May 14, 2025 Verifying identities
Know your customer is one of the key tenets of anti-money laundering practice. But this is just one aspect of an overall drive towards varying forms of identity verification which can lead to openness and transparency in business whilst also closing loopholes which could lead to fraudulent losses.
So how can identity verification help to prevent fraud? In April 2025, following a wave of cyber-attacks on UK retailers, the National Cyber Security Centre (NCSC) issued a critical warning to business to increase levels of awareness. Alongside recommendations such as reviewing password reset procedures and raising awareness amongst staff, the NCSC recommended the introduction of internal codewords or other identity checks for staff who requested credential or key financial changes.
It may seem unnecessary to have to consider building identity verification into internal processes. But, for example, all it takes is for an e-mail address to be cloned and the way is open for fraudsters to issue payment or other instructions in the name of a team leader or member of staff. In those instances, having a set identity check process would mean that individuals would not be worried about having to challenge the request and therefore help to prevent a potential fraud.
Another step in the move towards fraud prevention and transparency is the identity requirement introduced as part of the Economic Crime and Corporate Transparency Act 2023. The act requires directors, persons with significant control, and those who file on behalf of a company such as company secretaries to verify their identity with Companies House.
At present verification is voluntary, but compulsory verification is expected to come into force in the autumn of 2025. Once in full effect, those who have not verified their identity will not be able to file on behalf of their organisation or start a new company or entity. In addition, those who continue to be a director or person with significant control without verification will be committing an offence and may have to pay a financial penalty and be disqualified from continuing in their role. Companies House estimate that some seven million verifications will be required so it may be worth considering making a voluntary verification now rather than run the risk of being caught in a backlog later on.
Elemental is an Authorised Corporate Service Provider (ACSP). As such we are authorised to file on behalf of organisations and to conduct identity verification processes on behalf of our clients.
