Research into Companies House data conducted by technology provider HooYu showed that of the 6,700 currently disqualified directors, more than 800 (one in every eight) still appear to have an active directorship.
The analysis also uncovered over 500 so-called ‘chameleon’ directors who have been disqualified as a director, then subsequently made changes to their name or date of birth in order to register a ‘clean’ directorship.
The criminals, termed “chameleon fraudsters”, have been uncovered using graph theory and data visualisation technology in the HooYu Investigate platform to find disqualified directors who illicitly hold an active directorship. This is despite the fact that “chameleon fraudsters” obfuscate their new directorships by subtly altering their date of birth, or the spelling of their name in an attempt to avoid detection.
The current registration processes undertaken by Companies House are enabling criminals to evade detection, commit tax avoidance, avoid trading standards investigations and contribute heavily to the estimated £96bn fraud losses to the public purse.
When councils and trading standards use Companies House data, they are unlikely to spot chameleon fraudsters as directors are not verified when they register. As a consequence, HooYu is calling for there to be more identity verification and ongoing due diligence to be conducted to eliminate chameleon fraudsters who are currently able to operate undetected.
Richard Osborne, founder of the lobbying group Robust, commented, “Last year I formed Robust to raise awareness of how criminals are abusing Companies House data and our YouGov survey revealed that 84% of business leaders would want to see more robust identity checking procedures carried out by Companies House. This data analysis from HooYu reveals the level of abuse of records at Companies House and underlines our call for the Government to act”.
In light of the nature of how criminals are concealing their identity, many financial service investigators use the HooYu Investigate platform to build a visual graph that reveals otherwise hidden connections to businesses, directorships, shareholders, residential addresses and business premises.
“Investigators within the public sector including local councils and trading standards rely on Companies House data as a source for conducting due diligence, preventing fraud, insuring against money laundering and terrorist financing,” said David Pope, Marketing Director at HooYu.
“Until Companies House information is properly screened at the point of submission, and ongoing due diligence is undertaken to remove disqualified directors, it leaves a worrying loophole open to fraudsters, criminals and terrorists for them to exploit. Even more concerningly, we believe our current analysis of Companies House data just represents the tip of the iceberg.”