COMPANY REGISTRATIONS


>>


Companies House for all listed entities with the word ‘Impex’ in their title, a phrase he’d noticed fairly regularly and understood to be a portmanteau of ‘import/export’. This search on Companies House


generated a list of 403 active Scottish LPs and 69 active LLPs. Out of the 69 LLPs, just two had designated members with addresses in the UK, one had an address in France, and the remaining 66 had addresses in offshore locations. But the “most shocking figure of all” in


relation to these 69 companies, according to Graham, is that 44 of the 69 companies had annual accounts signed off by just two people: 28 of them were signed off by one man, and a further 16 were signed off by one woman. “Anyone who looks at that list and is


// STILL TOO MANY WEAK LINKS IN THE INTERNATIONAL CHAIN //


not shocked to the core is missing the point of this entire investigation,” he says. “There is no way that a randomly selected group of entities should exhibit such a strong correlation. And this is just the tip of the iceberg of the signed-off accounts.” To further highlight the issue that the


UK’s company registration system faces, and one which is no doubt prevalent in other countries, Graham found 13 different nationalities of PSCs across 40 of his Impex sample. If a PSC is based overseas, it can make it difficult to track these people if regulatory or law enforcement agencies wish to do so. But enforcement isn’t that strong in the


UK for British nationals either. According to a report by the International Consortium of Investigative Journalists (ICIJ), it wasn’t until 2018 that the first person was successfully prosecuted for supplying false information to Companies House after setting up a company in the name of former Business Secretary Vince Cable MP and appointing him director without his knowledge. Kevin Brewer pled guilty to the charges


and was ordered to pay £12,000 in fines and costs. From then until February 2021, when the ICIJ published the story, there were just five prosecutions for supplying false information, despite what the ICIJ calls “overwhelming evidence that Companies House is littered with fictitious filings”.


Global standards The issue is a global one that has been high on the agenda of the intergovernmental Financial Action Task Force (FATF).


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According to the ‘outcomes’ of an


FATF plenary session held in Paris in October 2022, delegates discussed how to help countries and the private sector implement FATF’s strengthened requirements on beneficial ownership to “prevent criminals from hiding illicit activity behind opaque corporate structures”. It was also announced at the meeting


that guidance on beneficial ownership would be finalised in February 2023 after input from FATF stakeholders. Furthermore, the FATF said it would propose modifications to its standard on beneficial ownership of legal arrangements to ensure that information about the likes of trusts and other legal arrangements that commonly hide identities was more transparent. Despite these developments, OECD


countries and their dependencies account for 68% of the world’s corporate tax abuse risks, according to the Tax Justice Network’s Corporate Tax Haven Index for 2021. This has prompted calls from campaigners for OECD tax rules “to be superseded by a more robust and globally inclusive process at the United Nations, beginning with a UN tax convention”, the body said.


No confirmation of validity or trustworthiness While there are collaborative and proactive steps being taken by individual authorities, or groups of countries via the likes of FATF, there remains a significant way to go before globally common standards are prevalent. There are still too many weak links in


the international chain, as well as within individual nations. Business leaders and owners might


view such risks as removed from their everyday lives, but a failure to analyse third-party risk arguably exposes any firm. The government’s Check, Act and


Review guidance on due diligence that firms should carry out on every third party they interact with highlights the importance of knowing who your firm is doing business with, no matter how small the contract or transaction. Being registered on Companies House,


or the vast majority of international registers, is no confirmation of validity or trustworthiness. Firms should undertake their own robust due diligence before accepting such companies as a customer.


THE REVIEW MARCH 2023


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