As the UK's official public register of companies and overseas entities, Companies House, rolls out its new identity verification requirements to align with the implementation of the UK Economic Crime and Corporate Transparency Act (ECCTA), we take a look at some of the details of the changes. We also look at other factors that are important in due diligence when it comes to understanding who the ultimate beneficial owners (UBOs) of an entity are, including direct ownership, indirect, and those who may exercise control.
To support anti-financial crime efforts, anyone who runs, owns, or controls a company in the UK will need to verify their identity to prove they are who they claim to be. Identity verification will be a new legal requirement for UK entities aimed at deterring the use of companies for illegal purposes.
This step taken by the UK government is expected to help reduce the risk of fraud, improve transparency, and enhance the accuracy of information held on the Companies House register. There are implications for entity verification, third parties acting on behalf of an entity, reporting of ultimate beneficial ownership, and identification of people with significant control (PSCs).
While additional verification information made available through Companies House can provide a foundational asset for risk and compliance teams to understand UBOs, robust due diligence requires more. For a clearer picture of beneficial ownership and associated risk, businesses need processes that leverage global, cross-border datasets combined with analytics that consider direct and indirect ownership, as well as control through different corporate links.
A phased timeline of changes has been shared by Companies House, which aligns with the implementational strategy of the UK ECCTA.
The new requirement for identity verification will be phased in from 2025 starting with voluntary filing and registration of Authorised Corporate Service Providers (ACSP), becoming compulsory for new directors and PSCs in the autumn of 2025, and requiring all existing directors and PSCs to complete verification by autumn 2026.
First half of 2025
The new requirement to file identity verification with Companies House comes into effect on a voluntary basis.
Third-party providers can begin registering as ACSPs to act on behalf of an entity to file the necessary identity verification with Companies House — ACSPs might include accountants, lawyers, or other governance professionals.
A process will also be available to individuals who wish to suppress their residential addresses from public disclosure in certain circumstances in this first phase of changes.
Second half of 2025 — Identity verification for new directors and PSCs:
Identity verification will become a compulsory part of incorporation and new appointments for new directors and people with significant control.
A 12-month transition phase will begin in the autumn of 2025 that requires more than 7 million existing directors and PSCs to verify their identity. There will be two options available for identity filing:
Identity verification will then need to be integrated into the annual confirmation statement filing, meaning directors and PSCs will need to ensure their identity is verified each year for compliance.
First half of 2026
Restrictions on who can file documents at Companies House are likely to be put in place early in 2026. For third-party agents who are asked to file on behalf of an entity, this will include a mandatory requirement for them to have registered as an ACSP.
Second half of 2026
Pre-existing directors and PSCs will have been given a year to comply with the identity verification requirements, and they will be required to have completed and filed their verification by autumn 2026.
The identity verification changes being introduced by Companies House offer benefits for risk and compliance teams conducting Know Your Customer (KYC) or anti-money laundering (AML) processes, as they will have the potential to obtain the identity, ownership, and control information from the register.
If the identities of directors and PSCs are verified and authenticated, and filed annually, this may make it harder for bad actors to use corporate structures for fraudulent or other illegal purposes. The verification process is likely to make it more difficult for individuals to hide behind a false identity or complex corporate structures involving circular ownership or shell companies.
For anti-financial crime, risk management, and compliance teams, they will have access to this official information from the UK register for use in investigations and due diligence. The filings can support transparency of corporate ownership and more effective risk assessment or monitoring.
Any method that supports identification of Ultimate Beneficial Owners is important for enhancing corporate transparency to understand risk. While reporting may make it harder for illicit actors to hide behind corporate structures, this alone is not enough to create a full picture of risk.
Sophisticated criminals continuously evolve methods to obscure ownership and control. Just because someone has identified themself as a director doesn't mean that's the end of their story. For robust risk assessment, a director, PSC, or UBO would need to be further screened, and their risk profile assessed before a decision about working with them is made.
Complex ownership structures can still be used to evade or obscure association with criminal enterprise due to the use of layering of multiple legal entities, trusts, and partnerships across different jurisdictions. These methods may involve circular ownership patterns, shell companies, and nominee arrangements that continue to obscure true beneficial ownership. As a result, even with enhanced due diligence processes, understanding who ultimately owns or controls a company can remain a knotty task.
While better UBO identification is of key importance, it is one element of due diligence and continuous monitoring that forms part of a risk-based approach to KYC and AML activity. Other risk signals can be combined with UBO and Entity Verification data to create a more holistic picture of risk.
To detect hidden control and influence beyond a surface level, organizations can adopt a multi-faceted approach. This may include using advanced technologies such as AI and data analytics, as well as multiple global datasets to uncover hidden connections and material changes, while maintaining continual oversight of a third party’s risk profile.
A process of perpetual KYC, which automatically flags changes to material risk factors across a third-party network can signal the need for enhanced due diligence and can be used as part of ongoing risk-based decisioning.
The Centre for Finance, Innovation and Technology (CFIT), of which Moody’s is a part, is an industry coalition that aims to address fraud and illicit activity in the financial sector. The coalition focuses on data-driven research and testing to develop solutions for better fraud detection, protecting small and medium enterprises, and strengthening defences against crimes like authorised push payment (APP) fraud.
One of CFIT’s key initiatives is the Digital Company ID, aimed at further improving efficiency, security, and trust in business transactions. Their aim is to have the ID support more seamless, secure data sharing across firms and sectors, helping to prevent fraud by closing gaps and disrupting fraud networks.
Moody's also offers data and innovative technology solutions to support Entity Verification, KYC, and Know Your Business (KYB) due diligence as part of a unified risk management approach. We can help simplify the process of understanding the ownership, control, and shareholder structure of a legal entity.
Our Entity Verification API connects directly to live government registers worldwide, which helps provide the foundation data to support risk assessment. The API retrieves time-stamped documents directly from national registers, providing audit-proof evidence for compliance. It supports borderless discovery, so users can conduct thorough ownership research. Moody's can also provide an interactive interface with visual ownership trees, making complex structural information easier to understand.
If you would like to discuss your approach to Entity Verification and understanding beneficial ownership, please get in touch with the Moody's team — we would love to hear from you.