Speaking to Accountants Daily, Pitcher Partners partner Paul Weston said the government’s plan to introduce a DIN as part of its planned modernisation of business registers was a step in the right direction.
As it stands, current application to become a company director requires only a name, an address and a date of birth, with no requirement for a person to prove their identity.
In contrast, the DIN will require all directors to confirm their identity and will be a unique identifier for each person, providing traceability of a director’s relationships across companies and interface with other government agencies and databases to allow regulators and market participants to map the relationships between individuals and entities and individuals and other people.
“The DIN should be good in preventing the number of players that get into this space, but it is not going to be the total answer to all the issues there, and as always, it is the ability to follow up, prosecute and appropriately penalise directors in that space,” Mr Weston said.
“I know there is intent to go down that route with law reforms into the phoenix activities and opening up the help desk with operators to come from government sources including, but not limited to, the ATO and ASIC, but generally speaking, there is a lack of resources available within the government authorities to prosecute perpetrators of this particular area.
“We get very frustrated at the fact that there is not enough capabilities for our law enforcement authorities to prosecute the perpetrators in this area, and we feel if that was enhanced with more resources to go after them and more stringent mechanisms of penalties, then that would assist.”
While advocating for a 100-point proof of identity check for a director registering for a DIN, Mr Weston acknowledged that rogue operators, including dodgy accountants, could still bypass checks and fraudulently register clients as directors.
Last week, more than 45 service providers, clients, employees and alleged “dummy directors” of phoenix companies connected to pre-insolvency adviser Philip Whiteman underwent examination in the Federal Court on the grounds of suspected promotion and facilitation of phoenix activities and tax schemes.
“You can never say it is going to work in all instances because there will always be the unscrupulous operators,” Mr Weston said.
“If someone in a position of trust such as an accountant is going to abuse the trust of their clients and they are going to use their clients’ identities for illegal activities, then it is going to take some time to catch up with them.
“But [with a DIN], at least if they are using their client’s identification as a means of perpetrating illegal activity such as phoenix operating, then at least they will be using real people with real identities and the authorities will be able to track them down pretty quickly and get to the answers and catch up to those rogues who are breaking that trust.”