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A formation agent is a business which forms firms, for example companies or partnerships. Formation agents typically operate through online platforms which use software with the capability to submit electronic incorporations directly to Companies House. For many formation agents, the business model is based on low cost and high sales. Some formation agents will form more than 1,000 UK legal entities each month.  Many formation agents also sell off-the-shelf firms, though this is also a service that could be provided by other types of TCSPs.

From 30 June 2026, relevant activity for the purposes of regulation 12(2) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) includes the sale of 鈥渙ff-the-shelf鈥� firms.

An off-the-shelf firm is a firm which is not formed on the basis of a specific customer instruction, and either:

• does not carry on business
• carries on business, but that business is not the main activity of the person or business selling the firm.

An off-the-shelf firm sale includes the sale of a pre-existing firm that a person or business has bought to hold dormant and that is then sold at a future date.

This means if a business sells a firm which has never traded, that sale is in scope as an off-the-shelf sale. If an entity has already traded, for business that is different to the TCSP鈥檚 main business activity, that sale is also in scope.

If a business is selling an entity it used in its main business activity, that does not fall under scope of an off-the-shelf firm. MLR 2017 do not intend to capture a business person selling their business to someone else. Please contact the Operational Technical Specialist Team if you have any questions or doubts about what constitutes off-the-shelf.

Please visit the TCSP Learning Zone for more information about off-the-shelf sales and example scenarios.  

The sale of an off-the-shelf firm differs from a firm formation service, as the firm being sold was not formed by the seller on the basis of a specific customer instruction. Some TCSPs might offer both firm formation services and sale of off-the-shelf firms. They must appropriately assess the risks to their business from each service as part of their risk assessment.

For a customer, buying an 鈥渙ff-the-shelf鈥� firm means contacting a TCSP to buy a pre-formed firm that has already been registered at Companies House. TCSPs offering this service may have a stock of such firms available which typically will be registered at the TCSP address with the directors being the TCSP themselves or members of their staff.

These firms might be registered with neutral names so that they can be used by anybody. It is usual for such firms to be registered with just two 拢1 shares issued to the directors.

The sale of the off-the-shelf firm takes place by the TCSP submitting online forms to Companies House which notify the resignation of the TCSP or current directors/shareholders of the firm and the appointment of new directors who are the purchasers. Full details of the new directors are supplied by the customer together with the new registered office of the firm (unless this is a service the TCSP continues to provide to the customer). The shares in the firm are transferred to the new owners as part of the price paid. This is done by completing share transfer forms and handing over the share certificates.

Many TCSPs offer added value by bundling the sale of an off-the-shelf firm or new firm formation in with other one-off services, e.g. articles of association, and referral to banks, accountants, and other service providers for which the TCSP receives commission. Typical services also offered by a TCSP who offers firm formation and/or off-the-shelf sales registered office address, and company secretarial services. TCSPs generally sell 鈥減ackages鈥� with different levels of service, though some will have a focus on firm formation of off-the-shelf sales, with or without a registered office address.

Formation agents and those who sell off-the-shelf firms typically operate from one location, but some have several and many will deal with customers via online services only. The risks of impersonation fraud associated with non-face to face delivery methods can be mitigated by using electronic verification systems. However, this will not remove the risk of a clean skin (i.e., someone without a criminal record and not known to law enforcement) establishing corporate structures for an organised criminal gang (OCG).  It is important that the TCSP properly assesses all the risks associated with the customer and business relationship, questioning why the customer seeks to establish or buy the corporate vehicle(s) and other services required and whether that seems credible/rational, as well as assessing the money laundering and terrorist/proliferation financing (ML/TF/PF) risk posed and what measures the TCSP needs to put in place to manage those risks. 

Most TCSP customers are UK individuals seeking to set up their own business. In addition to direct customers, it is likely that formation agents and those selling off-the-shelf firms will have customers who are professional intermediaries. Some TCSPs specialise in providing services to commercial customers including accountants, lawyers, banks etc, but also other TCSPs in the UK and overseas equivalents.  This includes specialist formation agents who are contracted by lawyers, accountants and other third parties, to form firms for them, to be sold onwards to their own clients. The ML/TF/PF risks can be increased where these intermediary lawyers, accountants or third parties, are based overseas or are providing services to non-UK based customers. 

Formation agents and those who sell off-the-shelf firms are normally paid by electronic methods, often through a third-party (i.e. WorldPay) which uses 3D secure to prevent fraud.  Due to the products and services offered, these TCSPs do not typically have oversight of a customer鈥檚 banking records so would be unable to identify all transactional risks within the entities that they establish.  However, it is vital the TCSP conducts a thorough risk assessment of the services it is being asked to provide in relation to its own financial transaction with its customer.

At a compliance visit, an officer should seek to understand all TCSP services (relevant activity) conducted by the TCSP, how the TCSP has risk assessed each service alone and in combination, and how it manages and mitigates those risks.

Record testing should span all of the TCSP services provided. For example, where a TCSP provides firm formation off-the-shelf sales and trustee services, records should be selected where formation services have been provided, where off-the-shelf sales have been provided, where trustee services have been provided, and where combinations of these services have been provided together.

Where the TCSP also carries out relevant activity in another supervised sector, an officer should seek to understand the business鈥檚 compliance with the MLR 2017 in respect of that additional sector(s). Record testing should span all sectors of relevant services provided by the business, including where provided in combination.

General money laundering, terrorist financing and proliferation financing risks for TCSPs can be found at ECSH52125. 

At a compliance visit, TCSPs should be expected to provide an explanation for any departure from published guidance.