Like many of you, I am sure, my interest was piqued last week by the story that broke on the Beeb (or at least that’s where I first heard it) about shell companies in Scotland allegedly being used to launder the proceeds of a gigantic fraud on three Moldovan banks. There are many aspects of this investigation that will fascinate those of us with an AML turn of mind, but one that caught my eye was the assertion that one of the limited partnerships suspected of involvement “is registered along with 420 other companies in a flat in a run-down part of Edinburgh”. This reminded me of both the (defunct) Sark Lark and the assertion on Wikipedia that Ugland House in George Town, Grand Cayman “is the registered office address for 18,857 entities”.
Now, not for one second am I saying that all the companies registered at Ugland House are dodgy, nor that the 259 limited partnerships that give their address as “a flat in Pilton, the district of north Edinburgh famous as the setting for ‘Trainspotting’, the novel about heroin addicts” are up to no good. But from a due diligence perspective, it would be useful to know that the company I was looking at was living in such cramped conditions.
So I had a peek at my own local register of companies, via the WebCHeck service offered free by Companies House here in the UK. You can search on company name or number, but not on address. Now that discussions are starting in earnest about how to design a register of beneficial ownership that meets the standards of the Fourth Money Laundering Directive, it might be a good opportunity to consider whether allowing a search on address would be handy. After all, if I were an MLRO and doing a check on a new corporate client, I’d quite like to know if they share their address with hundreds or thousands of others. That alone does not mean that there is anything wrong with them, but perhaps it is another facet of identity that should be available for interpretation and risk assessment.
I hate money laundering 
Interesting article. Insight: A web search on a company name via Google, may hit the nurmerous free (ish) company information providers websites, some of these do list how many other companies are registered at the same address. Should we be suspicious, perhaps…but it is cause to enquire further…!
An excellent suggestion, Phil – thank you. As you say, multiple appearances of an address would at least give an MLRO pause for thought…
Best wishes from Susan
Excellent story, thank you!
To be able to look up how many companies are registered an address would be very helpful to an MLRO. Indeed, the police too have expressed, off the record, that they would also like to know how many companies are registered to an address, which to all intents are based in a “virtual office”.
Two locations, apart from the address in Scotland spring to mind, F****ley Road and H***ey Street, both in London, where friendly business registration companies, have set up 100’s if not 1000’s of companies. Some of which are obviously genuine and others appear to be of a more dubious nature. Very frustrating if you are the victim of a “company’ of an organisation that has set up a fraudulent website. When detected, the owner then sets up another dubious website, whose address is based at the same location.
There is work to be done in this area, outside the scope of a mere mortal MLRO, which would be helpful to combat money laundering and other fraudulent, criminal activities.
Dear Peter
Welcome to the blog. You’re right: some addresses are notorious/advertised as virtual ones, and to some extent are therefore less troublesome – you know what you’re in for when one of those appears. It’s the unknown multiple addresses (like these Edinburgh ones) that cause the problems. Please do keep reading and commenting!
Best wishes from Susan
A reader has pointed out that in the UK we now have the concept of the SAIL – Single Alternative Inspection Location. Brought in by a section of the Companies Act 2006 which took effect on 1 October 2009, the purpose of the SAIL is to allow one alternative address where company records and registers are kept, if not at the registered office address. As many businesses are today run from home addresses, some business owners do not want to use their home address as their company registered office, as it goes on public record. Thus, the SAIL. A company is allowed only one SAIL, and it must be stated in the company’s annual return.
It would also be useful to search for companies which have appointed a particular person as a director. Again, there are websites which allow you to do this but, combined with an ability to search for registered office addresses and SAIL, it would help ensure information at Companies House, which has been self-declared, cross references consistently. Surely more attention should be focused on the accuracy of what Companies’ House have rather than adding more unverified information such as beneficial ownership?
You are preaching to the converted, Dawn! Companies House is – in my view – a very poor example of its type, and I too would focus my attention on improving what they do already before adding to their responsibilities. In other jurisdictions, people are often surprised to hear that there is no verification done by CH, but in essence just filing of, as you say, self-declared information.
Best wishes from Susan
Nostalgia! A sunny day, plane ride to Guernsey, boat to Sark, quick board meeting at the harbour, lazy trip back. Better than sitting at a hot desk 🙂
Those were the days, eh, Roy? Liquid lunches, ten minutes’ work a year for a director’s fee – ah, what spoilsports regulation, due diligence and AML can be!