Guardian and Panorama expose how easy it is to set up an anonymous company
November 26th, 2012
flickr / jambled
Investigations carried out by the Guardian, the International Consortium of Investigative Journalists and the BBC’s Panorama programme into the ease with which anonymous shell companies can be used to move dirty money around the world are on the front page of today’s paper and being broadcast tonight at 20.30 on BBC One. Their findings match those of Global Witness and others.
The days of corrupt politicians being bribed with a briefcase of used dollar bills are long gone. These days terrorists, tax evaders, arms smugglers and corrupt politicians open a bank account using an anonymous shell companies to disguise their identity.
The World Bank looked into 150 grand cases of corruption. 70% of the time, the corruption was facilitated by an anonymous company. American companies were the most popular choice of the corrupt, but companies from the UK and its crown dependencies and overseas territories came second.
In theory, anti-money laundering laws prevent anonymous companies from being created: company service providers are meant to know who owns and controls the companies they set up. But research by academic Jason Sharman shows that these laws are widely flouted. He and his colleagues carried out a mystery shopping exercise into more than 3,000 company service providers worldwide. His findings were alarming. 48% of company service providers were prepared to set up a company without requesting the proper identification documents. What’s more, company service providers in rich OECD countries such as the UK were more likely to flout the law than those in tax havens.
Global Witness’ own investigations have highlighted how UK shell companies with bank accounts at a bank in Kyrgyzstan at the centre of a major money laundering allegations appear to have moved hundreds of millions of pounds around the world.
Keeping information about who owns and controls companies secret makes life easy for the world’s criminals. What’s needed are public registries of the true, beneficial owners of companies. The European Union should seize the opportunity created by the revision of its Anti Money Laundering Directive to shine a light on the ownership of European companies. Similarly, the UK’s Department for Business, Innovation and Skills should ensure that UK companies cannot be abused by the world’s criminals.
