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Companies House has announced a package of reforms aimed at blocking opportunities for identity fraud and money-laundering, and improving the ability of law enforcement agencies to investigate suspected crime.

The proposals will make identity-verification mandatory for the appointment of company directors and give the Department of Business, Energy and Industrial Strategy executive agency more powers to query and reject information, improving the quality of data on the UK Register of Companies.

Companies House said its goal was to increase the reliability of the data showing who is behind each company so that businesses had greater assurance when they are entering transactions with other companies. It said small firms researching potential suppliers and partners would be among those to benefit from the new regime.

The reforms accompany the government’s response to the Corporate Transparency and Register Reform consultation, published on Friday.

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BEIS's minister for corporate responsibility Lord Martin Callanan said the reforms would provide businesses with greater confidence in their transactions.

“Mandatory identity verification will mean criminals have no place to hide – allowing us to clamp down on fraud and money laundering and ensure people cannot manipulate the UK market for their own financial gain, whilst ensuring for the majority that the processes for setting up and running a company remain quick and easy,” he said.

Companies House chief executive Louise Smyth said the reform package contained “significant and far-reaching” changes.

“We know how valuable our data is, not just to businesses but to law enforcement and these reforms will unlock that value even further,” she said.

“Driving confidence in the UK economy is at the very heart of our plans to modernise Companies House, and we already have a substantial transformation programme in place to bring the government’s ambition to life.”

Companies House said the identity verification process proposed for company directors would take place through a “fast, efficient, digital process” that was “expected to take a matter of minutes”.

It added that the reforms would not impact on the typical speed at which a company or organisation was formed, with companies able to be incorporated “easily” within 24 hours.

Companies House said its data informed many transactions between businesses and underpinned credit scores and lending decisions.