Monday, April 23, 2018

Treasure Island

British corporate vehicles have enabled fraud on a global scale. The former president of Ukraine used British companies to conceal his property, as did his cronies.

 The “Russian laundromat”, a complex money-laundering scheme that moved $21m out of Russia, was run through Scottish limited partnershipsTransparency International UK (TI-UK) last year analysed 52 corruption cases and found they involved 766 British corporate vehicles, which had laundered some £80bn.

 “The human damage inflicted on the victims of these crimes is still being counted,” it said, in its report Hiding In Plain Sight.

Sophisticated financial crime is impossible without corporate vehicles. Carousel fraud, a scam in which traders import goods, sell them to themselves via related companies, before exporting them and claiming back VAT that they never paid, costs the UK £500m to £1bn a year and that is just one category of crime.

 The UK as a whole loses as much as £193bn a year from fraud, while perhaps another £100bn is laundered through the country’s financial system, according to a National Crime Agency (NCA) report from last year.

David Cameron’s government obliged UK companies to declare a person with significant control (PSC – someone who actually owns the shares) and made it free to search Companies House so as to increase public scrutiny. The trouble is that no one at Companies House is checking the accuracy of the information submitted. No matter how transparent something is, the old tech rule applies: garbage in, garbage out.  In January, Global Witness analysed PSC entries and found 4,000 toddlers owning companies, as well as one beneficial owner who was yet to be born.

The price of incorporation in the British Virgin Islands costs 50 times as much as in the UK.

No comments: