Directors will be required to verify their identities with Companies House before they are appointed to a business under plans announced yesterday.

People who exercise significant ownership control over a company and anyone filing information on behalf of a company will also be forced to confirm their identity under the reforms, which will hand the register more power to scrutinise and reject information.

Companies House was set up in 1844 and ever since its creation it has operated by accepting information that is submitted to it as being in good faith, based on an assumption that the information given is true.

This approach has left the register vulnerable to exploitation by criminals, who have used it to set up shell companies to launder dirty money.

Companies registered in Britain played a role in one of the biggest money-laundering scandals ever uncovered, when about €200 billion was found to have flowed through the Estonian branch of Danske Bank, the Danish lender, for eight years until 2015. This led to calls to tighten up the British database.

Research by Global Witness, the campaign group, has also exposed shortcomings with Companies House.

Last year it found more than 6,700 companies controlled by owners who in turn controlled more than 100 other entities as well as some businesses seemingly controlled by children under the age of two.