The Dark Money Files
Day three of the Big Compliance Festival was all about fraud.
Compliance is seldom considered thrilling or exciting, but fraud is the only element about which movies are made.
All three presentations were excellent. Actually, that’s a guess. I have, as yet, only watched two. The third is on my to-do list.
One presentation in particular left me open-mouthed. The title alone is enough to catch the eye.
“The Dark Money Files – Are UK legal entities the oil that keeps laundromats running?”
A LLP was formed in the UK. A couple of months later, it opened a bank account at Danske Bank in Estonia. (As you do, obviously.) In thirteen months, the brand new LLP moved 1.2 billion dollars through the account.
That’s not a typo.
$1,196,669,700 (at the exchange rates of the time.)
A name that nobody had heard of, 3 months old, was moving millions every day through its accounts.
Must be a service company for a huge name, surely? Amazon or Apple or someone.
Actually, it was a UK LLP, run from a Moscow address. There was no web presence. No e-mail address, no website, nothing. Throughout the lifetime of the account, there were no expenses, salaries, drawings of any kind. Money (in multiple currencies) came in from places like Kazakhstan and then went out, in smaller tranches to other accounts held at the same bank. Whose accounts? Well, other LLPs with accounts at the same branch.
LLPs are not taxable entities, so they do not submit accounts to HMRC, but they do have an obligation to submit accounts to Companies House.
Who would have thought it? All of the accounts of all of the LLPs receiving the transfers were signed by the same people controlling the LLP sending the transfers.
Coincidentally, around the same time, I was involved in a money transfer company that needed bank accounts in Denmark. I sat in a meeting with a regional manager at Danske Bank.
“Money Transfer? No, I’m afraid we don’t service risky businesses like that.”
Fraud is lucrative. Bad actors will incentivise staff to “look the other way” or to conspire to launder money. It may not be at the scale of the international laundromats in your firm, but the risk is there.
Would your counter staff help a friend split transactions to stay beneath a threshold? No? Good. Have you tested that?
Having the best policies and procedures in the world will do you no good at all, if staff are circumventing them.
Drop Lime a line to schedule a free, confidential discussion about stress testing your systems and training your staff.