Business directors will be forced to verify their identities with Companies House under new proposals from the Government, in a bid to improve corporate transparency.
Changes outlined by the Government will seek to address "many weaknesses" which currently leave the UK's company registration system vulnerable to abuse for financial crime.
Research commissioned by Transparency International UK found at least 929 UK shell companies used in 89 corruption and money laundering cases, amounting to around £137 billion globally in potential economic damage.
The new proposals include identity verification checks for all directors, people with significant control and those filing information on behalf of the business.
Companies House will also require evidence of checks carried out by regulated professional service providers submitting information on behalf of clients as well as giving Companies House the power to investigate false information.
Steve Goodrich, senior research manager, at Transparency International UK, said:
"After years of campaigning for major reform to Companies House and greater corporate transparency in the UK, it is heartening to see many of our recommendations taken on board.
"For too long criminals have been able to abuse UK companies for the sole purpose of laundering the proceeds of crime and corruption. These welcome changes are a significant step forward in tackling Britain's role as a global hub for dirty money."
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