Session 2022-23
Economic Crime and Corporate Transparency Bill
Written evidence submitted on behalf of Encompass Corporation (ECCTB02)
Subject: Call for written evidence: Economic Crime and Corporate Transp arency Bill
Executive summary:
1) Establish Companies House information as the authoritative source of due diligence compliance requirements
2) Maintain Companies House as an open and public register
Encompass Corporation appreciates the opportunity to submit written evidence to the House of Commons Public Bill Committee in relation to the Economic Crime and Corporate Transparency Bill. Clearly the need for detailed review of the Bill is appropriate and we provide below our comments in relation to the Companies House Reform part of the Bill. We welcome any clarification or questions you may have related to our written evidence.
We are fully in support of the much needed reforms to Companies House. By way of context to our response, we are a UK based Regulatory Technology firm with offices in Glasgow and London. We have additional offices in Sydney, Singapore and New York. Our clients are primarily banks who look to automate their customer onboarding processes to meet their ‘Know Your Customer’ compliance obligations and to ensure customers onboarded fall within the bank’s risk profile.
As a requirement of their due diligence process, when banks onboard corporate customers (as opposed to individuals) there is a need to determine their corporate structure and the ultimate beneficial owner of the corporation. Typically for large corporates, the ownership structure can be complex. At a minimum, beneficial ownership is defined as directors with more than 25% share ownership or persons with significant control. Banks can determine the ownership from multiple public and commercial sources including Companies House (CoHo). This is of course further detailed here.
As such we fully support the need for all directors and persons with significant control to have their identities verified. Banks will need to rely on the accuracy and validity of the information provided in CoHo as the authoritative source. We recognize that banks may wish to reference additional secondary sources as part of their due diligence process especially when these corporate structures cross multiple jurisdictions. Large corporations can have complex holding structures. However, registration information for UK based companies with UK locations needs reference CoHo as the authoritative source to eliminate any potential confusion.
Our second recommendation is to maintain CoHo as an open and public register . The UK sets the global standard here and recognizes that transparency is key towards ensuring public confidence in the information provided in the register. There is a trend in other jurisdictions to limit the beneficial ownership register to law enforcement ostensibly to address potential financial crime issues. This approach however is short sighted given the previous point regarding maintaining confidence in the register. Indeed civil society groups like Transparency International continue to advocate for public access to ensure transparency.
We appreciate the opportunity to submit this written evidence and look forward to any comments you may have.
Regards,
Dr Henry Balani
Global Head of Industry & Regulatory Affairs
Encompass Corporation