More than 5 million company directors have yet to sign up for new anti-fraud checks despite a looming deadline tomorrow.
New identity verification rules are designed to end Britain’s unwanted reputation as a haven for corporate fraud.
But Companies House, which runs the public register of UK firms, said despite the imminent deadline the number of directors that have signed up was only ‘approaching 1.5 million’ out of the 7 million on its books.
After the deadline passes, any director who has not passed the checks will not be allowed to access Companies House to submit annual accounts or change executives’ details.
Leading business organisations say there is widespread support for the checks, which aim to crack down on money being laundered through shell companies using fake directors, some of which even use joke names such as Donald Duck and Osama bin Laden.
But there are concerns that the ‘confusing, clunky, and occasionally unreliable’ computer program used to carry out the process – called One Login – is still making the process impossible three months after problems with the system were highlighted by The Mail on Sunday.
Crackdown: New identity verification rules are designed to end Britain’s unwanted reputation as a haven for corporate fraud
Companies House was today urged to ‘do everything in its power to ensure that its systems are up to the task’. New rules have been brought in under the Economic Crime and Corporate Transparency Act 2023 – the biggest reform of Companies House since its inception in 1844.
Last month a BBC investigation revealed how a Kurdish crime network was enabling migrants to work illegally via a string of dodgy businesses.
Under the scam, fake directors were paid to have dozens of firms registered in their names on official paperwork – but were not involved in running them.
While the crackdown has broad support, the Institute of Directors (IoD) said the complex and unreliable verification process risked hitting legitimate firms.
‘Many members highlighted difficulties with One Login, calling it confusing, clunky and occasionally unreliable,’ an IoD spokesman said. ‘It’s clear smoother navigation and clearer guidance will be key to ensuring the system works effectively for businesses of all sizes.’
Tina McKenzie at the Federation of Small Businesses said asking directors to submit photo ID to register was ‘an important step in the fight against fraud’ but added Companies House needed to ensure the system was ‘up to the task of processing all the verifications submitted before it becomes mandatory’.
The number of directors who have undergone verification checks has risen rapidly since August, when it was only 300,000.
But many have found the process, which means linking existing ‘.gov.uk’ accounts with One Login, fraught with difficulties. Users reported Kafkaesque problems ranging from digital codes failing to appear, an ‘infinite loop’ of login screens, and the system failing to recognise documents as evidence. Officials admitted ‘essential security features’ could affect the process and conceded One Login did not meet all standards.
Those with experience of the lax controls also remain sceptical. Kevin Brewer, 73, a Warwickshire businessman took drastic measures to highlight director fraud in 2013. He created a bogus firm with then Business Secretary Vince Cable as a director – and was prosecuted.
He told The Mail on Sunday there were ‘still massive holes’ in the registration system, adding: ‘I don’t see any improvements. There is still the formation of companies in other people’s names.’
He said ‘proper verification’ was still ‘very hit and miss’ and Companies House needed ‘many more staff’ to do it properly.
Companies House noted ‘deadlines for existing directors and persons of significant control will be spread across a 12-month transition period’.
A spokesman added: ‘We have undertaken extensive work to ensure businesses are aware of upcoming changes. The introduction of identity verification will provide more assurance about who is setting up, running, owning and controlling companies in the UK, playing a key role in improving the quality and reliability of our data, and helping to tackle misuse of the register.’
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