This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Learn how company formation in the UK now includes anti‑money laundering and identity verification checks. This guide explains the legal framework, identity requirements for directors and beneficial owners, the role of ACSPs, AML supervision, risks of non‑compliance, and practical steps in the incorporation process.
When you form a company in the United Kingdom, there are legal requirements designed to ensure the integrity of the corporate register and to prevent economic crime, including money laundering, fraud and the misuse of corporate structures. Recent reforms to UK company law, driven by the Economic Crime and Corporate Transparency Act 2023 (ECCTA) and ongoing regulatory expectations, have introduced mandatory identity verification and strengthened anti‑money laundering (AML) supervision for company formation agents and others involved in setting up companies. This article explains the relevant legal framework, the checks that must be carried out, who they apply to, practical steps in company formation, and the implications of non‑compliance for directors, people with significant control (PSCs), agents and the companies themselves. It is written to be clear and accessible for members of the public, students, solicitors and other solicitors.
Legal Background: Economic Crime and Company Transparency
The Economic Crime and Corporate Transparency Act 2023 introduced a comprehensive set of reforms aimed at improving the accuracy, transparency and reliability of the Companies House register to deter fraud and money laundering. One key measure is new mandatory identity verification requirements for individuals involved in company formation and management, integrated with broader efforts to enhance AML compliance across regulated sectors.
What Anti‑Money Laundering Means in Company Formation
Anti‑money laundering (AML) refers to the systems and checks designed to identify and deter the use of legal structures, including companies, to disguise the proceeds of crime or facilitate illicit financial flows. In the context of company formation, AML checks help confirm that those establishing or controlling a company are genuine and that their identities and associated information are accurate.
Under the Money Laundering Regulations, professionals and firms providing services such as company formation, accountancy, legal advice, trust and company services, or similar regulated activities must be supervised for AML purposes by a recognised UK supervisory authority. This means they must operate systems to carry out customer due diligence (CDD), including verification of identity and beneficial ownership, and maintain records as required by law.
Who Must Undergo Identity Verification
From 18 November 2025, UK company law requires identity verification for:
- Directors and equivalent officers of a company (including general partners).
- Persons with Significant Control (PSCs), meaning individuals who own or control significant shares or voting rights.
- Anyone who files information at Companies House on behalf of a company, such as a company secretary or authorised agent.
- Individuals acting on behalf of overseas companies with a UK establishment.
This rule applies to both new incorporations and existing directors or PSCs during a transitional period. Once verified, individuals receive a unique personal code that must be provided on relevant filings. failure to comply once mandatory can lead to criminal offences, civil penalties and potential director disqualification.
Identity Verification and AML Supervision: Practical Steps
1. Digital Identity Verification
Directors and PSCs must verify their identity using an approved system. Companies House provides an online verification service via GOV.UK, often referred to as digital identity verification. This involves uploading photo ID and matching it to biometric or data sources.
2. Authorised Corporate Service Providers (ACSPs)
Many companies choose to use a third‑party provider to conduct verification. These providers must be registered as Authorised Corporate Service Providers (ACSPs) with Companies House and be supervised for AML by an appropriate regulatory body, such as HM Revenue & Customs or a professional AML supervisory authority. ACSPs include accountants, solicitors, company formation agents and governance professionals.
Before filing documents on behalf of clients, an ACSP will:
- Verify the identity of the proposed directors and PSCs.
- Ensure the company formation complies with identity standards.
- Maintain records of the checks for inspection by Companies House.
Only ACSPs who have completed registration and identity verification themselves can file formation documents for clients.
3. Agent AML Checks vs Company House Checks
AML checks carried out by an ACSP as part of their supervisory responsibilities are separate from, but complementary to, the identity verification required by Companies House. Firms already carrying out AML checks for other regulated purposes will be familiar with customer due diligence and know your customer (KYC) protocols; however, the Companies House identity verification standard is distinct and must be met explicitly as part of new statutory requirements.
Company Formation Process with AML and ID Requirements
The key stages of company formation in light of AML and identity verification requirements are:
- Preparation of Incorporation Information – Identify proposed directors, PSCs and registered office details.
- Identity Verification – All proposed directors and PSCs must verify their identity either directly with Companies House or through an ACSP.
- Registration of ACSP (if applicable) – If using a formation agent, ensure they are registered and supervised for AML and authorised with Companies House.
- Submission of Incorporation Documents – After completion of identity verification, incorporation documents can be submitted online, including the personal verification codes for individuals requiring verification.
- Post‑Incorporation Compliance – Maintain accurate records and ensure any future filings are made by verified individuals or authorised agents.
Failure to meet identity verification requirements at any stage results in Companies House rejecting the filing or, in continuing non‑compliance, regulatory action against the individuals or agents involved.
Risks of Non‑Compliance
Penalties and Offences
Once identity verification becomes compulsory, directors, PSCs and filers who fail to verify may commit a criminal offence and/or be subject to civil penalties. Companies may also be unable to file statutory documents or incorporate new entities unless the requirement is met.
Fraud and Economic Crime
The driving purpose of these reforms is to prevent misuse of UK corporate structures for illegal activity, including money laundering, tax evasion and fraud. Companies House has reported instances where significant numbers of suspicious registrations have been rejected or removed under the new regime.
Reputation and Enforcement Action
Agents failing to maintain robust AML controls and identity checks risk losing ACSP status, facing regulatory sanctions from their AML supervisory body, and being unable to act for clients. This includes professional bodies such as the Solicitors Regulation Authority or accountancy AML supervisors.
Common Questions
Do individuals need to verify more than once?
In most cases, once an individual has completed identity verification with Companies House and received a personal code, they do not need to repeat the process unless instructed.
Can overseas directors comply?
Yes, overseas directors must also verify their identity using accepted photo ID and the digital system or through an ACSP that can manage international verification.
Does AML supervision apply to all formation agents?
Only firms and individuals that fall under regulated categories (such as accountants, solicitors and company formation agents) must register with a UK AML supervisory body if they carry out relevant services.
Key Takeaways
Company formation in the UK now involves a structured set of identity verification and anti‑money laundering checks designed to strengthen the corporate register and prevent economic crime. Under reforms introduced by the Economic Crime and Corporate Transparency Act 2023, individuals proposed as directors or persons with significant control must complete identity verification with Companies House, either directly or via an Authorised Corporate Service Provider (ACSP). These checks complement AML due diligence requirements for supervised agents engaged in company formation services. Compliance is essential to ensure successful incorporation, avoid penalties and support transparency and trust in UK corporate structures.
