The Economic Crime and Corporate Transparency Act (ECCTA) 2023 introduced new identity verification requirements for directors and people with significant control (PSCs) among others, which come into force from 25 March 2025. The Companies House reforms are expected to impact about 7.4 million existing officers on the register that require verification.
“This is to clean up the register and make sure everybody on the register is valid,” says Tim Pinkney, Director of Professional Standards at the Institute of Financial Accountants (IFA).
“In the past, it was a free-for-all to set up a company in the UK, there were no checks, no balances. Anyone could set it up.”
The new requirements introduce additional liability for verifiers. “Once they’ve verified somebody, and that person gets a unique ID verification number, Companies House will always know who verified them,” Pinkney says. “If there is a problem going forward, let’s say it was a false passport or driving licence, the original verifier is liable.”
Companies House has already made substantial progress in cleaning up the register, with 75,600 companies impacted as of January 2025. This includes the removal of:
- 60,700 suspicious or inappropriate registered office addresses
- 47,200 officer addresses and 42,900 people with significant control (PSC) addresses
- 40,300 incorporation documents containing unauthorised personal data
- 9,500 documents including false mortgage satisfaction filings.
Practical steps for accounting practices
Pinkney advises firms to start preparing by checking their information is current and accurate. This includes:
- Ensuring their firm’s details match up across IFA records and Companies House.
- Reviewing current processes to incorporate the new verification requirements.
- Following the guidance from Companies House once it’s released.
- Planning communications with clients about the new changes.
The IFA is working closely with Companies House on implementation, regularly uploading supervised firm lists and responding to draft guidance.
Document retention requirements have also been strengthened. “You’ve got to keep the original documents that you verified somebody with, or copies of the original, for seven years,” Pinkney says. This differs from current AML requirements, where due diligence records are kept for five years after the business relationship ends.
He acknowledges the added compliance burden for smaller practices, but assures this will be a “one-off hit” as firms adapt to the new system. “Once people have had their ID verified, then they can use it,” he says. “I can then use my ID verification to set up multiple companies.”
Pinkney advises firms to integrate these new requirements into their existing processes: “If you’ve got all your records together and you build your processes into your existing business as usual processes, it shouldn’t be too painful.”
Verification and ACSP registration processes
The new system introduces Authorised Corporate Service Providers (ACSPs), which will be responsible for verifying the identity of company directors and PSCs. Individuals will have two main routes for identity verification, including direct verification through Companies House and verification through an “ACSP”.
“If you’ve got all your records together and you build your processes into your existing business as usual processes, it shouldn’t be too painful.”
Tim Pinkney, Director of Professional Standards, IFA
To become an ACSP, firms must:
- Be registered for anti-money laundering in the UK.
- Provide their AML supervisory body membership number.
- Pay a £55 registration fee.
- Complete a one-off registration which includes identity verification of the main contact within the firm.
Once registered, ACSPs will receive a new digital account, a unique identity number and the ability to add team members to conduct verifications. The verification process is expected to take minutes to complete using documents such as passports and smartphones. Companies House is providing a six-month window ahead of mandatory requirements to help firms transition to the new regime.
ACSPs face liabilities
Companies House estimates approximately 55,000 lawyers and accountants will register as ACSPs.
“Once they’ve verified somebody, and that person gets a unique ID verification number, Companies House will always know who verified them,” Pinkney says. “If there is a problem going forward, let’s say it was a false passport or driving licence, the original verifier is liable.”
The new requirements go “beyond the money laundering controls”, Pinkney cautions. Accountants will need to follow specific guidance on acceptable verification methods and document retention, which is expected to be released later this month.
Implementation timeline
The changes will be introduced in a phased approach:
- 25 February, 2025: Voluntary ACSP registration begins.
- 25 March, 2025: Individuals can voluntarily verify their identity.
- Autumn 2025: Mandatory ID verification for new incorporations and appointments.
- Spring 2026: ACSP registration becomes mandatory for third-party submissions.
The IFA will hold an AML Conference online on 20 May that includes valuable insights from experts about AML regulatory updates. More information here.
