Here is the Companies House “Strategic Intelligence Assessment”, Section 4 includes an overview on just how easy it was for Company Directors to blag the Bounce Back Loan Scheme.
Chief Executive’s Foreword
I am pleased to introduce Companies House’s first ever strategic intelligence assessment. This marks one of the major steps forward for the changes underway at Companies House. The assessment forms part of our work to more closely align to the National Intelligence Model and will underpin the work of our new and expanding intelligence team.
I’d like to thank our strategic partners for their valued insights, which have been used to shape our assessment and are helping us to continue our integration into the wider economic crime ecosystem.
We are at an exciting developmental phase. The Economic Crime and Corporate Transparency Act 2023 (ECCT Act) fundamentally changes the role of Companies House. We will now have the powers to reject, remove or rectify information on the UK company register. We’ll also have wider ranging powers to analyse and share data and information. We will no longer be a passive acceptor of ‘duly delivered’ documents but will be more proactive in ensuring the quality and accuracy of the company registers.
The Economic Crime and Corporate Transparency Act gives the 3 UK registrars clear objectives. To:
- ensure that anyone who is required to deliver a document to the registrar does so (and that the requirements for proper delivery are complied with)
- ensure information contained in the register is accurate and that the register contains everything it ought to contain
- ensure that records kept by the registrar do not create a false or misleading impression to members of the public
- prevent companies and others from carrying out unlawful activities or facilitating others to carry out unlawful activities
It has become even more clear in recent months that the scale of abuse of the UK company register continues to grow. I am determined that with our new powers we will act as quickly as possible to address these issues – taking action ourselves and supporting our law enforcement and other public partners.
Our strategic intelligence assessment provides analysis of the key threats being faced by Companies House. It will be followed by our control strategy outlining recommendations and action plans.
These plans will be based on a 4-part approach widely adopted in law enforcement called the ‘4P approach’, which focuses on:
- preparing for the threat
- preventing the threat wherever possible
- pursuing those who undertake activities which contribute towards the threat
- protecting against the threat
We know that we have gaps in our understanding of the threats. We’ll be looking to continue to engage with stakeholders and partners to help to fill these gaps.
This strategic intelligence assessment will drive the direction of Companies House and underpin the application of our new powers across the organisation. It will guide prioritisation, decision making, risk identification and mitigation. This will support businesses and the wider UK economy, by helping us provide an accurate, responsive register of corporate entities.
These are new and exciting times for Companies House. I am determined to play our part in ensuring the UK company registers are not abused.
Louise Smyth
Chief executive
Companies House
1 Register of Overseas Entities and overseas organised crime groups
Register of Overseas Entities (ROE)
Thirty thousand entities were registered on the Register of Overseas Entities by December 2023 – over 90% of the total register. It’s almost certain that these registrations have:
- reduced the threat posed by hiding or ‘obfuscation’ of foreign ownership of UK land and property
- improved transparency, ensuring relevant data is available to law enforcement and other relevant public authorities
It’s almost certain that the success of the registration of overseas entities will be based on both:
- effectively implementing the Register of Overseas Entities
- rigorous ongoing enforcement activities against non-compliance
Neither aspect on its own will provide the solution.
It’s highly likely that the UK’s international reputation will be damaged by:
- failure to adopt a risk-based approach to considering threats posed by beneficial ownership of legal persons
- competent authorities not being able to access data relating to overseas ownership in a timely manner
Background
The Economic Crime (Transparency and Enforcement) Act 2022 gave us the powers to create the Register of Overseas Entities (ROE). This was a response to the sharp increase in overseas property ownership in the UK and international tensions resulting from Russia’s invasion of Ukraine.
Between 2010 to 2022, overseas property ownership in the UK tripled. By November 2022, 1% of all UK properties were owned by overseas entities.
Wealthy investors often buy property through corporate entities, including those offshore. This action, whether deliberate or not, can hide beneficial ownership and provides potential for money laundering opportunities.
A 2022 assessment estimated that money laundering accounts for up to 5% of global gross domestic product (GDP), equivalent to 2 trillion US dollars.
ROE scheme
The ROE scheme was introduced in August 2022. It’s part of the government’s strategy to tackle global economic crime and strengthen the UK’s reputation as a place where legitimate businesses can thrive.
The scheme requires all overseas corporate structures who buy, sell or transfer land or property in the UK to:
- register with Companies House
- declare its beneficial ownersor managing officers
This also applies retrospectively to overseas entities who bought property or land on or after:
- 1 January 1999 in England and Wales
- 8 December 2014 in Scotland
These overseas entities had to register with Companies House and tell us who their registrable beneficial owners or managing officers are by 31 January 2023.
Overseas entities that have not registered cannot transfer, buy or sell land or property in the UK, preventing illegal activity. We’ve started taking enforcement action against entities that have not registered.
Scale and distribution of overseas entities
Approximately 46% of properties that are registered as owned by overseas entities in the UK are in the London area. Other significant groups of overseas property ownership correspond with different large cities.
What’s next
Threats remain following implementation of the Register of Overseas Entities. We’ll monitor these over the next 12 months.
Companies House is vital in implementing the Financial Action Task Force (FATF) standard in the UK. The next UK assessment is scheduled for 2027. The data collection period to inform this assessment has already started.
Implementing FATF standards also addresses issues of politically exposed persons and those individuals looking to evade sanctions control.
Limited liability partnerships and limited partnerships
Companies House also regulates limited liability partnerships and limited partnerships. We’ll keep monitoring threats specific to their operation. The ECCT Act gives us more power in this area, for example the power to deregister limited partnerships.
Other international influences
It’s highly likely that mass incorporations pose a threat to Companies House. Work is ongoing to fully understand the scale of the issue.
It’s highly likely that ‘company creation tourism’ and the personal details of foreign nationals are being used to:
- deliberately hide the true ownership and control of UK limited company structures
- assist money laundering and other criminality in the UK and overseas
Mass incorporations
Mass incorporation is when many companies – hundreds or even thousands – are registered in a short time and connected through an identical entity.
We’ve identified mass incorporations of UK limited companies in our records. They’re often dissolved 12 months later after minimal interaction with Companies House. Very often we’ve found no direct criminality in relation to these companies.
Work is ongoing to fully understand the scale and reasons for this behaviour. It is likely some partial explanations are:
- limited companies using online sales platforms to sell counterfeit or poor quality goods – mass incorporations allow criminals to switch between companies when intervention activity occurs
- potential sale or acquisition of personal details from overseas students prior to their return abroad
- using UK corporate structures for global legitimacy, to appear respectable, which could help carry out legitimate business or criminality
- a reaction to changes in government policy or legislative change – we’ve noticed increases in incorporations following domestic and international announcements or enactments
There’s a current general trend of increased incorporation. For example, an increase of 19.3% between comparative weeks in 2022 and 2023.
It’s a realistic possibility that at least some of this increase can be explained by individuals looking to create companies before legislative change. These individuals perhaps do not understand that new legislative requirements will still apply to their company, even if the company was created before the change.
Company creation tourism
Law enforcement have shared with us examples of ‘company creation tourism’. This is understood to involve organised crime groups (OCGs) offering holidays in the UK in exchange for letting their personal details be used to:
- incorporate limited companies
- hide who’s controlling the company by becoming ‘stooge’ director
2 Money laundering and UK-based organised crime groups
It is almost certain that the scale of money laundering through UK limited companies is underestimated. There’s no assessment of its value currently available.
It is highly likely that limited company structures within the UK are widely used to facilitate many types of serious and organised criminality. Work is ongoing to fully understand the scale of the issue.
Money laundering describes how the money from illegitimate activities or crimes is transferred into the legitimate economy. Although no absolute figures are available, the National Crime Agency (NCA) has assessed that there is a realistic possibility that the scale of money laundering impacting the UK annually is over £100 billion per year.
The part that previous legal frameworks and UK corporate structures have played in the commission of money laundering is widely recognised.
In partnership with The Insolvency Service, we’re creating 2 new intelligence teams to tackle money laundering, supported by £20 million of funding between 2023 and 2026 from the Economic Crime Levy. These teams will improve our understanding of how UK companies are misused to launder the proceeds of crime.
Types of money laundering
The main types of money laundering are:
- high-end money laundering
- trade-based money laundering
- cash-based money laundering
High-end money laundering
High-end money laundering involves the laundering of funds, wittingly or unwittingly, through the financial sector and related professional services.
Within Companies House, this threat can mean overseas entities purchasing land and property to:
- obscure beneficial ownership
- enable illicit funds to be transferred into the UK economy or financial sector
Trade-based money laundering
Trade-based money laundering means moving illegal funds through the international trade system to legitimise them, which we’ve identified as a threat.
This can include:
- wrongly describing goods on purpose
- invoice discrepancies
- pricing irregularities
- shipments that only exist in paperwork, known as‘ghost’ shipments
UK limited companies can facilitate trade-based money laundering by providing vehicles through which trade-based money laundering can be conducted.
Cash-based money laundering
Cash-based money laundering often uses couriers to transport physical cash and business activities to disguise the integration of funds into the legitimate economy.
Limited companies in the UK are used to integrate illegally acquired cash into the legitimate UK economy. Law enforcement give examples of cash-based limited companies being used in this way, such as nail bars and car washes.
We understand that abuse of corporate structures contributes towards the threat posed by terrorist financing. However, our understanding of the nature and scale of this activity is very limited.
Other serious and organised criminality
It is highly likely that limited company structures within the UK are widely used to facilitate many types of serious and organised criminality. Work is ongoing to fully understand the scale of the issue. Law enforcement give examples relating to:
- Class A drug supply
- fraud
- organised immigration crime
- modern slavery
Limited company structures also facilitate investment fraud.
Illegal drugs: case study
A UK limited company was established with the purpose of smuggling drugs. In 2021, 514 kilograms of cocaine worth £57 million was intercepted while being exported overseas from the UK. Assets of more than £3 million were identified and connected with these criminal activities.
Fraud: case study
A network of apparently unconnected limited companies were used in a business-to-business tele-sales scam concerning long-term energy contracts. Misleading details were provided to customers before the call was transferred to another operator who then formed a verbal contract with victim.
The business-to-business element ensured that no cooling off period was applicable. Organisations targeted included a charity offering support to children suffering from cancer.
Analysis revealed that one individual was connected to all the limited companies. According to press reports at the time, a juror was allegedly offered a bribe and threatened in exchange for a particular plea.
3 Exploitation of the public
It is highly likely that details from future external data breaches could be used in limited company incorporation activity. It is unclear the extent to which proposed identity verification will mitigate against this threat. This may depend on the sophistication of the data breach and details obtained.
It is highly likely that:
- using someone else’s details when creating limited companies, whether that person is complicit or not, is an increasing problem
- work is ongoing to fully understand the scale of the issue
Exploitation of members of the public occurs through the abuse of Companies House processes.
This can be seen directly in the use of personal details of others in the incorporation or director appointment processes.
The Economic Crime and Corporate Transparency Act will over time introduce identity verification processes for everyone who presents documents to Companies House. This will help to mitigate against this risk and it is highly likely that the scale of the issue will reduce.
Exploitation of the public is also seen indirectly through using Companies House structures and processes to facilitate organised immigration crime and human trafficking.
Work is ongoing to fully understand the scale of abuse of community interest companies. However, the community benefit element of the organisation provides opportunities for individuals or communities to be exploited.
Direct exploitation, including appointment of director or use of address without consent
Current lack of verification means that:
- directors of limited companies can be appointed without consent
- addresses can be used without confirmation of any association with a limited company
We recognise that the introduction of the Economic Crime and Corporate Transparency Act will bring new powers to Companies House. Over time this will enable us to introduce verification of identification to our processes.
Scale of data exploitation
In the period 2020 to 2023, requests to remove director details increased by 183%. This figure relates only to instances where a change has been requested. It is therefore highly likely that the true scale of the issue is significantly higher with many instances remaining undetected or unchallenged.
Data misuse issues of this scale pose a huge risk to Companies House. Identification verification and the opportunity to challenge information provided by the ECCT Act will help to improve our integrity.
Causes of data exploitation
Some of the known causes of this kind of data exploitation are:
- identity theft
- purchased identity details
- malicious intent
- identity details of people who have died
- addresses
Identity theft
We received over 3 times more requests to change details between April and June 2022 compared to the same period in 2021.
It’s highly likely that this is because of 2 widely reported data breaches of external employee details. Details from these data sets were used to incorporate 1,020 limited companies without the individuals’ knowledge.
Purchased identity details
Law enforcement have provided examples of individuals being paid to operate as ‘company mules’.
We define ‘company mule’ as individuals being paid, or otherwise being complicit (with or without coercion) in activity which leads to their personal details being used in limited company incorporation or being appointed as director of such organisations.
We’ve seen some examples of foreign students’ details being purchased, especially in circumstances when departure from UK after graduation is anticipated. Exploitation in these cases is more limited as the individuals are considered complicit – although arguably it still exists.
We’re particularly concerned about payments to vulnerable individuals. For example, instances of individuals with learning difficulties who lacked the competence to understand the responsibilities of being a company director.
Malicious intent
There have been a few high profile examples where an individual holds a personal grudge against a corporate entity. They use Companies House processes to target the entity.
Identity details of people who have died
There are people who we understand have died showing as directors on the Companies House register, sometimes appointed after their death. Work is ongoing to identify the scale of the issue and relevant records and rectify the register.
Addresses
There are examples of invalid addresses being used for fraudulent companies. Many agencies consider the selection of addresses to be indiscriminate, identifying no trends or patterns.
It is likely that vacant properties are attractive targets, as letters from us may not be identified for some time. For similar reasons, unoccupied residential premises such as flats above retail outlets have also featured as fraudulent addresses.
Victim care
Our response to fraudulent appointment of directors and addresses not associated to entities is very process driven.
The current position places the responsibility on the person who has been fraudulently appointed, which includes a lot of administrative effort. The speed with which registration is completed (and the proactive approach to maintaining this) is not matched when queries are raised regarding accuracy of details used to incorporate.
We recognise that this is a complex area and that all allegations of fraudulent appointment may not be genuine.
The ECCT Act gives us opportunities to change our approach and reduce the administrative burden of getting the register corrected.
Community interest companies
Community interest companies (CICs) are limited companies whose business relates to community benefit rather than private gain. CICs cannot be political in nature but can have socio-political objectives.
CICs now fall under the remit of Companies House. The Registrar of Companies for England and Wales also holds the position of Regulator of CICs.
CICs need to complete a community benefit statement when they incorporate. During their operation, a legal clause called an Asset Lock prevents the assets of the company being used for private gain, rather than the purpose stated on the benefit statement.
Companies House considers each application to form a CIC individually. About 3,000 CICs are created each year, totalling over 31,000.
Current threats in the area of CICs include:
- allegations of financial mismanagement, including directors’ pay
- CICs not engaging in their stated purposes
Other challenges relate to assessment of annual community benefit returns and enforcement issues.
4 Exploitation of business and state
It is highly likely that limited companies and other structures regulated by Companies House will be used to commit government fraud in relation to any future business relief schemes.
It is almost certain that Companies House processes facilitate confusion and fraud due to openness of naming rules for limited companies.
Bounce Back loans
Company structures can be used to commit fraud against the public sector.
A recent high-profile example of this relates to Bounce Back loans, a scheme put in place to support businesses during the COVID-19 pandemic.
To claim assistance from the Bounce Back scheme, businesses were required to be:
- in existence on 1 March 2020
- adversely affected by the COVID-19 pandemic
- currently trading
- not in liquidation or bankruptcy
Many limited companies applied for Bounce Back loans. The current lack of identification requirements for directors:
- makes it easy to hide or confuse who owns a company
- gives people the opportunity to distance themselves from personal liability
- hampers enforcement activity against non-repayment
It is almost certain that some UK limited companies were used to undertake fraud against the UK government.
Bounce Back loan fraud: case study 1
Two companies submitted false documents to at least 41 local authorities and the government’s Bounce Back loan scheme. They secured £230,000 worth of funding put in place to support businesses during the pandemic, despite having never traded. This included Bounce Back loans totalling £100,000. Following an investigation by The Insolvency Service, the companies were liquidated, or ‘wound up’ by the Court.
Bounce Back loan fraud: case study 2
A director obtained Bounce Back loans of £150,000 for 3 companies which had never traded, and so were not entitled to the loans. The director used the money for cash withdrawals and made payments to a company owned by a “close friend” and other third parties. He was disqualified from acting as a company director for 13 years as a result. His “close friend” was also banned as a director for similar reasons.
The Bounce Back loan scheme was an isolated emergency response and lacked the more considered and nuanced introduction which more routine schemes may have.
Success against Bounce Back loan fraud
Approximately 4000 individuals have been disqualified from being company directors after being involved in Bounce Back loan fraud.
VAT fraud
UK limited companies are used in VAT fraud.
VAT fraud can be committed through:
- cloned companies using the genuine firm’s VAT number to charge VAT to customers at point of sale, with no onward payments to HMRC
- new incorporations register with HMRC to get a VAT number, then using it to charge customers VAT while making little or no VAT payments to HMRC
VAT fraud: case study
Eleven thousand limited companies were incorporated and VAT-registered to a residential flat, allegedly without the knowledge of its owner. The owner received letters from HMRC asking for VAT payments of £500,000.
Business exploitation
Cloned companies
Companies House processes prevent auto-registration in several scenarios. For example, on attempted incorporation, when a proposed company name or director details include one of 2,394 restricted words or phrases.
Despite this success there are still very few restrictions on the contents of a registered company name. This means companies can be incorporated with similar names to existing entities.
Imitation companies confuse consumers and can use the reputation of the ‘real’ company in their business dealings. This is particularly visible in the financial services sector with attempts to imitate financially regulated firms.
Phoenix companies
Entities whose incorporation is followed by a period of debt acquisition are called ‘phoenix companies’. All assets are then transferred to another (often newly created) company before directors seek dissolution of the initial company. This divorces the debt from the assets and makes enforcement activity more difficult.
Company hijacks
Companies are often targeted for hijack in the latter stages of their existence.
Once companies have been hijacked, they can be used directly by those involved in their takeover or advertised for sale.
Company hijack: key success
In a co-ordinated company hijack, registered office addresses of limited companies were changed or attempted to be changed to a residential building of several flats in London.
We identified a suspicious pattern of paper filing in connection with multiple companies, with the same or similar addresses being used alongside similar handwriting.
We decided to intervene to prevent further fraud attempts. In instances where the registered office address had already been changed, Companies House contacted the company at their previous address to query the suspicious filing. These contacts confirmed that the companies had been hijacked. We are supporting customers through the process of rectification.
‘Second-hand’ or ‘vintage’ companies are available on many online sales platforms. While it is not illegal to sell limited companies, it’s difficult to identify legitimate commercial purposes behind such sales and purchases.
In separate instances, single individuals have been identified as directors of a large number of companies. It is highly likely that appointments on this scale prevent single directors from carrying out their duties in an appropriate manner.
5 Cross-cutting threats
It is almost certain that use of professional enablers facilitates abuse of Companies House processes.
It is highly likely that the low cost and ease of registration also contributes to the nation’s desirability as a registration location.
It is highly likely that if Companies House fails to adapt to required ways of working this will cause significant reputational damage to the organisation.
It is almost certain that cyber-attacks against UK critical national infrastructure will continue. It’s highly likely that any cyber breach would cause reputational damage to both Companies House and the UK.
It is highly likely that attempts to impersonate Companies House will enable fraud to be committed.
Some threats affect individual areas of Companies House and particular areas of criminality. Others apply across broad aspects of our processes and form threats in the wider landscape. These are called ‘cross-cutting’ threats.
Cross-cutting threats to Companies House include:
- professional enablers
- formation agents
- jurisdictional issues
- Companies House processes and data maturity
- insider threats
- cyber attack
- political change
- technology use
Professional enablers
Many professionals participate in the creation and ongoing management of UK limited companies. These include, but are not limited to:
- formation agents
- accountants
- solicitors
Many of these professionals provide their services legitimately and enable companies to meet their legislative requirements. However sometimes, professional services are used to facilitate abuse of Companies House processes. This ranges from failure to apply due diligence, to negligence to complicit activity by regulated professionals.
Supervisory bodies provide some oversight of professional activities. However, there is no requirement to fall under one of the regulators to describe yourself as an accountant.
Professional services are commercial, therefore motivated by profit. Compliance with ‘know your customer’ and due diligence is required but not always a primary focus. Company creation is often offered as a loss leader (sometimes free) by enterprises looking to attract long term accountancy business. We therefore assess resources allocated to the necessary checks as low.
Formation agents
Individuals can create limited companies directly through the Companies House website. Alternatively, they can use a formation agent. Many formation agents offer legitimate services. Sometimes they charge less than the Companies House fee of £50 or offer packages of services including VAT registration and virtual office address.
All trust or company service providers must register with HMRC for anti-money laundering purposes, unless they’re already supervised by another body. For example, service providers in the legal and accountancy sector.
However, the use of formation agents can add opaqueness to corporate structures. In these cases, agents might be reckless or careless in their due diligence, or sometimes complicit in illegal actions.
Another threat is limited companies using the address of a formation agent to obscure their own location, without a formal relationship with the agent. This is called ‘squatting’ at the address of a formation agent.
We do not endorse any company formation agents. However, we list 109 formation agents on GOV.UK as having the software to interact with Companies House. There are many other agents, not all based in the UK.
Authorised corporate service providers
The ECCT Act introduces the concept of authorised corporate service providers (ACSPs).
ACSPs will introduce a clearer regulatory framework for corporate service providers. For example, ACSPs will be required to:
- be based in the UK
- register with Companies House, providing opportunities for education and oversight without requiring partner collaboration
- be registered with a supervisory body for anti-money laundering purposes
- retain records of identity verification checks
ACSPs will be liable to suspension if they fail to engage with Companies House’s requests.
We recognise that formation agents are a legitimate and regulated business. However on occasions their behaviour exploits vulnerabilities in Companies House systems and leads to an increase in fraudulent companies. At the very least, the use of a formation agent adds practical challenges to data and enforcement opportunities.
Jurisdictional issues including global displacement
In 2021, the UK incorporated 758,751 companies. This is 154% more companies than the next nearest total, Australia, which incorporated 298,663 companies in 2021. Between 2021 and 2022, company incorporations within the UK increased by 3.28%.
The UK is a popular place to register private limited companies. Given the relative size of the countries on the chart, the disparity in figures is even more significant. Registering in the UK has historically carried a prestige and kudos.
According to complete global coverage figures compiled by the World Bank, the UK is the 15th cheapest country in the world to incorporate a limited company. Of the 14 globally cheaper operations, excluding Rwanda, Slovenia and Venezuela who make no charge for company formation, none are cheaper considering a comparison with average monthly income.
GOV.UK emphasises the speed of registering a company online, which usually takes no more than 24 hours.
It is highly likely that the low cost and ease of registering private limited companies also contributes to the UK’s desirability as a registration location.
Companies House processes and data maturity
The ECCT Act and the registrar’s new objectives fundamentally change the role of Companies House. This change will require continued customer service but with an underlying change in approach.
We will be taking steps to improve our data quality. We will move from being a static register to a proactive gatekeeper.
The current cost of company incorporation is £50. It is highly likely that this cost is not a barrier to individuals seeking to undertake mass incorporations.
Successful integration of staff from other backgrounds will also be required to support the new types of work required.
Effective collaboration with other agencies will help us address many of the threats identified in this strategic intelligence assessment. We’ll need to effectively coordinate to minimise duplication of effort.
Insider threat
‘Insider threats’ relate to the actions of staff, either unwittingly or complicitly. They could relate to:
- data integrity
- physical security
- knowledge of processes being used to facilitate the illegal actions or intentions of others
Between 2018 and 2020, reports show a 47% increase in insider threat generally. Contributions to this increased threat include:
- cloud computing
- mobile devices
- hybrid working
- current economic challenges leaving individuals with debt or facing cost of living pressures, making them more vulnerable to criminal approach
Companies House data would be useful to a range of individuals outside of the organisation, whether to obtain competitive advantage over rivals or facilitate organised criminality.
The change in organisational role presents additional challenges for Companies House. We’ll need to adapt with direct embedding of security required to respond to the different climate and refocus our staff to identify potential risks.
We’re addressing this threat by carrying out a security review, which will cover:
- system access
- vetting levels
- more robust education and awareness raising for staff
Cyber attack
The UK is the third most targeted country in the world for cyber-attacks, after the US and Ukraine. The National Cyber Security Centre (NCSC) 2023 review points out threats to UK from state-aligned actors from China, Russia, Iran and the Democratic Republic of Korea. Some organisations have stated a desire to achieve a more disruptive and destructive impact against western critical national infrastructure, including in the UK.
Changes in legislation and the resulting raising of Companies House’s profile, combined with previous lack of security focus could present us as a potential target.
It is almost certain that cyber-attacks against UK critical national infrastructure will continue. It’s highly likely that any cyber breach would cause reputational damage to Companies House and the UK.
Political change – national and global
Companies House is susceptible to global political events that lead to changing government policy and priorities.
This can be beneficial to Companies House processes. For example, the speed with which the Register of Overseas Entities was introduced following Russia’s invasion of Ukraine. The scheme increased transparency in beneficial ownership within the UK and enabled sanctions to be implemented more effectively against sanctioned individuals.
However, we’ve also seen abuse of Companies House processes in response to government policy announcements, such as the COVID-19 business relief projects.
Technology use
Work is ongoing to understand the nature and scale of organised criminality’s use of technology to facilitate abuse of processes.
Online sales platforms are used to advertise sale of previously established companies.
Other examples have included the use of malicious technical content being included in company name on incorporation, and sequential numbering of mass incorporations.
Financial influencers
Advice from financial influencers on social media, called ‘finfluencers’, is another risk factor. Finfluencers provide financial advice online which has been assessed as a global market worth £83 billion in 2022. This advice can give helpful insight, but it’s sometimes given by those with limited subject matter knowledge. It is a realistic possibility that ‘finfluence’ could be used, knowingly or not, to encourage investment in UK corporate structures that are operating fraudulently.
Impersonating Companies House
There have been recent examples of impersonation of Companies House, by letter or phone call. It is highly likely that such impersonation attempts will enable fraud to be committed.
Impersonating Companies House: case study
Some limited companies received a letter in January 2024. The letter shows the Companies House logo and tells companies to make payments for Enhanced Web Filing Access.
This was not a genuine letter. No such payments are required or received by Companies House if they are made.
Future technologies
Future technologies pose a threat to Companies House and will require monitoring.
The role that Companies House will play, if any, within the metaverse is currently unclear. Some online reporting has speculated that Companies House could exist within this non-fungible token (NFT) based environment, to regulate metaverse entities.
It is unclear the extent to which artificial intelligence (AI) and the potential for deepfake technology will impact on our proposed identity verification processes. It is highly likely that we’ll need to closely monitor developments in this area to assess their impact on gatekeeping processes.
