Identity verification planned

Businesspeople may need to prove their identity through iGovt, a $122 million hi-tech verification system being tested by the Internal Affairs Department, before registering companies or taking on directorships.

The Government is under pressure to tighten up company registrations in the wake of the revelation that an Auckland-registered company, SP Trading, had been used to charter a Georgian plane to fly arms from North Korea to Iran, in breach of a United States embargo.

Officials are due to brief Commerce Minister Simon Power on the options today.

Companies Office general manager Justin Hygate said the discussions were likely to cover the possible role of the identity verification service.

It was designed to make it easier for government agencies to conduct more secure transactions online and could let the Companies Office check people's identity while still letting them submit documents over the internet.

To use the identity verification service, people must first register in person by presenting their passport at a government office and providing their mobile phone number.

Then, after logging on to a government website, they can request a unique code be sent to their mobile, which they can key in to prove their identity.

The system works on the same principle as a two-factor authentication system used by the banks to secure internet banking transactions.

My Hygate said that from May or June, the Companies Office's 150,000 registered users would be required to use an iGovt password to submit documents to the Companies Office.

He could not promise it would be compulsory for them to also enrol in the identity verification service, but said the Companies Office would be an "early adopter".

The service would provide greater confidence about identities.

The verification service could also do away with manual checks on signatures, allowing people to register companies or directorships at any time of day or night.

The difficulty with making the identity verification service compulsory was that many companies appointed overseas directors, often Australians, who were not eligible to use the service, Mr Hygate said.

"To come up with arrangement that prevented legitimate international involvement in businesses would be silly."

However, Mr Hygate said the Australian government was developing a similar system, called Vanguard, that could allow evidence of identity to be shared electronically between the two countries.

"It may be that mutual recognition of IVS and Vanguard is possible."

Business NZ chief executive Phil O'Reilly said the group would support the voluntary use of IVS, but would not want it to be compulsory.

"I suspect it may become quite popular anyway. The fact we have got this very simple company registration system in New Zealand helps us do business. In the vast majority of cases – 99.9 per cent of companies – the owners are obvious."

Mr Hygate said few of New Zealand's major trading partners required people to prove their identity before registering companies, suggesting the controversy surrounding SP Trading was a red herring.

"With the company involved, all of the players have been identified and are `real people'. None of the additional checks we could have done would have prevented what happened happening."

Checking people's identity before registering businesses or taking on directorships could help make the world more secure, he said.

- © Fairfax NZ News