By Meena Sahota, 21 February 2025
As we approach the implementation date of a pivotal change in corporate governance, businesses across the UK are preparing for the mandatory identity verification requirements for directors, set to be enforced by Companies House from 25 February 2025. This regulation marks a significant stride in bolstering corporate transparency and security, aligning with the objectives of the Economic Crime & Corporate Transparency Act 2023.
Starting next week, directors will be required to undergo identity verification to be registered with Companies House. This initiative aims to curtail the proliferation of rogue operators and fraudulent directors, particularly those managing multiple entities. The identity verification service is provided free of charge but must be carried out by an Authorised Corporate Service Provider (ACSP) such as accountancy or law firms, including Everest & Co. This ensures that the process is seamless, secure, and compliant with legal mandates.
Understanding the Verification Process
Complying with this new requirement involves a comprehensive identity verification procedure, managed by ACSPs who assume the responsibility of accurately verifying the identities of directors. These verifications involve collecting essential information including the full name, past names, date of birth, and address history, among others. It is crucial for firms to authenticate these details with physical documents, with liabilities for any oversight resting firmly on the ACSP.
Verification Options and Documentation
To facilitate the verification process, there are two approaches available. Option 1 relies on identification document validation technology (IDVT), which leverages advanced algorithms to authenticate documents by checking their security features against a stored template. This method provides a robust layer of accuracy and assurance in preventing fraudulent documentation. Under this option, directors can present documents such as:
- A biometric or machine-readable passport, or an Irish passport card (up to six months expired if identity checking technology can still validate the cryptographic features).
- A UK, Channel Islands, Isle of Man, or EU photocard driving licence (full or provisional).
- An identity card with biometric information from the EU, Norway, Iceland, or Liechtenstein.
- A UK biometric residence permit (BRP), which can be up to 18 months expired.
- A UK biometric residence card (BRC).
- A UK Frontier Worker permit.
Option 2, on the other hand, requires the physical checking of documents by trained personnel, necessitating expertise in detecting false documentation. This manual verification demands a minimum of two documents, one of which must include a photographic ID. Companies House has delineated these documents into two groups (A and B), providing flexibility in meeting compliance requirements.
Consequences and Transition Period
Non-compliance with these regulations will result in fines, emphasizing the importance of prompt adherence as the regulations take effect. However, there is provisioned a transition period extending to autumn 2026 for existing companies. During this time, businesses will need to present identity credentials for directors during their next confirmation statement submission.
In summary, this regulatory development is a decisive step toward enhanced corporate diligence and will play a critical role in reinforcing the integrity of business operations across the UK. At Everest & Co, we are poised to assist our clients through every step of this new compliance landscape, ensuring a smooth transition and steadfast adherence to these pivotal changes. As we approach this new era of director identity verification, our commitment to providing exceptional client service remains unwavering.