By Marit Rødevand, CEO of Strise
FOR years, the UK’s corporate registry operated under a structural hypocrisy -championing transparency while enabling opacity.
It said one thing while doing another, much like Elvis Presley’s curious turn as an honorary federal agent for the Bureau of Narcotics: a gesture heavy with symbolism, light on substance.
Under the registry, companies could be incorporated and controlled with minimal identification oversight, all whilst the registry claimed it contained accurate information about corporate ownership.
This tension was illustrated by the now-infamous entries listing directors or persons of significant control (PSCs) under names such as “Darth Vader” or “Santa Claus.” While providing a great industry gag, they exposed a critical vulnerability within the UK’s corporate infrastructure.
The lack of meaningful identity verification rendered Companies House susceptible to exploitation by fraudsters, shell-entity facilitators and networks engaged in money laundering and tax evasion.
The Economic Crime and Corporate Transparency Act – passed in 2023, with some provisions only taking effect this year – introduces a transformative shift in the regulatory landscape.
Effective later this month, directors and PSCs of UK companies are legally required to verify their identities when forming or controlling entities.
Reliability
The policy will initially focus on new incorporations while phasing in verification requirements for the existing population of approximately seven million individuals over the subsequent twelve months. By formally linking individuals to the companies they control, this measure represents a significant step toward enhancing the reputation of the UK corporate register – from ridicule to reliability.
From an anti-money-laundering perspective, the reform addresses one of the fundamental vulnerabilities exploited in illicit finance: anonymity.
Shell companies, nominee directors and obscure PSCs or beneficial owners are central tools in the concealment of assets and the facilitation of financial crime.
By establishing a verified link between individuals and the companies they manage, Companies House improves the quality of its data, creating a more reliable foundation for compliance, regulatory oversight, and law enforcement action.
Between 4 March 2024 and 3 March 2025, Companies House identified and removed false or misleading information affecting 100,400 companies and rejected over 10,200 suspicious applications, a damning statistic which only hints at the depth of the prior abuse of the system.
Furthermore, estimates indicate that approximately 50,000 UK companies currently obscure their beneficial owners through foreign entities, underscoring the persistent opacity in corporate ownership structures.
Deterrant
Mandatory verification not only strengthens the registry’s accuracy but also serves as a deterrent. By increasing the operational complexity of maintaining anonymity, the reform raises the cost of illicit activity, signaling that the UK is taking corporate transparency seriously.
Verified identity data can now be integrated into broader anti-money-laundering and know-your-customer (KYC) frameworks, enabling financial institutions and regulators to link corporate filings and transactional flows to verified individuals.
This capability is critical for identifying high-risk structures, monitoring ongoing compliance, and enhancing intelligence-led interventions.
Whether this will be the silver bullet the industry hopes for remains uncertain. Current readiness remains limited: only 28% of UK directors are reportedly prepared for the new requirements and fewer than 200,000 individuals – less than 3% of the total population affected – have completed voluntary verification. Enforcement mechanisms also remain modest.
‘Watershed moment’
In addition, fines collected have been minimal relative to the total penalties issued. These gaps underscore the need for a sustained operational effort to translate legislative reform into genuine, meaningful systemic change. Verification should be seen as only a baseline.
Sophisticated actors will continue to seek avenues for circumvention, requiring complementary measures including ongoing monitoring, cross-border intelligence sharing and effective sanctions enforcement.
For corporate and compliance professionals, these changes have immediate strategic implications. Verified identities will become a critical component of KYC and AML frameworks, and early adoption is essential to avoid operational disruptions.
The availability of verified identity data from Companies House should be leveraged to enhance risk assessment, improve beneficial ownership intelligence, and integrate with supervisory frameworks.
Ultimately, mandatory identity verification at Companies House marks a watershed moment in UK corporate governance and financial crime prevention.
By addressing a long-standing structural weakness, the reform strengthens the integrity of the corporate register, reinforcing the UK’s commitment to transparency and accountability and enhancing the effectiveness of its AML measures.
Its ultimate success will be measured not simply by the number of verified identities, but by the tangible reduction in the abuse of corporate structures for illicit purposes.
The register is no longer simply a passive repository of information. Now it is time to take the next step and ensure it becomes a proactive instrument for ensuring corporate transparency and protecting the financial system.
The UK cannot be seen as a true bastion of financial rigour when its corporate registry remains a figleaf for dark money operations.
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