What is it?
The Economic Crime and Corporate Transparency Bill, which is currently before Parliament, introduces reforms that will have consequences for UK companies' Persons of Significant Control (PSC's).
One of the most fundamental changes that are being introduced is the concept of ID Verification.
Who is it for?
All new and existing PSC's of UK-registered companies.
How does it work?
Once the legislation has been enacted into law, all new and existing PSC's of UK companies will be required to verify their ID with Companies House. The information used to verify a PSC's ID will be protected information and thus, it will not be displayed on the public record.
The requirements for verification will differ depending on whether they are an existing PSC or one that is notified after the law is changed.
Existing PSC's: It is expected that there will be a specified timescale for when existing PSCs' ID verification must be completed once the law has been passed.
It is anticipated that there will be a new portal through which PSC's must register an account and submit a copy of their ID alongside a photo of themselves. The software will then use facial mapping technology to verify that the person on the ID matches the person in the photograph. This will then verify that individual across all their appointments. This will only need to be done once per individual, rather than multiple times for each company they are a PSC of. If they are a director and a PSC, the verification will also apply to that director appointment, and they will not need to re-verify.
New PSC's: for new PSC's, the requirement to verify ID will be largely the same as above. They may verify their ID before formally being notified to Companies House, but this is not a requirement.
If they choose not to verify their ID in advance, and paperwork is submitted to Companies House to appoint them as a PSC, Companies House will still register the appointment. They will then attempt to contact the individual asking them to verify their ID within a given time frame. If they do not do so, an annotation will be added to the register to state that the new PSC is unverified. The annotation on the register will remain in place until the PSC has verified its identity. If the PSC remains unverified, they may be liable to civil penalties. Companies should therefore communicate to the PSC that Companies House will likely contact them.
Where the new PSC is a legal entity (e.g., a Relevant Legal Entity), a relevant officer of that entity should be ID verified. That relevant officer must be a natural person.
Both current and new PSC's may prefer to ask a third party to arrange this ID verification for them. An "Authorised Corporate Service Provider" such as an Accountant or Solicitor may be used by an individual to verify their ID and submit a "Verification Statement". There is little guidance on what this statement will entail, so please check back here for updates.
What should I do next?
All companies should make sure this new requirement is communicated to all existing PSC's, and to any new PSC's that are appointed going forwards.
Where there are internal checklists for appointing a new PSC, the company should ensure this new requirement is incorporated into those checklists.
Once the legislation comes into force, Companies must ensure that all PSC's are compliant and have verified their ID. If a PSC fails to verify their ID after receipt of notification from Companies House, and after the register is annotated, they will have committed an offence. They may be liable for a civil penalty.
If you have any queries regarding the above or have any other questions, please do not hesitate to contact Charlotte Leslie at 01865 261119 or email.
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