What is it?
The Economic Crime and Corporate Transparency Act 2023 introduces reforms that will have consequences for Persons of Significant Control (PSCs) of UK companies.
One of the most fundamental changes that is being introduced is the concept of ID Verification. Whilst this has not yet been introduced, the changes will require some planning.
Who is it for?
All new and existing PSC's of UK-registered companies.
How does it work?
Once the secondary legislation has been enacted, all new and existing PSCs of UK companies will be required to verify their ID with Companies House. The information used to verify a PSCs 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 PSCs: It is expected that there will be a specified timescale for existing PSCs to verify their ID. As yet, there is very little information on whit this timescale is likely to be.
It is anticipated that there will be a portal through which PSCs can submit a copy of their ID alongside taking a photo of themselves. Likeness matching technology will then be used to verify that individual. This will then verify that individual across all of their appointments. This will only need to be done once per individual. If they are a director and a PSC, the verification will apply to that director appointment as well.
New PSCs: For new PSCs, the requirement to verify ID will be largely similar to the above. They may choose to verify their ID prior to 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 such time as the PSC has verified their identity. If the PSC continues to remain unverified, they may be liable to civil penalties. Companies should therefore endeavour to secure the ID verification prior to appointment and where they are unable to do so, they should communicate to the PSC that they are likely to be contacted by Companies House.
If the new PSC is a corporate 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.
What else do I need to know?
Both current and new PSCs 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”. As yet, there is little guidance on what this statement will entail, so please do check back here for updates.
What should I do next?
All companies should make sure this new requirement is communicated to all existing PSCs, and to any new PSCs that are notified going forwards.
Where there are internal checklists for the appointment of a new PSC, the company should make sure this new requirement is incorporated into those checklists. Companies should also make sure that all new notifications are made to Companies House within 14 days.
Once the legislation comes into force, Companies must ensure that all PSCs 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 and 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.
This article has been updated since its original publication (2 February 2023) to provide accurate and up-to-date information.
Find out more about Charlotte Leslie