Companies House: Strategic Intelligence Assessment

The UK is one of the world’s easiest and most affordable places to set up a company. However, these low barriers to company formation leave the incorporation system open to abuse. Given these issues, Companies House published its inaugural strategic intelligence assessment (SIA), which provides an in-depth analysis of the key threats the agency faces and how it intends to tackle them.

This intelligence report follows the introduction of the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) on 16 October 2024. The ECCT Act aims to reform the powers and role of Companies House, combat economic crime, and improve corporate transparency in the UK.

Louise Smyth, Chief Executive of Companies House, said in her foreword to the SIA:

It has become even more clear in recent months that the scale of abuse of the UK company register continues to grow. I am determined that with our new powers we will act as quickly as possible to address these issues – taking action ourselves and supporting our law enforcement and other public partners.

This strategic intelligence assessment will drive the direction of Companies House and underpin the application of our new powers across the organisation. It will guide prioritisation, decision making, risk identification and mitigation. This will support businesses and the wider UK economy, by helping us provide an accurate, responsive register of corporate entities.

We know that we have gaps in our understanding of the threats. We’ll be looking to continue to engage with stakeholders and partners to help to fill these gaps.

The Strategic Intelligence Assessment (SIA)

The strategic intelligence assessment highlights five key threats underpinning the work of the new intelligence team at Companies House. These are as follows:

Register of Overseas Entities and overseas organised crime groups
Money laundering and UK-based organised crime groups
Exploitation of the public
Exploitation of business and state
Cross-cutting threats

This assessment will be followed by a new control strategy, which will set recommendations and action plans for tackling these threats and preventing abuse of the UK company registers.

1. Register of Overseas Entities and overseas organised crime groups

In response to the rapid increase in overseas property ownership in the UK, Companies House introduced the Register of Overseas Entities (ROE) in August 2022. This came into force through the new Economic Crime (Transparency and Enforcement) Act 2022.

The ROE scheme forms part of the government’s broader strategy to combat economic crime and strengthen the UK’s reputation as an attractive location for legitimate businesses to thrive.

Any overseas entities that wish to buy, sell, or transfer UK property or land must register with Companies House. This also involves disclosing details of their registrable beneficial owners or managing officers.

The strategic intelligence assessment highlights that registration on the ROE almost certainly:

Reduces the threat posed by hiding or obscuring foreign ownership of UK land and property
Improves corporate transparency, ensuring relevant information is available to law enforcement agencies and other public authorities promptly

Companies House believes that the success of these registrations is contingent upon the effective implementation of the ROE and strict enforcement activities against non-compliance. Both aspects are key to protecting the UK’s international reputation.

The report also states that threats remain following the implementation of the ROE. Therefore, Companies House intends to monitor these risks over the coming 12 months.

2. Money laundering and UK-based organised crime groups

The strategic intelligence assessment recognises that UK limited companies are commonly used to facilitate money laundering and other serious and organised criminality. While the scale of the issue is yet to be confirmed, the National Crime Agency (NCA) estimates that it costs the UK more than £100 billion per year.

There are three main types of money laundering:

High-end money laundering—involves laundering funds (wittingly or unwittingly) through the financial sector and related professional services.
Trade-based money laundering—moving illegal funds through the international trade system to legitimise them. Examples include invoice discrepancies, wrongly describing goods on purpose, and shipments that only exist in paperwork (‘ghost’ shipments).
Cash-based money laundering—disguising the integration of illicit funds in a cash-intensive business or using couriers to transport physical cash.

Examples of other serious and organised criminality facilitated by limited companies are Class A drug supply, fraud, organised immigration crime, modern slavery, and investment fraud.

The new intelligence teams at Companies House will work alongside The Insolvency Service to better understand how corporate structures are fraudulently used to launder the proceeds of crime.

3. Exploitation of the public

Abuse of company formation activities can lead to the exploitation of members of the public. The strategic intelligence assessment discusses the increasing threat of identity theft through external data breaches and the fraudulent use of these details in company incorporations and director appointments.

The ECCT Act provides new powers for Companies House to mitigate the prevalence of data exploitation. These enhanced capabilities enable the agency to challenge information it receives on customer filings and remove inaccurate information from company registers. New identity verification requirements for incorporations and appointments will also come into force by autumn 2025.

4. Exploitation of business and state

Another key threat under assessment by Companies House is the use of limited companies and other entities to commit fraud against the UK government in relation to future business relief schemes.

Examples of exploitation of business and state include:

abuse of Bounce Back loans—a government scheme that was put in place to support businesses during the COVID-19 pandemic
VAT fraud—using another company’s VAT number or registering for VAT and charging customers without making payments to HMRC
cloned companies—deliberately forming a company with a similar name to an existing entity for the purpose of imitation
phoenix companies—carrying on the same business activities successively through a series of companies, where each one becomes insolvent in turn
company hijacks—a form of corporate identity theft where fraudsters change the details of a company’s directors and registered office address

According to the intelligence report, ‘it is almost certain that Companies House processes facilitate confusion and fraud due to openness of naming rules for limited companies.’

5. Cross-cutting threats

The final section of the strategic intelligence assessment highlights ‘cross-cutting’ threats to Companies House. These include:

professional enablers (e.g. accountants, solicitors, and company formation agents)
certain formation agents and authorised corporate service providers (ACSPs)
jurisdictional issues, including global displacement
Companies House processes and data maturity
insider threats (i.e. the actions of staff within a company)
cyber attacks against UK critical national infrastructure
political change—national and global
technology use—the nature and scale of use to facilitate abuse of processes
financial influencers—there is a risk of these ‘finfluencers’ being used to encourage investment in fraudulent UK companies
impersonation of Companies House (e.g. by letter or phone call)
future technologies

Cross-cutting threats occur in the wider landscape and apply across broad aspects of Companies House processes. To tackle these issues and avoid reputational damage, the agency recognises that it must adapt to new ways of working.

Thanks for reading

Overall, the strategic intelligence assessment provides an in-depth analysis of the key threats affecting Companies House and the integrity of UK company registers, which in turn pose risks to corporate entities and the general public.

Please comment below if you have any questions about this post. For more limited company guidance and insights, explore the 1st Formations Blog.

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Companies House publishes first Strategic Intelligence Assessment