Will new powers at Companies House stop or slow down fraudsters?

The Companies House register has long been open to exploitation by criminals seeking to commit fraud, money laundering and other forms of financial crime as a result of some baked-in lack of controls. New measures which came into force earlier this week will help mitigate the risks of UK companies being used for nefarious purposes but they are only a start. 

These measures, the first under the wide-ranging Economic Crime and Corporate Transparency Act 2023, will enable Companies House to start to tackle fraud and the misuse of the register. It is being hailed as the most significant change to Companies House in its 180-year history.

In summary, the powers (which, crucially, will be complemented by new criminal offences and civil penalties) include: 

• new rules for registered office addresses (it is no longer possible to use a PO Box as a registered office address); 
• a requirement for all companies to supply a registered email address; 
• stronger checks on company names and powers to tackle and remove factually inaccurate information; 
• greater powers to query information and request supporting evidence; 
• a requirement for subscribers to confirm that they are forming a company for a lawful purpose when they incorporate, and for a company to confirm its intended future activities will be lawful on its confirmation statement; and 
• the ability to share data with other government departments and law enforcement agencies. 

Importantly, this is a phased roll out of new powers under the Act and there is still a long way to go. For example, full identity checks on company directors is unlikely to come into force for some time. Further, it will require global cooperation to create a level playing field and to stop criminals shopping around for the easiest jurisdiction to exploit. Criminals are more than happy to forum shop and the exponential growth in fraud across the globe can only be stopped – or at least slowed – if more is done, worldwide, to inhibit criminals’ use of corporate structures.