Tue. Oct 19th, 2021


If it can be believed in the British company register, my family and I shared our home with a Russian in the mid – forties. We have been an office for some time for his start-up, which he set up last year and in which he is the sole shareholder.

The problem is that this is not true. We have never heard of “the Russian”. But removing our virtual stickers seems to be complicated and expensive.

Pulling through public records is the backbone of my work as I follow the global cash flow in search of evidence of financial fraud or accounting acrobatics. I am therefore aware that records in the UK Corporate Registry, Companies House, contain errors and lies.

Doubtful files abound in the registry. Was Christ, Jesus Holy with a dwelling in Heaven really a year long director of Weight A Minute Limited? Why has a dormant business – recently named MAD Group Limited – changed its name almost 250 times since its inception six years ago before it was voluntarily shut down?

These are just some of the oddities that Graham Barrow, a money laundering expert and host of the Dark Money podcast, has encountered. “It’s really hard to know what commission and crime crimes are,” Barrow said. “Is it intentional or accidental?”

Britain has long attracted criminals who want to launder money, and the abuse of the corporate register is rampant. Research by Transparency International has cataloged at least 929 British shell companies used in corruption and money laundering cases, which they say could be costs the world economy as much as £ 137 billion.

What I discovered about our alleged tenant certainly raised questions. Following a series of public reports, I traced an individual with the same name and date of birth to the Russian city of Nizhny Novgorod. There he led at least half a dozen companies, most of which were dissolved. His British company has set up a website selling artifacts for online games – another red flag. Online gaming has become a popular way to launder money, with players transferring items in the game that can be converted into tangible currencies.

Setting up a business in Britain is cheap and costs just £ 12. However, Companies House does not have a task to verify the truth of the information submitted. Although the government is aware of the problem, there have been only five prosecutions for providing false information to the registry. Ironically, the first one was an activist who registered a company in the name of former business secretary Vince Cable in a attempt to uncover loopholes in the register.

There is little information on how often addresses are used fraudulently or false information is filed, but it has become a growing problem. The address of a director is relatively simple. But to get rid of false information about shareholders, a lawyer must be appointed and a “properly worded court order” obtained, according to Companies House. The burden of proof and the legal costs are on the person whose address they used.

The Russian company was to be removed from the register earlier this year. However, according to the filing of Companies House, there is ‘proof’ why the company should not be removed. This apparently did not include checking to see if the owner’s address was legal.

That may change soon. After years of almost unpunished criminal justice for criminals, in 2019 the government considered options to increase the transparency of companies and tackle economic crime. A further consultation concluded in February called for opinions on reforms that would give powers to the registrar to review the information provided to Companies House.

Ben Cowdock, lead researcher at Transparency International, says the proposed changes are only part of the way to tackle the problem. The fight against rogue formation agents falls outside the scope of current reforms. Another concern is how quickly any changes will be made. According to Companies House, ‘legislation will be introduced’ when parliamentary time allows’. “It will not happen overnight. “During this time, criminals will continue to launder money through the United Kingdom,” said Cowdock. For me, the changes cannot happen fast enough.

cynthia.omurchu@ft.com



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