Companies House powers boosted to tackle £137bn dirty money deficit
21 Sep 2020
Companies House will be given greater powers to query, investigate and remove false information in the registration of company directors, in efforts to reduce the potential £137bn lost globally to financial crime, according to Transparency International UK
21 Sep 2020
New proposals to improve corporate transparency in the UK represent a significant step forward in tackling Britain’s role as a facilitator of global corruption, providing they are introduced as soon as possible and backed up with sufficient resourcing.
Changes outlined by the government will seek to address many of the weaknesses which currently leave the UK’s company registration system vulnerable to abuse for financial crime.
These vulnerabilities include a lack of checks on those forming companies or on information submitted to the register, which has made UK firms attractive to criminals in the past.
Transparency International UK research has found at least 929 UK shell companies used in 89 corruption and money laundering cases, amounting to around £137bn globally in potential economic damage. The actual number of UK companies used in serious financial crime could be much higher - in the thousands or tens of thousands.
Kingsley Napley criminal litigation partner Alun Milford said: ‘This announcement follows up on earlier statements of intent, and plainly it makes sense to reinforce Companies House as part of a wider response to economic crime.
‘But, as ever, proof of the pudding will be in the eating and Companies House will clearly also need greater resources if it is to implement these important changes effectively.’
The proposals in the government’s response to the consultation on corporate transparency and register reform include:
- introducing identity verification checks for all directors, People with Significant Control and those filing information on behalf of a company;
- companies House will require evidence of checks carried out by regulated professional service providers submitting information on behalf of clients; and
- giving Companies House the powers to query, investigate and remove false information.
These measures must now be considered by MPs and peers before they become law. In addition to these new powers, Companies House will need resources to carry out its new remit as well as regulators and the police to actively pursue rogue lawyers, accountants and formation agents incorporating companies for criminals.
Steve Goodrich, senior research manager at Transparency International UK, said: ‘These welcome changes are a significant step forward in tackling Britain’s role as a global hub for dirty money.
‘While we recognise other important issues will feature in parliamentary proceedings in the coming months, these much-needed reforms are already long overdue and should be tabled at the earliest possible opportunity.
‘New powers for Companies House will be most effective if they are coupled with the introduction of transparency over the true owners of overseas companies holding UK property. This would strengthen our defences against illicit financial flows as the UK seeks to attract overseas investment.’
Experts from Transparency International UK and the Royal United Services Institute (RUSI) will host an online briefing on this consultation response on September 23.
Speakers will include:
- Ben Cowdock, investigations lead, Transparency International UK
- Helena Wood, associate fellow, Centre for Financial Crime and Security Studies, RUSI