A mismatch of ID requirements

Companies House will, over 2025 and 2026, be requiring all company directors and PSCs to have their identity verified. They expect there to be seven million IDs to verify. But accountants and others have for years been verifying their clients’ ID to satisfy the requirements of the Money Laundering Regulations 2017. So, you might think, for most of those seven million people the ID verification has already been done. All that is needed is for the accountants to inform Companies House that their clients’ IDs have already been verified – correct? Unfortunately not!

There is a mis-match between the ID requirements under MLR 2017 and the ID requirements of Companies House.

Satisfying MLR 2017

The approach taken by accountants under MLR 2017 has been to verify the client’s name, date of birth and address. Where the client is a company the accountants will also verify the name, date of birth and address of the company’s directors and beneficial owners (including PSCs).

The verification typically takes the form of seeing at least two documents (such as an unexpired passport or driving licence and a recent bank statement or utility bill) and/or undertaking an electronic check of name and address.

This approach is informed, in particular, by Regulation 28 MLR 2017 and the AML Guidance for the accountancy sector produced by the Consultative Committee of Accountancy Bodies.

However the AML Guidance does not necessarily require the accountant to obtain photographic evidence, or to be able to extract data from, for example, a passport chip. Accountants are not skilled document examiners and will not have received training in detecting forged documents.

Satisfying Companies House

Recent guidance from Companies House has a different flavour.

The Companies House requirements focus on the name of the individual, date of birth, current and recent addresses and email address.

There are optional different routes to satisfying Companies House.

The first option is for the individual concerned to deal directly with Companies House (and not involve his accountant in the identity verification process). Essentially the individual will confirm his identity via the GOV.UK One Login process.

The second option is for the accountant to use ID verification technology, for example to read the data on the chip in the client’s passport. Just one document will need to be obtained from the client.

The third option is for the accountant to obtain recognised training in document examination and then to receive and examine documents, such as an unexpired or recently expired passport or driving licence and a recent bank statement or utility bill. At least two documents will need to be obtained from the client.

It is essential that photographic evidence of the client’s identity is obtained by the accountant under options two and three.

More information on these requirements is published HERE.

The mis-match

There is therefore something of a mis-match between what accountants have been doing to satisfy the MLR 2017 requirements and the expectations of Companies House. Typically in satisfying MLR 2017 ID verification requirements accountants have not used ID verification technology and have not obtained training in document examination.

This means that in most cases the ID verification already performed by accountants on company directors and PSCs will not be sufficient to satisfy Companies House requirements. As a result fresh ID verification will be required this year or next in order to satisfy Companies House.

What will accountants do?

It is likely that most accountants will direct their clients to obtain for themselves a GOV.UK One Login (if they do not already have one) and deal directly with Companies House.

If you are concerned that your firm’s AML compliance is inadequate, out of date, or even non-existent, get in touch now using the link below and we can work together to fix this. The hardest part is getting started.

David Winch

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