As America deregulates, Britain doubles down on corporate transparency measures.
The metaphorical Atlantic Ocean separating the United States and United Kingdom has suddenly become much wider—at least in terms of regulatory philosophy. While the US administration dismantles its Corporate Transparency Act framework in a bold deregulatory push, enacted overnight, the UK is charting precisely the opposite course, implementing expansive new identification requirements through Companies House.
We are witnessing the most significant regulatory divergence between these two economies in decades.
MASSIVE VERIFICATION INITIATIVE LOOMS
Over the next 12 months, more than six million individuals—representing directors and beneficial owners of UK-registered businesses—will be required to verify their identities with Companies House. This unprecedented undertaking marks Britain’s most ambitious corporate transparency initiative to date.
Companies House officials maintain their implementation approach will “reduce the burden on business created by politicians,” though many industry observers remain sceptical. The verification requirement for existing and new directors commences autumn 2025, integrated into the annual confirmation statement process.
ENFORCEMENT QUESTIONS PERSIST
Questions remain about enforcement mechanisms. Critics point to previous beneficial ownership disclosure legislation where, despite approximately 50,000 firms failing to implement requirements, fewer than ten prosecutions materialized over five years. “Without meaningful enforcement, these ambitious transparency goals may prove largely symbolic.
INDUSTRY IMPACT
For small businesses, the implications are substantial. Identity verification performed by Companies House will not satisfy regulatory requirements for banks, IFAs, mortgage brokers or legal professionals. The Financial Conduct Authority continues to insist that regulated firms conduct independent verification processes regardless of Companies House records.
So we are looking at layers of duplicative compliance requirements. Each entity in the chain must repeat essentially identical verification processes, creating enormous inefficiencies.
UNCERTAIN FUTURE
BAT believe that the financial sector may eventually experience deregulation, but we are aware that such relief appears distant. The cliff edge moment of regulatory recalibration could be years away, for now, firms need to tighten their belts and address what is directly in front of us.
Quoting Tennyson – “Ours is not to reason why, ours is to do or die” — may seem OTT, but it captures the sentiment of many financial professionals confronting this expanding compliance landscape. As the regulatory divide between America and Britain grows. Firms must also be ever mindful of compliance costs, and be ready to reallocate resources should deregulation arrive in the UK. One way to do that, of course, is to use BAT AI for file checking….at just £10 per file.
Companies House has provided this guidance to support company secretaries.