Strengthening company fraud protection

Strengthening company fraud protection

In order to increase transparency about the way in which companies were both owned and controlled, in 2016 the UK became the first country in the G20 to introduce a public register of company ownership. The fact that in 2018 the register was accessed some 6.5 billion times is a testament to the impact of the project. However the register has not been universally welcomed with 10,000 complaints in the last three years, the majority of which related to concerns over disclosure of personal details and the consequent risk of fraud.

In response to these concerns Companies House has announced a package of reforms with a view to both safeguarding the personal data of business owners and ensuring the accuracy of the register. This, Companies House say, will not only provide great personal protection but also help to strengthen fraud protection for the companies themselves and for consumers.

There are four main proposals, the first of which is to undertake identity verification checks for those who are setting up, managing and controlling companies. This will help to ensure that the information being entered on the register is correct and relates to verified individuals. The quest to improve the accuracy of data on the register is further strengthened by a power being given to Companies House to query and corroborate information before it is entered on the register.

It is believed that this verification of entries on the register will also help to protect companies from potential fraud. In a further quest for fraud prevention the reforms aim to improve the way in which information is shared between Companies House, other government bodies and financial institutions, thereby enabling “faster and more sophisticated identification of possible criminal activity.”

Responding to the concerns raised by individuals in respect of potential misuse of private information, directors will be given additional rights in respect of the way in which their personal data such as home addresses are viewed and shared.

The proposals have been welcomed by a number of bodies including the Institute of Directors which highlighted the challenge of marrying transparency with fraud prevention. Commenting on the proposals, Louise Smyth, the Chief Executive of Companies House, said “This package of reforms represent a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protect Directors from identity theft and fraud and improve the accuracy of the register.”

Nick Lindsay
nick.lindsay@gmail.com
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