Having The Right Tools To Combat Growing Corporate Fraud

Companies House is a treasure trove of UK business information. Businesses rely on the accuracy of Companies House data to assess risk and protect their security interests. While this vast database can be invaluable, it has serious issues that plague the UK’s business landscape, and pose a risk to your business.

The Companies House open registry has left the door open for bad actors worldwide to take advantage of our system. As a result, the UK has earned the unfortunate title of a global hub for money laundering. 

With fraud rising and costing the UK economy upwards of £200 billion yearly, the government has finally taken steps to take back control. Towards the end of 2023, The Economic Crime and Corporate Transparency Act (ECCTA) was passed into law. The act provides wide-ranging powers to crack down on fraud and money laundering and puts more onus on businesses to prevent fraud. However, these changes will take time to implement. It is also doubtful that reforms will eliminate the problem as criminals become increasingly sophisticated.

That’s why you need to prepare your business. We’re constantly innovating to keep you one step ahead of the fraudsters. Let’s take a closer look at the problem, and how our latest product will work alongside the ECCTA to help bulletproof your business. 

Criminals and Kleptocrats attacking our open registry

We have one of the most open and largest economies in the world. Inevitably, this attracts criminals like moths to a flame. Terrorists, criminals and kleptocrats regularly use our system to launder their dirty money. 

For example, in 2022, an anti-corruption agency revealed that £1.5 billion of UK property is owned by Russians accused of links to financial crime or the Kremlin. In 2023, the BBC reported that 16 addresses on the same road in Worksop, Nottinghamshire were used to register new companies in one weekend. All the companies were registered to a 23-year-old from China. Of the 775,000 companies registered with Companies House in 2022, around 155,000 were fake.

This ability for criminals to conduct business with relative ease in the UK has been due to several glaring issues with the Companies House registry:

• Businesses could be registered under any name and address without identity verification
• A property can be listed as a Company’s address without the knowledge of its owners
• It is possible to register fictional names on the registry
• Companies House does not currently verify the accuracy of the information filed
• Data can be out of date, or inaccurate
• Data is not standardised

The continued abuse of Companies House by criminal enterprise funds organised crime in the UK, and facilitates corruption overseas. The threat of illicit finance could have serious consequences for your business. Rising fraud also poses a threat to our national security and undermines the integrity of our financial systems. 

Government crackdown on fraud: The Economic Crime and Corporate Transparency Act

The ECCTA promises to fortify the UK's defences against economic crime. The act focuses on 4 key areas of reform including Limited Partnership reform, crypto-assets reforms, new anti-money laundering powers, and Companies House reform. The Companies House wide-ranging reforms include:

• Identity verification is now mandatory for all new and existing companies
• The registrar has new powers to check, decline and remove information on the register
• The accuracy of the financial information provided will be improved so that the register is more reliable, complete and accurate
• New enforcement powers for Companies House, including the ability to share suspicious information with law enforcement
• Broader reforms will crackdown on the misuse of corporate entities

Identity verification and greater financial transparency should give you more security in your decision-making process, and protect you from fraudulent behaviour. However, it is important to remember that these changes will take time, and there are likely to be gaps in these new powers. A culture of vigilance remains paramount to protect your business from unscrupulous actors.

That’s where our expertise comes in. 

Company Watch helping you remain vigilant in the fight against fraud

This backdrop of ever-evolving risk can be daunting - we get it. Uncovering fraud is tricky, and you need robust data verification so you know that information is genuine. That's why we’ve created our new tool, ‘Vigilance™’ to level the playing field. 

Vigilance™ is an early warning tool that will alert you to suspicious activity that may lead to fraudulent behaviour. This latest cutting-edge tool will empower you to:

• Scrutinise a company’s filings on Companies House with precision 
• Identify abnormal activity and uncover potential fraud
• Stay one step ahead of criminals with advanced risk mitigation
• Make informed business decisions with confidence 

 Here’s how it works:

• This market-leading tool searches deep in the UK company database for signs of unusual behaviour or activity in a company’s filings
• An alert is triggered by the tool when a suspicious event or behaviour is found 
• You can then investigate potential wrongdoings that might otherwise slip through the cracks

Our Vigilance™ tool will provide you with an extra layer of protection against fraudulent companies. It works with our other market-leading products to give you an unbeatable edge when managing risks.

Ready to protect your business with the best risk management solutions on the market?

Get in touch for more information about any of our packages or products.