A draft Statutory Instrument, the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations, was laid before Parliament in May, which makes provisions under the Companies Act 2006 (‘the 2006 Act’) about identity verification, authorised corporate service providers and unique identifiers. 

The 2006 Act, as amended by the Economic Crime and Corporate Transparency Act 2023 (‘the 2023 Act’), will require those involved in setting up and running companies to verify their identity. Section 1110A(1) of the 2006 Act defines “identity is verified” for the purpose of the 2006 Act. 

According to the procedure set out in the new statutory instrument, this status can be obtained via verification either by the registrar of companies, or by an authorised corporate service provider (ACSP). Once verified, each individual will have a unique identifier allocated to them according to this instrument.

Background

Under the 2006 Act, individuals involved in setting up, running and controlling companies will be required to verify their identity. Section 167M of the 2006 Act prohibits acting as a director of a company unless an individual’s identity is verified. 

Section 790LQ of the 2006 Act requires persons with significant control (PSCs) over companies to maintain verified identity status during the period in which they stand as a PSC in relation to a company. 

Individuals may verify their identity with the Registrar directly or via an ACSP. The identity verification requirements are intended to improve the reliability of the information on the register and to make it challenging for individuals to create a fictitious identity, or fraudulently use another person’s identity, to set up or run a company.

Previously, there were no requirements that individuals who were appointed as directors of a company, who were notified as PSCs, or who filed information with the registrar were required to have their identities verified. 

The company registration framework was left open to abuse as companies and others could falsely register an individual as a director or create fictitious identities for their directors or PSCs. There were also no restrictions on the ability of third parties to file documents or form companies on behalf of others. The majority of these third parties are legitimate businesses, but there was evidence that they were at high risk of being used in money laundering schemes.

After the 2023 Act, all directors, PSCs and those who file documents with theRegistrar (excluding employees of ACSPs, or anyone who may fall under an exception provided for in separate regulations) will need to verify their identity. All agents will have to be registered as an ACSP with the Registrar, and be UK supervised for anti-money laundering purposes to do so.

This instrument sets out the procedure that must be followed for an individual to have their identity verified or reverified by either the Registrar or by an ACSP. The identity verification procedure created by this instrument requires that an identity verification application contains specific information, but it also confers a power on the Registrar to require further types of information, evidence and steps to be taken in rules. 

This is necessary to ensure that the identity verification procedure can remain flexible and adapt to changing technology or identity proofing techniques. There is a draft version of the Identity Rules, although not all requirements are yet in place. Measures introduced and in force from 4 March 2024, as well as future changes, are outlined here.

Future steps

In addition to the draft version of the Registrar’s rules, Companies House will also produce further, non-statutory, guidance to support ACSPs to undertake successful identity verification checks.

ICAEW will be working alongside Companies House and the Department for Business and Trade to produce more detailed guidance for chartered accountants who are required to carry out verification work for clients, or for those firms who are considering applying to be ACSPs. 

Given the current suspension of Parliament and election-related uncertainties, timescales around the new identity verification measures coming into force are not yet clear. Companies House has indicated an intention for these measures to come into force in full from early 2025. However, the expectation is that further information will be released after the election and resumption of Parliament.