There is a good reason why those who can form and manage companies (whether as a standalone service, or as part of a wider professional offering) should be included in the AML family: the “front company” is invaluable to criminals in general and money launderers in particular. Such a company can be used in many ways, as recent news stories demonstrate.
They can be used to cover up criminal activity. In a recent success for the UK’s National Crime Agency, brothers Glen and Gary Wheatley from the north of England were jailed for lengthy terms for using their coach company to smuggle heroin from the Continent. They built a secret compartment above one of the wheel arches of their coach (you can see it here), and stuffed it with 12kg of heroin – sitting above it were their oblivious passengers, coming home from a trip to the Christmas markets in Belgium. The Wheatleys were certainly not the first to see the potential of a transport company as a front business for criminality: who can forget the terrible death of 58 Chinese would-be illegal immigrants in the lorry driven by Perry Wacker in June 2000?
And of course front companies can be used to launder the proceeds of all sorts of crime. MLROs warn their staff to be aware of the potential for laundering through cash-intensive businesses – takeaway food outlets, pubs, hairdressers, tanning salons and the like. And sometimes criminals combine the two very effectively, as in the notorious “Paddington black cab gang“, when launderers used the accounts of a taxi firm to launder vast amounts of drug money, and its vehicles to transport both drugs and cash.
Entrepreneurial friends in other countries tell me that they envy the ease with which companies can be incorporated here in the UK, but they are certainly not the only ones to spot that. We cannot allow the irritation of legitimate business people put us off making thorough due diligence enquiries of every new company – and even more crucially, we must be super-vigilant about monitoring them and making sure that they operate as predicted and expected.