07 Dec 2017
Susan has been making her living from crime for over twenty years. She provides anti-money laundering training and advice to the regulated community in the UK, Guernsey, Jersey, the Isle of Man and Gibraltar, and writes and talks on the subject at every opportunity. As her hobby she writes historical novels—about financial crime.
With the acres of newsprint devoted in recent months to the topic of registration of beneficial ownership, it is interesting to consider the role of the registrars.
Companies – and other structures – are required to submit returns, and to update them regularly, and to make changes promptly to their details, but is any of that information being verified, or even checked?
Before the advent of the PSC register here in the UK, Companies House was a simple register of companies – in essence, a giant filing cabinet.
I send in my annual return to them, along with the appropriate fee, and anyone looking up my company on the CH system will find the information that I have submitted.
My suspicion has always been that you can send in whatever details you want, as long as you don’t mind signing a false declaration.
And it seems that I am not alone in thinking that.
In February 2016, an S Prichard made a Freedom of Information request to CH, containing several questions, including “Is it illegal to knowingly provide wrong information for registration to Companies House (i.e. false names, variations of names, false address, false DOB)?” and “What safeguarding measures do Companies House take to ensure the public are safeguarded from criminal activity such as fraud when viewing or obtaining information about a company on the Companies House website?”.
In response to the first question, CH explained that “it is an offence under the Companies Act to submit a false filing” – so that’s clear.
It’s the second question that really interests me, as the CH answer is this: “Companies House acts primarily as a registry of company information.
We must accept all documents sent to us in ‘good faith’, we do not have any powers to verify or validate the information contained on them. We can only act within the parameters of the Companies Act as we have no investigatory powers.”
Now that CH is the home of the PSC register as well, I wonder whether things have changed? And some Italian journalists wondered the same thing… A fortnight ago, Italian newspaper Il Sole 24 Ore reported that some of its staff had gone through the motions to set up a company in the name of Matteo Messina Denaro (a notorious mafia boss currently on the run) and giving 10 Downing Street as the company address.
According to the Italians, their aim was to show that the UK company formation regime is too liberal and that “there is nothing easier than creating ghost companies that can hide illegal activities or recycle money”.
They stopped short of actually paying the £12 to form the company – so as not to break the law – and CH said that “had the application been submitted our systems would have picked up the false information and the incorporation would have been denied”.
To be fair, I can imagine that their systems might have spotted the address… But perhaps a more subtle attempt might have succeeded, if the CH powers are indeed still the same – i.e. no power to verify or validate.
This piece first appeared on Susan’s blog, I hate money laundering.
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