the business as an ACSP will be able to add other people who work for the business to the ACSP account once it has been registered and approved. These employees will not be subject to identity verification but will be allowed to carry out identity checks and file accounts for clients on behalf of the ACSP.

It is anticipated that the application process for ACSP registration will open in Q4 2024.

Filing information at Companies House

Once the relevant provisions are in force, only ACSPs and verified individuals will be able to file information at Companies House on behalf of a company or other registered entity. This is a significant change from the current situation where anyone is able to deliver documents to Companies House.

Many companies currently use third parties, such as accountants, to file information on their behalf. These third parties will need to register as an ACSP in order to continue doing this. By requiring all third party agents to register their business and verify their identity, the Government will be able to confidently identify who is filing on the register and acting on behalf of companies. It will also help in the identification of agents who may not be acting with a lawful purpose, enabling the Government to take action more quickly. 

Resources

Government Factsheet: Identity verification and authorised corporate service providers
The Economic Crime and Corporate Transparency Act 2023
Draft Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024
Draft Registrar’s Rules for identity verification
Companies House blog (13 September 2024)