AML – SHELL COMPANIES, FRONT COMPANIES AND THE MISUSE OF REAL ESTATE

An outstanding article on Finextra on 23rd July discusses a case that took place in the UK which has strong similarities to the 1MDB case.  It too involved tactics used to defraud financial institutions and conceal the true owners and controllers of the scheme. This case involved the misappropriation of millions of pounds, involving in excess of 100 transactions over a 4-year period – and it took place almost 10 years before legal proceedings were initiated in the 1MDB case.  It is observed that despite the changes we’ve seen in the AML regulation of the sectors involved, the tactics used in this scheme have also been used in more recent cases like 1MDB, to launder the proceeds of crime.  In the case the miscreants managed to misuse the proceeds provided under the Agreement, using several different tactics, and in total over £100 million was misappropriated from the funding provided under the Agreement.  The article describes, with diagrams, each of the tactics used.  It seems that the scheme only came unstuck when the perpetrators were disqualified as directors in relation to a previous business they operated, and administrators who were subsequently appointed uncovered the scheme. The article highlights the red flags that should have alerted people to the scam and finally comments that assuming that all financial institutions apply the same standards of KYC and monitoring simply because they are regulated, can be a risky proposition.

https://www.finextra.com/blogposting/17537/aml—shell-companies-front-companies-and-the-misuse-of-real-estate

This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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