The Government Response to the Treasury Committee's Twenty-Eighth Report: Economic Crime – Anti-money laundering supervisions and sanctions implementation was released on 8 May 2019.
The Report had identified Companies House as presenting a weak area in the UK's systems for preventing economic crime. The Report stated that "[t]he UK cannot extol the virtue of a public register of beneficial ownership and yet not carry out the necessary rigorous checks of the information on that register."
The Government Response to this was that the Department for Business, Energy and Industrial Strategy will publish a consultation on reforming Companies House shortly. The issues included in the consultation will include the information which companies are required to disclose, the checks on this information and the exchange of intelligence between Companies House and UK law enforcement authorities. The consultation was launched on 5 May 2019 and closes at 11:45pm on 5 August 2019.
The lack of verification of information at Companies House has been a longstanding weakness in the veracity of the register; and the lack of teeth and/or willingness to bite in relation to misinformation provided to Companies House have together allowed for a system wide open to abuse and fraud to exist.
This was made all too clear in the first ever prosecution for falsifying company information in 2018; a case hailed as a success story on the part of Companies House. However, on closer inspection of the facts Mr Brewer who supplied false facts did so in order to expose the gaping loophole in the system that meant such facts could be submitted to the register with no verification conducted.
Mr Brewer had incorporated John Vincent Cable Services Ltd in 2013, making the former Business Secretary Vince Cable MP a director and shareholder without his knowledge. Mr Brewer had also formed another company in 2016, Cleverly Clogs Ltd, making Baroness Neville-Rolfe (the Minister with responsibility for Companies House), James Cleverly MP and an imaginary Israeli national, Ibrahim Aman, all directors and shareholders without their knowledge. Mr Brewer pleaded guilty and was fined £1,602 and ordered to pay costs of £10,462.50 and a Victim Surcharge of £160.
While this case was amusing and the prosecution itself a little petty the point made by Mr Brewer was a serious one and flaws identified are still inherent in the current system. This firm intends to respond to the consultation.