Representatives said: “Companies House” is disruptive and facilitates fraud | Business

The anti-fraud leader at trade body UK Finance said the government needed to fix the “broken” corporate house as it helps facilitate trade fraud.

Nick Van Binchoten, director of international illicit finance at UK Finance, and the heads of anti-fraud at NatWest and HSBC have targeted online registration for UK-based companies.

Van Benschoten said: “The Companies House is meant to be a key part of the information infrastructure that supports the business environment. Right now, it’s a dysfunctional part, and others can’t make up for it.

“The government needs to get it right the first time, and then we can help and build on that. But at the moment I’m afraid it’s not an effective advantage.”

The statements were made to members of Parliament on the Committee on Business, Energy and Industrial Strategies (BEIS), at the hearing to examine fraudulent company registrations, particularly fraudsters using victims’ home addresses to register a fake company.

Graham Barrow, a money laundering expert who runs the podcast The Dark Money Files, confirmed that a large percentage of people are harmed by registering fake Companies House and identity theft to do so.

He said, “We have a very big problem with shell companies, or ‘burning’ companies, that do short-term fraudulent activity and then disappear. Some people find their homes being stolen under their noses.”

He said that about half of the companies registered in the database were lost after only a few years, indicating that many of them were created under fraudulent circumstances.

“You have to provide verification of your identity to borrow a book from the library,” he added. “You don’t have to do this to set up a company that could cause tens of thousands of pounds of damage to our economy.”

Anti-fraud directors at HSBC and NatWest emphasized that the lack of checks for people setting up a business through Companies House makes it difficult for banks to crack down on fraud.

Donald Tun, Head of Risk Mitigation at NatWest, said: “We have a real problem here because we are obligated to verify accounts, and we are looking at Companies House data as part of that verification process.

“And the obligation is then on us to tell Companies House if there is a difference between what we are told and what is in their database.”

Tone stressed that about 6,000 employees, or 9% of its workforce, work to prevent economic crimes at the bank every day. It spends around £500m a year on fraud prevention, and is also set to pay an economic crime tax in addition to those costs.

“Please don’t go too far with any suggestion that banks don’t spend money, and don’t put too much effort into it,” he said.

The House of Commons is passing a new Economic Crimes Bill and is proposing major changes to Companies House.

Martin Swain, a director at Companies House, responded to the discussion: “I would like to see in three or four years that we are not getting the negative press coverage that we get, that we are ‘facilitators of fraud.’ This is not where we want to be as an agency – We want to be fraud prevention.”