Lax Oversight of Corporate Register Undermines UK Transparency: Watchdog
08 May 2019

Hundreds of thousands of UK companies have exploited loopholes and lax regulatory enforcement to circumvent rules on reporting their beneficial owners, a British watchdog group said Monday.

A study by London-based Global Witness found that the number of corporations that have reported to the UK Companies House that they have no beneficial owner has risen to 336,224 in 2019 compared to 335,010 in the previous year. Of those corporations that name individuals with “significant control,” more than 2,000 identify directors that have previously been banned from holding a directorship, the organization said.

More than 6,700 registered companies cite beneficial owners who control over 100 corporations on paper, making it likely that their reported ownership is nominal, while nearly 230,000 firms are registered at a company factory or mailbox address that has little or no ties to their owners, according to the nongovernmental group.

Under UK law, businesses have been required since 2016 to report identifying information on the individuals who own stakes of 25 percent or more for inclusion in the corporate register maintained by Companies House. While reporting exemptions exist when no individual owns such a stake, the statistics suggest that non-exempt businesses have failed to disclose required ownership data, Global Witness said.

“Our research shows how  a failure by Companies House to check company information or enforce rules means criminals can exploit loopholes and submit false information,” said Global Witness. “We even found an address in London where at least two company service providers appear to host a number of companies apparently controlled by children under the age of two.”

The watchdog group, which cited recent reports of Russian money launderers using British firms to move illicit funds, called on UK officials to empower Companies House to enforce corporate reporting obligations, including through the allocation of additional funding.

Photo: Colin and Kim Hansen, via Wikimedia Commons

Read more:

UK parliamentary research on registers of beneficial ownership

Cayman Islands accuses UK of “apparent double standard” on registers, considers legal action

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