Mike Miller, ICAEW’s Economic Crime Manager, outlines the major changes and intended timeline for implementation of Companies House identity verification for those setting up, running or controlling companies.
The UK government’s Companies House reforms, introduced under the Economic Crime and Corporate Transparency Act 2023, mark a significant shift in corporate governance and transparency. At the core of these changes is the introduction of mandatory identity verification for company directors, people with significant control (PSCs) and those filing documents on behalf of companies. Identity verification aims to enhance the integrity of the UK’s company registration system, combat financial crime and close loopholes that have historically facilitated the misuse of corporate entities.
This article explains the key changes to the identity verification process and outlines the vital role chartered accountants will play in the reforms, presenting both opportunities and challenges. Chartered accountants’ expertise will be critical in implementing these changes and ensuring that businesses adapt efficiently to meeting all necessary obligations.
Identity verification: a fundamental change
Mandatory identity verification of individuals involved in the management and control of companies will apply to new incorporations and lead to changes for existing companies and ongoing compliance activities, as illustrated in the table below.
KEY ASPECTS OF THE VERIFICATION PROCESS |
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Mandatory for key roles |
Integration with incorporation |
Ongoing compliance for existing companies |
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Directors, PSCs and those filing documents on behalf of a company must verify their identities. This ensures that only legitimate individuals are involved in corporate governance and filings. |
Identity verification will be required before new companies can be registered. This adds a new step to the incorporation process, which was previously one of the most streamlined in the world. |
Any changes to a company’s structure, such as appointing a new director or altering its PSCs, will trigger the need for identity checks. This makes continuous monitoring and compliance an integral part of corporate governance. |
Individuals needing to verify their identity will be able to do so either directly with Companies House or through an Authorised Corporate Service Provider (ACSP). ACSPs are individuals or organisations that undertake anti-money laundering (AML) supervised activity and might include company formation agents, solicitors and governance professionals, as well as accountants.
Facilitating identity verification
The ease of company formation has long been a hallmark of the UK’s business environment; some would argue too easy. While the introduction of mandatory identity verification will introduce new steps that could lengthen the process, it will also make it a more robust process and help to combat economic crime.
As ACSPs, chartered accountants in practice will play a central role in helping clients meet the new verification requirements. Verification must be integrated into workflows, ensuring that all required documents are collected and validated before submitting incorporation applications. Communicating these changes to clients will be essential to avoid delays and manage expectations.
For companies already on the register, the reforms will require ongoing compliance. Accountants will need to monitor corporate structures closely, ensuring that any changes – such as new appointments or PSC updates – trigger the necessary identity checks. This adds a layer of continuous responsibility, as accountants must stay informed about their clients’ activities and ensure timely compliance.
The responsibilities of accountants in practice include:
- Guiding clients through the process – for many clients, these requirements will be unfamiliar. Accountants will act as trusted advisers, providing clear guidance and support.
- Collecting identification documents – accountants will need to gather and review official documents, such as passports or driving licenses, to verify identities.
- Ensuring compliance with AML standards – as part of the verification process, accountants must adhere to AML regulations, ensuring that all documents and processes meet legal standards.
Preparing to act as an ACSP
Accountancy firms and other third-party providers will need to register their business as an ACSP before they can submit information and carry out identity verification checks on their clients.
Becoming an ACSP could offer significant opportunities for accountants, allowing them to provide a broader range of services and reinforce their position as essential partners in corporate governance. However, being an ACSP also involves additional responsibilities, including maintaining rigorous compliance systems and being subject to oversight under the UK’s AML regime. The table below outlines some of the opportunities and challenges for accountants.
OPPORTUNITIES |
CHALLENGES |
| Reinforcing trusted adviser status By guiding clients through these changes, accountants can strengthen their role as trusted advisers and enhance their value proposition. |
Increased administrative burden The additional steps involved in identity verification will require accountants to adapt their workflows and allocate more resources to compliance activities. |
| Expanding service offerings Registering as an ACSP opens up new opportunities for accountants to provide comprehensive compliance services, including identity verification and AML support. |
Potential delays in incorporation The new requirements may lead to longer timelines for company formation, which could frustrate clients accustomed to quicker processes. |
| Improving corporate governance The reforms align with accountants’ commitment to integrity and transparency, allowing them to contribute to a stronger and more reliable business environment. |
Technological adaptation Accountants may need to adopt new tools and systems to streamline identity verification and manage compliance effectively. |
Implementation timeline
Identity verification will be rolled out in stages over several years, as set out below:
Preparing for the future
To navigate these changes effectively, chartered accountancy firms should take proactive steps.
- Educate clients: ensure clients understand the new requirements and their implications, providing clear guidance on compliance.
- Review internal processes: update workflows and systems to integrate identity verification seamlessly into client onboarding and compliance management.
- Evaluate ACSP registration: consider whether registering as an ACSP aligns with your firm’s strategic goals. If it is, then preparation for the associated responsibilities will be required.
- Stay informed: keep up to date with guidance from Companies House and other regulatory bodies, ensuring that your practice is aligned with the latest developments.
Companies House reforms represent a transformative moment in the UK’s approach to corporate governance and transparency. While the changes introduce new responsibilities for chartered accountants, they also offer opportunities to enhance their role as essential partners in compliance and corporate integrity. By embracing these reforms and adapting their practices, accountants can help clients navigate the evolving regulatory landscape, ensuring smooth transitions and robust compliance. In doing so, they will reinforce their commitment to supporting a transparent and trustworthy business environment in the UK.
Mike Miller, Economic Crime Manager, ICAEW
