The United Kingdom has set a clear timeline for the implementation of stricter identity verification (IDV) and anti-money laundering (AML) controls for businesses, marking a significant shift in corporate regulation. According to the UK government, businesses will have until the end of 2026 to comply with these changes, which are aimed at tightening corporate transparency and preventing financial crimes such as money laundering and fraud.

The new regulations are part of the broader effort to enhance corporate governance, specifically through the Economic Crime and Corporate Transparency Act 2023 (ECCT Act). This piece of legislation is designed to address concerns surrounding inaccurate and misleading information in company records and to prevent fraudulent activities linked to companies’ operations.

In this article, we’ll break down the key elements of the UK’s new identity verification and anti-money laundering controls, what they mean for businesses, and how companies can prepare for these changes.

The Focus on Corporate IDV and AML Regulations

The introduction of the Economic Crime and Corporate Transparency Act (ECCT Act) represents a major overhaul of corporate regulations in the UK, with a primary focus on improving identity verification processes and strengthening anti-money laundering (AML) efforts. Under the new rules, businesses in the UK must comply with more stringent requirements for verifying the identities of directors and those with significant control over companies.

This move is aimed at addressing growing concerns around money laundering and corporate fraud, which have been significant issues for financial institutions, regulatory bodies, and law enforcement agencies. The UK government’s goal is to make it more difficult for criminals to use shell companies or corporate structures to disguise illicit activities.

Under the ECCT Act, Companies House will have new responsibilities, with a focus on ensuring the accuracy and completeness of company records. The Act mandates that any business seeking to register with Companies House must verify the identity of its directors and persons with significant control (PSCs). This information will become part of the company’s annual filing process, making identity verification a standard part of corporate compliance moving forward.

Key Dates and Transition Timeline

Businesses in the UK will have until the end of 2026 to fully comply with the new corporate IDV and AML controls, with the first phase of the regulations set to take effect in autumn 2025. Starting in that period, directors and persons with significant control of new companies will need to verify their identity at the time of incorporation. This will require individuals to submit personal identification documents, such as passports or national ID cards, for verification.

For existing businesses, there will be a 12-month transition period, during which company directors and PSCs will be required to complete identity verification as part of the annual confirmation statement filing process. By the spring of 2026, Companies House will enforce the requirement that all company filings include proof of identity verification for the presenter, ensuring that businesses comply with these new standards.

With an estimated 7 million people affected by these changes, the UK government anticipates a substantial impact on corporate practices, including an increase in administrative workloads for both businesses and the agencies involved in the verification process.

Role of Authorised Corporate Service Providers (ACSPs)

The ECCT Act also introduces the concept of Authorised Corporate Service Providers (ACSPs), a new category of professionals who will be authorized to assist businesses with identity verification. Trust and Company Service Providers (TCSPs), along with other professionals such as accountants and lawyers registered for AML purposes, will be able to register as ACSPs starting on February 25, 2025.

ACSPs will be responsible for conducting identity verification checks for their clients and submitting the results to Companies House. This is expected to streamline the verification process and ensure that businesses can comply with the new regulations without unnecessary delays. Additionally, ACSPs will play a vital role in helping companies navigate the complexities of the new AML and IDV requirements.

Voluntary identity verification services with Companies House are expected to begin on March 25, 2025. From that point onward, businesses will be able to submit documents to Companies House accompanied by identity verification records. This is seen as a first step toward full compliance, which will be mandatory by spring 2026.

Potential Impact on Businesses and Compliance Practices

The new corporate IDV and AML regulations are expected to have a profound impact on how businesses in the UK manage their compliance efforts. While some companies may already have robust identity verification and anti-money laundering processes in place, others may need to overhaul their compliance frameworks to meet the new requirements.

For businesses operating in sectors such as finance, legal services, and accounting, the changes will likely require additional resources, both in terms of personnel and technology. Companies will need to invest in secure, efficient systems for verifying identities and submitting the necessary documentation to Companies House.

Additionally, businesses that fail to comply with the new regulations may face severe penalties, including fines and restrictions on their ability to operate. This underscores the importance of proactive preparation for the upcoming changes.

Conclusion: Preparing for Stricter Corporate IDV and AML Controls

As the UK government moves forward with the implementation of the Economic Crime and Corporate Transparency Act 2023, businesses must take steps to ensure they are prepared for the upcoming changes. From verifying the identities of directors and PSCs to registering with Authorized Corporate Service Providers, the new regulations will have a significant impact on how companies conduct their operations and comply with AML laws.

To avoid penalties and stay ahead of the regulatory curve, companies should begin reviewing their current compliance practices and investing in the necessary tools and services to meet the new identity verification standards. By doing so, they will not only avoid potential legal issues but also contribute to the UK’s broader efforts to combat financial crime and ensure corporate transparency.

Related Links

• UK Government: Economic Crime and Corporate Transparency Act
• Companies House: Identity Verification Requirements
• Financial Action Task Force (FATF): AML and CFT Guidelines
• UK AML Regulations: Overview and Updates
• Trust and Company Service Providers (TCSPs) in the UK

Other FinCrime Central Articles about UK’s AML Regulation

• New Essential Identity Verification in the UK
• 80% of the UK Law Firms Are Not Fully AML Compliant
• UK Push for Public Beneficial Ownership Registers Gains Momentum

Source: Biometric Update