New front opening up in trade-based financial crime

With beneficial ownership laws tightening up across the world, those intent on illicitly moving funds are finding new ways to hide their names from the businesses they operate and their financial operations.

‘Fake owners’ for Scottish shell firms are now being openly sold online for as little as EUR 170, representing good value for those involved in trade-based financial crime who need to shield their identities from the authorities.

The practice will be a major challenge to the UK’s anti-money-laundering defences.

Secrecy vehicle

The UK parliament last year forced all Scottish limited partnerships – known as SLPs and some say the country’s most abused secrecy vehicle – to declare beneficial owners or face hefty fines.

The move was widely welcomed in the wake of the US$3 billion so-called Azerbaijani Laundromat scandal, which extensively used SLPs to obscure payments from eastern Europe and Russia to pay off western politicians.

As of August 2017, all SLPs have been obliged to declare a ‘person of significant control’ (PSC) or pay a fine of some US$700 a day.

Off-the-shelf solution

An investigation by Scotland’s Herald newspaper now suggests that overseas-based internet agencies are selling off-the-shelf PSCs for SLPs, for less than half the cost of a daily fine.

One firm, which the newspaper declined to name, said it could provide a nominee- controlled British limited company as a PSC, making the true owners of any SLP untraceable, for just EUR 170.

Scottish SLPs and their English equivalent, limited liability partnerships, are opaque because their partners are often shell firms incorporated in traditional tax havens.



Categories: Trade Based Financial crimes News