Companies House Consultation: Improving the detection of possible criminal behaviour

This is the final article in our series looking at the Companies House Consultation, the changes suggested by the Government and the potential effect they may have on private limited companies.

This article will focus on how the Government is looking to improve the detection of possible criminal behaviour.

What are the proposed changes and what will this mean for me?

The Government proposes to improve the detection of possible criminal behaviour (and the accuracy of the information held at Companies House) through the use of cross-checks between data held by Companies House and that held by other Government and private sector bodies. Regulated bodies spotting an anomaly would be required to report these to Companies House. In addition, new powers are proposed to allow Companies House to share information with law enforcement partners wherever there is substantial reason to believe this would aid in preventing, identifying or prosecuting crime.

Overseas Accounts

One of the main focuses in the consultation was changes that the Government could make to counter money laundering. To assist with this, the Government is considering whether there should be a new filing requirement for UK companies to notify Companies House within 14 days of any non-UK bank account being opened. As part of this, the company would have to provide details about the bank account such as:

  1. the name of the bank;
  2. the address of the branch; and
  3. the account number.

Linking back to our previous article regarding the protection of data that is held on the register, any full bank account information provided by a company would not be made publicly available, but these details would be stored and available to law enforcement agencies on request.

Of all the comments put forward by the Government, the requirement of companies to disclose banking information for any overseas accounts is the one that appears to be causing most concern. Whilst it is clear to see the intention is to target money laundering accounts, the proposals would mean that even in a simple instance of a director opening an EU business bank account, possibly just for visiting abroad, there would be a requirement to provide these details and that those details would be available to law enforcement agencies on request. Of particular concern is the following sentence taken from the consultation: ‘However, there may be a case for some basic information e.g. the jurisdiction under which the bank account operates, to be made public.’

Limited Partnerships

A proposal, intended to aid in the prevention of misuse of limited partnerships, would look to provide a new process through which the court can ensure a limited partnership no longer carries on business where it is deemed to be in the public interest to cease trade.

Limited partnerships are different to corporate limited companies and limited liability partnerships in the fact that limited partnerships can continue even after the partners have decided to dissolve the limited partnership.

Any changes implemented by the Government would need to acknowledge these differences in corporate structure so that when a court decides a limited partnership should cease trading, this can be actioned and the Companies Register updated accordingly. This may involve being struck off the register completely.

Directorships

The consultation also considers introducing a limit on the number of directorships that an individual may hold simultaneously. Similarly, this would also apply to the issue of having multiple companies registered at a single address. Alternatively, Companies House could be given the ability to link multiple directorships and then the power to flag this information to law enforcement agencies where necessary. The consultation looked to discuss what this limit should be set, but there is no definite information as to what this number would be at present.

When Could This Be Implemented?

The consultation points out the suggested reforms to Companies House in terms of both systems and staffing will necessitate primary legislation to be enacted and could take years to deliver.

Many of the proposals are both relevant and necessary to ensure we are keeping accurate data on file and keeping faith in UK business practice high. However, issues such as the general uncertainty around cap levels for a number of the proposals or how each change would apply to different types of business may be a cause for concern. Of specific concern is the number of times the sentence ‘could be extended to law enforcement agencies’ has been included in the proposed changes.

This has concluded our look into the consultation and has hopefully provided some useful information on the proposals. If you have any queries about how the proposed changes to Companies House will affect your business, please contact Andrew Meredith on 01689 877081.

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