Accountants at risk of ‘chameleon’ directors, says tech provider
Fraud investigation technology provider HooYu said it has identified loopholes at Companies House that enable individuals to register as a director, run businesses and engage in fraud and money laundering, even after they have been struck-off from holding company directorships.
Research into Companies House data conducted by HooYu showed that of the 6,700 currently disqualified directors, there are over 800 (one in every eight) that still appear to have an active directorship.
This means that accountants are accessing false data when they conduct AML checks, putting them at risk of working for so called "chameleon" directors.
HooYu's analysis has uncovered over 500 "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, the tech provider said.
It judged that the current registration processes undertaken by Companies House are enabling criminals to evade detection and allowing fraud losses to consumers, businesses and the public purse alike, contributing to the estimated £96 billion of fraud and money laundering that takes place each year in the UK.
HooYu explained that currently, when organisations use Companies House data, they are unlikely to spot chameleon fraudsters as directors are not verified when they register. As a consequence, the technology company has called 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.
"Investigators rely on Companies House data as a source for conducting due diligence, uncovering assets, preventing fraud, insuring against money laundering and preventing terrorist financing," warned David Pope, marketing director at HooYu.
He said that 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," Mr Pope cautioned.